Key facts
- US GDP grew at a 1.5% annual rate in the second quarter.
- The growth figure was lower than analysts estimated.
- Consumer spending grew at a 3.2% rate in Q2.
- Prices rose 3.5% in the year to June.
The U.S. economy grew at a 1.5% annual rate in the second quarter, a slowdown from 2.1% in the first quarter. Geopolitical events impacting energy prices and supply chains contributed to the deceleration, while consumer spending remained resilient.
The slowdown in US economic growth, despite resilient consumer spending, indicates potential headwinds from geopolitical instability and inflation, which could influence Federal Reserve policy decisions.
The U.S. economy grew at a 1.5% annual rate in the second quarter, a slowdown from the 2.1% expansion seen in the first three months of the year. The Commerce Department reported that lower government spending, investment, and exports contributed to the downturn. However, consumer spending, which accounts for over two-thirds of economic activity, grew at a robust 3.2% rate, demonstrating resilience despite prices rising at 3.5% year-over-year.
Geopolitical events, particularly the conflict in the Middle East, have impacted energy prices and supply chains, contributing to the economic slowdown. Brent crude oil prices were around $90 a barrel, and average gasoline prices have risen above $4 a gallon. Despite these pressures, economists like Bradley Saunders of Capital Economics suggest the growth figure undersells a healthy economy, with households appearing to shrug off higher fuel costs.