U.S. economy grows 1.5% in second quarter, matching initial estimate

The U.S. economy grew at a rate of 1.5% in the second quarter, matching the department’s initial estimate, the Commerce Department reported Wednesday. Growth slowed from 2.1% in the first quarter.

Consumer spending, which accounts for about 70% of economic activity, increased at an annual rate of 3.4%, up from 0.5% in the previous quarter. Despite the modest overall growth, consumer spending remained healthy.

The slowdown was largely due to a surge in imports, which rose at a 12.5% annual pace from April through June. Increased shipments of computer chips and other products supporting artificial intelligence investment contributed to the imports increase, which subtracted 1.64 percentage points from second-quarter growth.

Beyond the headline figures, the economy showed resilience amid geopolitical tensions and rising energy prices. Business investment excluding housing grew 8.5%, driven by AI-related investments. A measure of underlying economic strength — which excludes volatile government spending and trade — increased 4.2%, up from 1.7% in the first quarter. Housing investment also ticked up for the first time since late 2024, despite high mortgage rates depressing the market.

The report was the second of three quarterly GDP assessments, with the final estimate scheduled for Sept. 30. Separately, the Commerce Department reported that inflation remained steady in July, with prices rising 3.7% compared to the previous year, unchanged from June. Inflation has increased since February, when it was at 2.9%, amid rising energy prices and geopolitical tensions. Experts say high inflation remains a key issue ahead of the upcoming midterm elections, amid concerns over energy costs, tariffs, and rising prices for technology products.

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