US Economy Expands 1.5% in Q2 Amid Sticky Inflation

The US economy expanded by 1.5% in Q2 2026, according to the Bureau of Economic Analysis (BEA). This growth rate is lower than the first quarter's 2.1%. The decrease in government spending and slower growth in investment and exports were partly offset by stronger consumer spending.

The Core PCE Price Index, considered the Federal Reserve's preferred inflation indicator, remained at 3.3% year-on-year in July, matching market estimates. On a monthly basis, core PCE ticked higher to 0.2%, up from 0.1%. The Fed has targeted 2% for inflation.

Fed officials have voiced concerns that stubborn inflation will force the central bank to maintain interest rates at higher levels for an extended period, 'higher for longer'.