Finance30 July, 20262 min read
U.S. Economy Slows to 1.5% Annualized Growth in Second Quarter
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GDP grew at a 1.5% annualized rate in Q2. Growth slowed from 2.1% in the prior quarter.
GDP slows to 1.5%
The U.S. economy expanded at a sluggish 1.5% annualized pace from April through June, as the Commerce Department reported that rising imports weighed on growth while consumers continued to spend. The slowdown came as gross domestic product decelerated from 2.1% in the first three months of 2026, and consumer spending increased at a 3.2% annual clip, up from 0.5% in the January-March period.
The AP reported that the imports shaved 1.5 percentage off second-quarter GDP growth, even as a measure of underlying strength expanded at a 3.9% annual pace. NBC News said economists polled by Reuters had forecast GDP rising at a 2.1% pace, with estimates ranging from a 0.8% rate to a 2.9% pace, before the advance indicators shifted expectations.
Fed holds, inflation lingers
The Federal Reserve chose to leave its benchmark interest rate unchanged for the fifth straight meeting, while three regional Fed presidents dissented and said they wanted to raise rates to combat elevated inflation.
AP quoted Olu Sonola of Fitch Ratings saying, "The consumer rescued the quarter," while also warning that the AI boom does not automatically translate into an equally large boost to U.S. GDP.
The BBC said the Commerce Department reported the economy grew at an annual rate of 1.5% in the second quarter, down from 2.1% in the first three months, and that the downturn reflected lower government spending, investment and exports offsetting consumer spending.
In the same BBC report, Michael Pearce of Oxford Economics argued the growth slowdown underplayed the "strength" of the U.S. economy and suggested the pace would return to above 2% later this year.
What comes next for households
The AP said the PCE price index rose 3.7% last month from June 2025, and that the year-over-year increase in prices has been stuck above the Fed’s 2% target for more than five years. The BBC reported that Brent crude was about $90 a barrel on Thursday and that average gasoline prices were back above $4 a gallon, tying the conflict’s oil-price pressure to pump costs.
In a separate themortgagepoint summary of Reuters-linked reporting, the Commerce Department noted inflation in June held well above the Federal Reserve’s goal, complicating the central bank’s policy path. NBC News warned that economists said the U.S.-led war with Iran, now in its sixth month, posed a downside risk to demand and ultimately economic growth in the second half of the year, even as consumer spending and AI-related investment supported the quarter.