US Economy Hits Slow Gear with Sluggish 1.5% Growth in Q2
The US economy experienced slow growth in the second quarter of this year, expanding at a rate of just 1.5% from April to June. This is down from 2.1% in the first three months of 2026 and below economists' expectations.
Despite sluggish overall growth, consumer spending continued to drive the economy forward, increasing at a rate of 3.2% annually. This represents an improvement over the previous quarter's growth of just 0.5%. A measure of the economy's underlying strength also looked healthy, expanding at a 3.9% annual pace.
Business investment in areas such as artificial intelligence (AI) remains strong, with spending rising at an 8.4% pace. However, imports weighed on growth, increasing by 11.5% and shaving 1.5 percentage points off GDP.
The Federal Reserve's preferred measure of inflation, the PCE price index, rose 3.7% last month from June 2025 but was down from a 4.1% year-over-year increase in May. Core consumer prices were up 3.3% from a year earlier, with energy prices falling 0.1% due to a 9.2% drop in gasoline and other products.