The Commerce Department reported that the U.S. economy grew at a sluggish 1.5% pace in the second quarter of 2026.
The Commerce Department reported that the U.S. economy expanded at a 1.5% annual rate from April through June, a figure lower than the 1.8% growth expected by economists. While the growth rate decelerated from the 2.1% seen in the first quarter, the economy showed underlying strength, particularly in consumer spending, which rose at a 3.2% annual clip. This consumer resilience helped offset a decline in federal spending and a surge in imports, which shaved 1.5 percentage points off the top-line GDP figure. Inflation remains a primary concern for the Federal Reserve, as the personal consumption expenditures price index rose 3.7% last month, staying well above the 2% target. Despite the impact of the Iran war on energy prices, consumers continued to spending on goods like motor vehicles and furniture. The Federal Reserve held its benchmark interest rate steady for the fifth consecutive meeting, while Kevin Warsh warned that there is no "magic wand" to combat rising prices. The administration noted that the economy remains resilient despite the financial impacts of the Iran war and various tariffs.