Key facts
- U.S. GDP grew at a 1.5% annual rate in the second quarter of 2026.
- This growth rate is a slowdown from the 2.1% recorded in the first quarter.
- Consumer spending increased by 3.2% in the second quarter.
- The Federal Reserve's favored inflation gauge showed slower price increases in June.
- Inflation remains above the Federal Reserve's 2% target.
- The Federal Reserve decided to maintain current interest rates.
The U.S. economy experienced a slowdown in the second quarter of 2026, with gross domestic product growing at a 1.5% annual pace. This deceleration from the first quarter's 2.1% growth was partly attributed to a significant increase in imports, which subtracted 1.5 percentage points from the GDP figure. Despite the overall slowdown, consumer spending rose robustly by 3.2%, and business investment, excluding housing, also showed strength with an 8.4% increase, partly driven by investments in artificial intelligence.
On the inflation front, the Federal Reserve's preferred measure, the personal consumption expenditures (PCE) price index, indicated a slower rise in prices in June compared to May. However, inflation remains persistently above the central bank's 2% target, a concern for consumers facing high living costs. In response to the economic and inflation data, the Federal Reserve voted to maintain its current interest rate levels, though financial markets anticipate potential future rate hikes.
Analysts noted that while consumer spending and AI investment were key drivers of the quarter's growth, the surge in imports highlights that the benefits of an AI boom do not automatically translate into a proportional boost to U.S. GDP. The economic figures were released as the nation approaches the midterm elections, with inflation being a significant concern for voters.