US Economy Slows Amid Iran War-Induced Inflation Surge
The US economy has reported a growth rate of 1.5% in the second quarter, which is lower than expected. The slowdown can be attributed to the surge in inflation, which has reached 3.5%, exceeding the Federal Reserve's target rate of 2%. Despite elevated costs for businesses and consumers, hiring remains resilient.
The GDP growth was affected by a historic global oil shock triggered by the Middle East conflict. The national average price for a gallon of gasoline soared to $4.56 in May, before easing after a preliminary peace agreement last month.
A significant contributor to the nation's economic growth has been a burst of investment in artificial intelligence, accounting for roughly two-thirds of GDP growth over the first half of 2025. The Federal Reserve is set to announce its latest decision on interest rates, with borrowing costs remaining well above the pre-COVID-19 pandemic level.