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

The United States economy grew at a 1.5% annual rate during the second quarter of 2026. This performance marks a slowdown from the 2.1% pace recorded in the first three months of the year. Growth figures fell below initial expectations as a surge in imports offset other economic gains.

Despite the slower GDP growth, American consumers remain active in the marketplace. Spending increased at an annual rate of 3.2% from April through June, a significant jump from the 0.5% rate seen in the first quarter. Business investment also contributed to the figures, with an 8.4% rise in non-housing investment driven by heavy spending on artificial intelligence technology.

Inflation remains a persistent challenge. The Federal Reserve's preferred measure, the personal consumption expenditures price index, grew 3.7% in June compared to the previous year. This sits well above the central bank's long-standing 2% inflation target. Core prices, which exclude volatile food and energy categories, were up 3.3% over the same period.

The broader economic environment faces pressure from rising costs and energy price volatility linked to the Iran war. While the job market shows improvement with an average of 92,000 new jobs added each month this year, price stability is a primary concern for voters. The Federal Reserve recently decided to keep interest rates steady, though some regional bank leaders have indicated a preference for further action to lower inflation.

Public sentiment reflects these pressures. Recent polling indicates 72% of U.S. adults view the prevention of rising oil and gas prices as an urgent priority. As the midterm elections approach, the economic outlook stays central to both domestic policy debates and consumer behavior.