US Economy Expands at 1.5% Pace in Q2, Inflation Remains Above Target

The US economy experienced sluggish growth in the second quarter of this year, expanding at a rate of 1.5% from April to June. This growth is lower than the 2.1% pace recorded in the first three months of 2026 and falls short of economists' expectations.

According to the Commerce Department, rising imports weighed on growth during this period. However, consumer spending remained strong, with Americans able to spend due to a resilient job market. Employers have been adding an average of 92,000 jobs per month this year, compared to fewer than 10,000 in 2025.

The Federal Reserve's favored measure of inflation, the personal consumption expenditures (PCE) price index, rose 3.7% last month from June 2025, but remained above the central bank's 2% target. Core consumer prices, excluding volatile food and energy prices, were up 3.3% from a year earlier.

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