Consumers are likely to travel and spend more because U.S. national gasoline prices have fallen for weeks, economists said, delivering an expected boost to the economy.

The average cost of a gallon of regular unleaded gasoline fell to $4 on Wednesday, according to energy data provider OPIS. That is well below the record high of $5.02 reached in mid-June but still about 80 cents a gallon higher than prices were a year ago.

WASHINGTON—The federal deficit narrowed by 30% in July compared with a year earlier, as the government reported a $211 billion monthly gap between revenue and spending.

The drop in the deficit this year is the product of the end of a burst of federal spending last year and rising government revenue this year. Government outlays fell 15% to $480 billion in July after programs administered last year such as expanded unemployment benefits ended, the Treasury Department said Wednesday. Government revenue, not adjusted for calendar differences, rose 3% to $269 billion.

Data on inflation and economic activity are likely to guide whether central bank officials lift their benchmark federal-funds rate by half a percentage point or three-quarters of a point at their Sept. 20-21 policy meeting. They have said they want to see evidence that price pressures and economic growth are cooling before they moderate their pace of rate increases.

China’s central bank said it won’t flood the economy with excessive liquidity while trying to realize the best results for the economy this year.

The People’s Bank of China said in its second-quarter monetary policy report Wednesday that it would step up support for the economy by reiterating existing measures.

The central bank said in the...

U.S. inflation likely remained close to a four-decade high in July despite cooling energy prices, economists say.

The Labor Department on Wednesday is estimated to report that the consumer-price index rose 8.7% in July from the same month a year ago, down from 9.1% in June, according to economists surveyed by The Wall Street Journal. June marked the fastest pace of inflation since November 1981.

Thailand’s central bank raised its policy rate for the first time in nearly four years in a bid to help control inflation.

The Bank of Thailand said Wednesday that its policy committee voted six to one to increase its one-day repurchase rate by 25 basis points to 0.75%, effective immediately. It was the first increase since December 2018. One member voted to raise the policy rate by 50 basis points, the central bank said.

All...

Increases in U.S. consumer-price index inflation are likely to remain between 0.4% and 0.5% “for the next couple months,” Goldman Sachs economists wrote in a report, adding they expect core CPI to slow to between 0.3% and 0.4% by December. They also forecast year-over-year core CPI inflation of 6.1% in December, 2.7% in December 2023, and 2.8% in December 2024. “Our forecast reflects a negative swing in health insurance prices and a larger slowdown in goods than in services inflation next year,” the report said.

Workers’ wages are rising briskly, a factor contributing to four-decade high U.S. inflation.

Average hourly earnings grew 5.2% in July from a year earlier, and annual wage gains have exceeded 5% each month this year, the Labor Department said Friday. The rapid earnings growth adds to other evidence that employers are continuing to increase pay as they try to find and keep workers in a tight job market.

Americans are expecting less inflation in coming years, according to a recent survey by the Federal Reserve Bank of New York.

Respondents’ median expectation in July was for an annual inflation rate of 6.2% in one year, down from the 6.8% they expected in June, the regional reserve bank said Monday. They expected inflation in three years to be at 3.2%, down from the 3.6% they expected in June, and inflation in five years to be at 2.3%, down from a previous 2.8%.

If U.S. labor markets are driving forecasts for hawkish monetary policy, inflation data from the Federal Reserve Bank of New York could feed the doves. The bank’s latest survey of consumer expectations shows “sharply” reduced estimates for how much prices will rise. The median one-year-ahead inflation expectation declined from 6.8% in June to 6.2% in July, while the three-year expectation fell from 3.6% to 3.2%. “Both decreases were broad-based across income groups, but largest among respondents with annual household incomes under $50,000 and respondents with no more than a high school education,” the bank said.

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Sen. Elizabeth Warren (D., Mass.) is calling on regional Federal Reserve Banks to set rules that would prevent their leaders from trading individual stocks, following recent disclosures that the chiefs of the Boston and Dallas banks actively traded stocks and other investments last year.

“The controversy over asset trading by high-level Fed personnel highlights why it is necessary to ban ownership and trading of individual stocks by senior officials who are supposed to serve the public interest,” Ms. Warren wrote in letters addressed to the leaders of the 12 regional Fed banks.

Product shortages and the Delta variant are preventing many Americans from spending at retailers, restraining the economic recovery.

U.S. retail sales likely fell for the second straight month in August, according to economists surveyed by The Wall Street Journal. The Commerce Department will release official figures at 8:30 a.m. ET Thursday.

Jobless claims likely held near a pandemic low last week, as layoffs ease despite a rise in coronavirus cases tied to the Delta variant.

Economists expect a Labor Department report on Thursday to show initial unemployment claims rose slightly to 320,000 last week from a pandemic low of 310,000 a week earlier. Delayed filings following Hurricane Ida, which hit Louisiana at the end of August, could have contributed to a small increase last week, some economists say.

J.P. Morgan has pared its estimate of U.S. economic growth in the current quarter from 7% to 5%, bank economist Michael Feroli wrote Wednesday in a note to clients. “The revision reflects a combination of weaker final demand growth and slower inventory accumulation,” he wrote, adding “these in turn are likely the result of, among other potential issues, the delta virus and supply-chain problems, the latter being particularly severe for the motor vehicle sector.” Mr. Feroli wrote that the economy will make up for some of the slower growth, lifting his fourth-quarter GDP projection from 3% to 3.5%.

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As the Federal Reserve ramps up for its monetary policy meeting next week, it faces some tough cross currents on the inflation front.

The Fed has for some time been up against an unexpected surge in price pressures testing its desire to keep monetary policy on an aggressively supportive footing to help the U.S. economy recover from the body blow of the coronavirus pandemic.

Fed...

The battle to raise the U.S. government’s debt limit carries some big risks, economists at Goldman Sachs wrote in a note to clients Monday. “While it seems likely that the Treasury would continue to redeem maturing Treasury securities and make coupon payments, if Congress does not raise the debt limit by the deadline the Treasury would need to halt more than 40% of expected payments, including some payments to households,” they wrote. They added that a failure to raise the limit could further crimp Democratic attempts to implement fiscal policy and lower the amount of money the U.S. can borrow. “While there is not necessarily...