US growth slows to 1.5% in Q2 2026 as inflation readings rise: BEA

Washington: US economic growth slowed to an annual rate of 1.5 per cent in the second quarter of 2026 from 2.1 per cent in the previous quarter, even as key inflation readings moved higher, according to the second estimate released by the US Bureau of Economic Analysis (BEA).

"Real gross domestic product (GDP) increased at an annual rate of 1.5 per cent in the second quarter of 2026 (April, May, and June). In the first quarter, real GDP increased 2.1 per cent."

"Compared to the first quarter, the deceleration in real GDP in the second quarter reflected a downturn in government spending and decelerations in investment and exports," the BEA added.

The April-June GDP growth estimate was unchanged from the advance estimate released earlier.

"Real GDP increased at the same rate as in the advance estimate. An upward revision to consumer spending was partly offset by an upward revision to imports," the BEA said.

The increase in real GDP during the quarter was driven by higher consumer spending, exports and investment, partly offset by a decline in government spending. Imports, which are subtracted while calculating GDP, also increased.

Underlying private domestic demand was stronger than previously estimated. Real final sales to private domestic purchasers, which includes consumer spending and gross private fixed investment, increased 4.2 per cent in the second quarter, revised up from the earlier estimate of 3.9 per cent.

At the same time, price pressures were revised higher. The price index for gross domestic purchases increased 5.8 per cent in the second quarter, compared with the earlier estimate of 5.7 per cent.

The personal consumption expenditures (PCE) price index rose 5.3 per cent, revised up from 5.1 per cent, while the PCE price index excluding food and energy increased 3.6 per cent, up from the earlier estimate of 3.4 per cent.

Corporate profits also recorded a sharp increase during the quarter. Profits from current production rose by USD 400.9 billion in the second quarter, compared with an increase of USD 74.4 billion in the first quarter, according to the BEA.