Economy grows at a sluggish 1.5% in second-quarter with inflation remaining stubbornly high

The U.S. economy grew at a 1.5% annual rate in the second quarter, according to the Commerce Department, with imports weighing on GDP even as consumers kept spending. Growth slowed from 2.1% in the first three months of 2026 and came in below economists’ expectations. Consumer spending rose 3.2%, up from 0.5% in January-March, while underlying measures excluding volatile government spending and trade increased at a 3.9% pace. Business investment excluding housing climbed 8.4%, reflecting momentum in artificial intelligence, but imports rose 11.5%, subtracting 1.5 percentage points from GDP. The Fed’s preferred PCE inflation measure increased 3.7% in June from a year earlier; core prices were up 3.3%. The article notes the Fed held rates unchanged for the fifth straight meeting, despite dissent from three regional presidents.