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

The US economy expanded at a sluggish 1.5% pace in the second quarter of 2026, down from 2.1% in the previous quarter and below economists' expectations. This growth was weighed down by rising imports, but consumer spending remained strong.

According to the Commerce Department, personal consumption expenditures (PCE) prices rose 3.7% last month from June 2025, with core consumer prices increasing 3.3%. These inflation numbers remain above the Federal Reserve's 2% target.

The Fed chose not to raise its benchmark interest rate for the fifth consecutive meeting, despite dissenting voices from three regional presidents who wanted to combat elevated inflation by raising rates. Americans are feeling frustrated with high living costs ahead of November's midterm elections.