US Economy Expands 1.5% in Second Quarter Amid High Inflation

The US economy grew at a sluggish 1.5% pace in the second quarter of this year, according to the Commerce Department. This is lower than the 2.1% growth rate seen in the first three months of 2026.

Consumer spending, however, continued to drive growth, increasing at a 3.2% annual clip. Business investment also remained strong, with a rise in artificial intelligence-related investments contributing to an 8.4% increase in business spending.

The Commerce Department's report highlighted the impact of imports on GDP growth, which was shaved by 1.5 percentage points due to rising imports, particularly computer chips and other products supporting AI investment.

Despite this, the personal consumption expenditures (PCE) price index, favored by the Federal Reserve, rose only 3.7% in June from a year earlier, down from 4.1% in May. Core consumer prices were also stable at 3.3%, with energy prices plummeting 9.2%.