US Economy Slows to 1.5% Growth as Fed Holds Interest Rates Steady

The US economy slowed to 1.5% growth in the second quarter, missing expectations and marking a drop from the first quarter's 2.1% growth.

The decline was driven by lower government spending, investments, and exports, but consumer spending remained strong with a 4% increase in final sales.

White House Economic Council Director Kevin Hassett downplayed the GDP numbers, saying 'The fact is that final sales were up almost 4%. We had a big boom in consumption, a big boom in investment.'

The Federal Reserve's preferred measure of inflation, the Personal Consumption Expenditures Price Index (PCE), rose 3.7% over 12 months, with core PCE at 3.3%, above the Fed's 2% target.

Federal Reserve Chairman Kevin Warsh expressed confidence in the central bank's ability to stabilize prices and signaled no rush to cut interest rates, saying 'We understand that the five-plus years of inflation above target cannot be cured in nine weeks or by a single month of modest price decreases.'