US Economy Slumps to 1.5% Growth in Q2 Amid Persistent Inflation

The US economy's growth rate has slowed down to 1.5% in the second quarter, according to the Commerce Department's latest report. This is a decrease from the previous quarter's 2.1% growth and falls below economists' expectations.

Consumer spending, however, was a bright spot in the economy, with the personal consumption expenditures (PCE) price index rising by 3.7% last month compared to June 2025. This is down from May's year-over-year increase of 4.1%. Excluding volatile food and energy prices, core consumer prices were up 3.3% from a year earlier, little-changed from the previous month.

The Federal Reserve has been keeping a close eye on inflation, which remains above its 2% target. The Fed's benchmark interest rate was left unchanged for the fifth straight meeting, but three regional presidents dissented, advocating for a rate hike to combat elevated inflation. Higher costs have frustrated Americans ahead of the November midterm elections.