US Economy Expands at Sluggish Pace, Inflation Remains Above Fed Target

The US economy expanded at a sluggish 1.5% pace from April to June, weighed down by rising imports. Despite this, consumer spending rose.

The Commerce Department reported that growth in US gross domestic product (GDP) decelerated from 2.1% in the first quarter of 2026 and fell short of economists' expectations. The GDP report was the first of three Commerce Department estimates of second-quarter economic growth.

Rising imports had a significant impact on the economy, which has proven surprisingly resilient despite the Iran war and energy price spikes. However, Americans remain frustrated over high living costs as inflation remains above the Federal Reserve's 2% target.