The U.S. economy grew at a 1.5% annual pace from April through June, the Commerce Department said Thursday, as rising imports weighed on overall output while consumer spending remained brisk.
The department reported that growth slowed from a 2.1% annual pace in the first quarter. Personal consumption expenditures, which account for about 70% of economic activity, rose at a 3.2% annual rate in the second quarter, the Commerce Department said.
Stripping out volatile government spending and trade, a measure of underlying economic strength expanded at a 3.9% annual pace, the Commerce Department said. Business investment excluding housing rose 8.4% as shipments of computer chips and other products supporting artificial intelligence surged, the agency said.
The Commerce Department said imports climbed 11.5% and subtracted about 1.5 percentage points from second-quarter GDP. “The consumer rescued the quarter,” said Olu Sonola, head of U.S. economics at Fitch Ratings. He added that AI investment is a powerful growth story but that the import surge shows an AI boom does not automatically produce an equally large boost to U.S. GDP.
The Commerce Department also said the Federal Reserve’s preferred inflation measure, the personal consumption expenditures price index, rose 3.7% from a year earlier. Excluding food and energy, core PCE was up 3.3% from a year earlier, little changed from May. Prices fell 0.1% from May to June, driven by a 9.2% drop in gasoline and other energy prices, the department said. The Federal Reserve left its benchmark interest rate unchanged this week, with three regional Fed presidents dissenting, according to the Fed. An AP-NORC poll released recently found 72% of U.S. adults say it is extremely or very important to prevent domestic oil and gas prices from rising, the poll said.
Jon Ross Myers is the executive editor and publisher of the Mississippi News Network, Mississippi's largest digital only media company. He can be reached at editor@tippahnews.com
