The US economy expanded at a 1.5% annual rate in the second quarter of 2026, unchanged from the government’s first estimate, as stronger household spending was offset by a larger rise in imports.
The latest estimate from the Bureau of Economic Analysis showed that growth slowed from 2.1% in the first quarter. Consumer spending, exports and business investment added to output, while government spending fell.
Gross domestic product, or GDP, measures the value of goods and services produced in the country. The 1.5% figure is a seasonally adjusted annual rate, meaning it shows how fast the economy would grow over a full year if the quarter’s pace continued. It is not a year-on-year comparison.
The unchanged headline conceals a meaningful revision beneath the surface. The BEA raised its estimate of consumer spending, mainly because spending on services such as hospital and physician care was stronger than first calculated. That improvement was largely cancelled out by an upward revision to imports.
Domestic demand was firmer than GDP suggests
Imports reduce the GDP calculation because they are produced abroad. A jump in imports can therefore hold down measured growth even when American households and companies are buying more.
This is one reason economists also watch real final sales to private domestic purchasers. The measure combines consumer spending and private fixed investment while excluding government purchases, exports and inventory changes. It rose at a 4.2% annual rate in the second quarter, revised up from 3.9%.
Consumer spending itself increased at a 3.4% annual rate, according to the detailed BEA tables reported by the Associated Press, a sharp acceleration from 0.5% in the first quarter. The contrast helps explain why the economy could feel more active than the 1.5% GDP figure alone implies.
Business investment also increased, although more slowly than in the first quarter. Government spending moved in the opposite direction and exports lost momentum.
The broader picture is therefore mixed rather than uniformly weak. The economy slowed, but the slowdown was not driven by a collapse in household demand. Much of the gap between the headline rate and underlying private demand came from trade and government spending.
Inflation remains the uncomfortable part of the report
The same release showed stronger price pressures. The price index for gross domestic purchases increased at a 5.8% annual rate, slightly above the first estimate of 5.7%.
The personal consumption expenditures price index rose 5.3%. Excluding food and energy, which can be volatile, the index increased 3.6%. Both readings were revised up by 0.2 percentage point.
These are quarter-to-quarter annualised rates, not the more familiar 12-month inflation figures. Even so, they show that prices accelerated during the second quarter. That combination of moderate GDP growth and persistent inflation can complicate decisions for the Federal Reserve, because lower interest rates may support demand but can also make it harder to bring inflation under control.
Another measure of activity offered a somewhat stronger signal. Real gross domestic income, which adds up the income generated by production rather than the output itself, increased 2.2%. The average of real GDP and real gross domestic income rose 1.8%.
In theory, income and output should be equal. In practice, they are estimated from different data and often diverge. Looking at both can provide a more balanced view when one measure is unusually affected by trade or other volatile components.
Corporate profits rose, but the estimate will change again
Corporate profits from current production increased by $400.9 billion at an annual rate in the second quarter, following a $74.4 billion increase in the first. This is a broad national-accounts measure and should not be read as the combined quarterly net income reported by listed companies.
The second GDP estimate uses more complete source data than the advance estimate, but it is not final. The BEA will publish a third estimate on 30 September, when it also begins its annual update of national and regional economic statistics.
For now, the report points to an economy growing slowly at the headline level but supported by much firmer private demand. The harder question is whether households and businesses can maintain that pace while price growth remains elevated.
