U.S. economy turns in sluggish 1.5% second-quarter growth and inflation remains above Fed target
Summary
The U.S. economy grew at a slow pace of 1.5% in the second quarter of 2026, slower than earlier in the year and below expectations. Inflation, measured by the Federal Reserve’s preferred index, eased slightly but stayed above the 2% goal, keeping prices higher than desired.Key Facts
- U.S. gross domestic product (GDP) growth slowed to 1.5% from April to June 2026.
- This growth rate was lower than the 2.1% growth seen in the first quarter of 2026.
- Consumer spending increased during the second quarter.
- The Federal Reserve’s favored inflation measure, the personal consumption expenditures (PCE) price index, rose 3.7% year-over-year in June 2026, down from 4.1% in May.
- Core consumer prices, which exclude food and energy, increased by 3.3% compared to the previous year.
- The Federal Reserve kept its main interest rate unchanged for the fifth meeting in a row.
- Three regional Federal Reserve leaders wanted to raise interest rates to fight inflation.
- The job market improved in 2026, with employers adding about 92,000 jobs per month on average.
- Inflation remains above the Federal Reserve’s 2% target, causing concern for many Americans.
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