US economy grows sluggish 1.5% in second quarter as inflation tops Fed target
Summary
The US economy grew slowly at 1.5% in the second quarter of 2026, slower than expected and less than the 2.1% growth in the first quarter. Inflation, as measured by the Federal Reserve’s preferred price index, rose more slowly but stayed above the 2% target, while consumer spending increased.Key Facts
- US GDP growth was 1.5% from April to June 2026, below economists’ predictions.
- Growth slowed from 2.1% in the first quarter of 2026.
- The Federal Reserve’s preferred 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 inflation, which excludes food and energy prices, was 3.3% higher than a year ago, nearly unchanged from May.
- The Federal Reserve kept its benchmark interest rate unchanged for the fifth meeting in a row.
- Three regional Federal Reserve leaders wanted to raise rates to reduce inflation.
- The US job market improved in 2026, with employers adding an average of 92,000 jobs per month, up from fewer than 10,000 per month in 2025.
- Inflation remains above the Federal Reserve’s 2% target, causing concerns among Americans about the cost of living.
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