The Commerce Department reports that U.S. economic growth slowed to 1.5% in the second quarter of 2026.
The Commerce Department reported Thursday that the U.S. gross domestic product (GDP) expanded at a sluggish 1.5% pace from April through June, falling below economists' expectations of 2% growth. While the top-line figure was lower than the 2.1% growth seen in the first quarter, underlying drivers remained solid, particularly consumer spending, which rose at a -3.2% annual clip. This growth was partially offset by a decline in federal government spending and a surge in imports, which shaved 1.5 percentage points off the GDP growth rate. Simultaneously, the Personal Consumption Expenditures (PCE) price index, the Federal Reserve's primary forecasting gauge, rose 3.7% year-over-year in June. This figure remains well above the Federal Reserve's 2% target, complicating the policy path for the administration. Despite the mixed data, the job market has shown resilience, with employers adding an average of 92,000 jobs a month this year. These economic indicators provide a complex picture for the Federal Reserve as it navigates the impact of the Iran war and persistent inflation ahead of the midterm elections.