US Economy Slows Amid Persistent Inflation
The US economy slowed down in the second quarter of 2026, with real GDP growing at an annualized rate of 2.2%, down from 2.5% in the first quarter.
This slowdown was despite consumer spending and business investment remaining key growth drivers, while stronger imports weighed on overall growth.
The persistence of inflation above the Federal Reserve's 2% target complicates the central bank's policy outlook, with Vice Chair Philip Jefferson noting that 'inflation has been too high for too long'.
Federal Reserve Governor Michael Barr attributed price pressures to tariffs, energy prices, geopolitical tensions, and AI-related investment, which is adding to inflationary pressures.
The Federal Reserve Bank of New York's President and CEO John Williams listed three reasons for a one percentage point increase in inflation: tariffs, geopolitical and supply-chain disruptions, and high demand for AI-related goods.