Sluggish Growth, Stubborn Inflation as US Economy Expands at 1.5%

The US economy grew at a sluggish 1.5% pace from April to June, falling short of economists' expectations. Consumer spending, however, rose at a 3.2% annual clip, with business investment in artificial intelligence driving growth.

Imports weighed on the economy, rising at an 11.5% pace and shaving 1.5 percentage points off GDP growth. The Commerce Department reported that personal consumption expenditures (PCE) price index, favored by the Fed, rose 3.7% last month from June 2025.

The Federal Reserve chose to leave its benchmark interest rate unchanged for the fifth straight meeting, despite three regional presidents dissenting in favor of a rate hike to combat elevated inflation.