U.S. GDP slows as AI imports weigh on second quarter data

U.S. GDP slowed to a 1.5% annual rate during April–June as AI-linked imports and weaker government spending offset firmer consumers. The Commerce Department reported the figure Thursday, showing a cooler headline economy than the 2.1% pace recorded in January–March.

The reading also missed the 1.8% estimate from a private economist survey cited in the source. Beneath that shortfall, however, the report described an economy still drawing strength from households and corporate technology spending.

Consumers carried the quarter

Household outlays rose at a 3.2% annual pace, according to the Commerce Department data described in the report. That was a sharp acceleration from 0.5% in the prior quarter and marked the strongest consumer performance since the third quarter of last year.

The spending pickup came even as gasoline prices climbed during the Iran conflict, a cost shock that can quickly squeeze discretionary purchases. The report said tax cuts helped support buying across both goods and services, giving consumers more room to absorb higher fuel costs.

For policy makers, that split matters: slower GDP did not come from a broad retreat in private demand. A cleaner measure of domestic momentum, final sales to private domestic purchasers, rose at a 3.9% rate, up from 1.7% and the fastest pace since the first quarter of 2023.

AI imports changed the math

The weaker headline number was shaped by the accounting treatment of imports. GDP measures domestic production, so goods bought from abroad reduce the calculation even when they are tied to U.S. investment plans.

That mechanism was visible in net exports, which subtracted one percentage point from growth, according to the report. Inventory investment also weighed on the quarter as companies slowed the pace of stockpiling after earlier accumulation.

Artificial intelligence spending helps explain why the import drag was so large. Data-center construction and corporate technology upgrades require foreign-made semiconductors, computing equipment and related components, while business investment remained firm as companies kept buying information-technology equipment and software.

Tariffs frame the next split

The trade data arrive as President Trump’s tariff policy places new attention on what the United States imports and why. U.S. Trade Representative Jamieson Greer told the Senate Finance Committee last week that some imports should be judged by whether they expand domestic production capacity.

Greer welcomed imports of “the type of goods that help us produce even more here.” He added: “We have shifted the bulk of our imports from consumer goods and autos to the things we need to scale reindustrialization, like machine tools, injection molding equipment and AI chips.”

The next test is conditional. If AI-related imports keep rising faster than domestic output from those investments, GDP could remain pressured even while data-center builders and chip-dependent firms continue spending; if those imports translate into more U.S.-based production, the drag could give way to stronger industrial capacity across technology, manufacturing and power markets.

Globally, the distinction affects trade flows as much as growth optics. Sustained U.S. demand for chips and machinery would support exporting economies and deepen supply-chain exposure, while a shift toward domestic sourcing would redirect investment toward American producers and alter competition across the broader AI infrastructure sector.