US Economy Grinds to 1.5% Growth, Inflation Remains Elevated

The US economy has reported a sluggish growth rate of 1.5% in the second quarter, with consumer spending being the main driver of growth.

Despite expectations of higher growth rates, the Commerce Department's report showed that imports weighed heavily on the economy, shaving off 1.5 percentage points from GDP growth.

The surge in AI investment was a highlight of the quarter, with business investment excluding housing increasing at an 8.4% pace, down from 10.6% in the previous quarter.

However, the Federal Reserve's preferred measure of inflation, the PCE price index, remained above its 2% target, growing at a rate of 3.7% year-over-year, and core consumer prices were up 3.3% from last year.