US Economy Expands at 1.5% Pace in Second Quarter Amid Persistent Inflation

The US economy grew at a sluggish pace of 1.5% from April to June, according to the Commerce Department's report on Thursday. This is lower than the 2.1% growth in the first three months of this year and below economists' expectations.

Rising imports weighed on growth, but consumer spending rose during this period. The Federal Reserve's preferred measure of inflation also grew more slowly last month, but remained above its 2% target.

The Commerce Department reported that personal consumption expenditures (PCE) price index, the one favored by the Fed, rose 3.7% last month from June 2025, down from a 4.1% year-over-year increase in May. Core consumer prices were up 3.3% from a year earlier, little-changed from the 3.4% increase in May.

The Federal Reserve left its benchmark interest rate unchanged for the fifth straight meeting on Wednesday, despite three regional Fed presidents dissenting, who wanted to raise rates to combat elevated inflation.