US Economy Expands Just 1.5% in Q2 Amid Energy Costs and Government Spending Cuts

The US economy expanded at an annual rate of 1.5% in Q2 2026, missing the 2.1% growth forecast.

Higher energy costs and lower government spending slowed activity, but consumer spending remained strong, growing at a 3.2% annual rate.

The Federal Reserve has kept interest rates steady at 3.5%-3.75% as it monitors inflation and geopolitical risks.

Fed Chair Kevin Warsh noted that the economy continues to show resilience, with labor market stability and productivity improvements as positive signs.