US Economic Growth Cools to 1.5% in Second Quarter

US economic growth eased to 1.5% in the second quarter of 2026, slowing from 2.1% in the prior quarter, according to figures released Thursday by the Bureau of Economic Analysis. Officials said the weaker headline pace reflected a larger trade deficit and rising fuel costs during the period.

The government release described fuel prices as being pushed higher by ongoing geopolitical tensions in the Middle East. At the same time, the data showed imports running ahead of exports, a pattern officials cited as a key drag on overall output.

Trade deficit widens as imports outpace exports

Officials pointed to the trade gap as a Officials pointed to the trade gap as a central factor holding back growth in the quarter. They said imports exceeded exports, increasing the net subtraction from gross domestic product even as activity elsewhere remained supported. The report tied part of the import dynamic to the continued buildout of artificial intelligence infrastructure. Officials noted that a significant share of the hardware used in data center expansion is sourced from abroad, which can support domestic investment activity while also lifting the value of imported goods and widening the trade deficit shown in the data. Consumers keep spending as inflation gauges cool Despite the slowdown in overall growth, consumer spending rose 3.2% over the quarter, according to the release. Officials attributed the resilience in household outlays to federal tax refunds and continued investment connected to artificial intelligence infrastructure.

Economic Analysis

Inflation indicators cited in the same period showed some easing in the latest month referenced. The Personal Consumption Expenditure Price Index, a measure closely watched by the Federal Reserve, increased 3.7% year over year in June, down from a 4.1% annual rise in May.

Fed holds policy rate as markets split between risk and safety The Federal Reserve left its policy rate unchanged at 3.5% to 3.75% on Wednesday, citing persistent inflationary pressures. Officials framed the decision as part of an ongoing effort to balance cooling growth against inflation readings that remain elevated in the official data.

Market moves described alongside the release were mixed in their message. Equity prices advanced amid signs of strength in parts of the technology sector, with investors responding positively to strong cloud services performance and the Nasdaq up 2.6%.

At the same time, demand for defensive assets remained evident. Gold rose 1.9% to $4,108.30 per ounce, a move described as reflecting investor caution about long-term economic stability.

Open questions highlighted by officials

Officials flagged several uncertainties that could shape the outlook implied by the quarter’s figures. These included how long fuel costs remain elevated and whether the import-heavy pace of AI infrastructure investment continues, both of which were described as closely linked to the trade deficit and the growth profile reported.