U.S. GDP Growth Slows to 1.5% Annualized in Q2, BEA Says

U.S. economic growth slowed in the second quarter, with the economy expanding at a 1.5% annualized rate after a stronger start to the year, according to the government’s first estimate released Thursday.

The U.S. Bureau of Economic Analysis said, “Real gross domestic product (GDP) increased at an annual rate of 1.5 percent in the second quarter of 2026 (April, May, and June).” That was down from a 2.1% annualized pace in the first quarter, based on the agency’s third estimate for that period. On a quarter-to-quarter basis, without annualizing the figure, real GDP rose 0.4%.

The headline slowdown, however, masked a more mixed picture. The BEA said second-quarter growth reflected gains in consumer spending, investment and exports, partly offset by a decrease in government spending. Imports also increased, which weighed on the headline figure because imports are subtracted in GDP calculations.

Consumer spending rose across both goods and services. Investment was supported by gains in equipment and intellectual property products, even as private inventory investment and nonresidential structures declined. Exports increased overall, though services exports fell.

The report also showed inflation remained elevated in the quarter. The BEA said, “The personal consumption expenditures (PCE) price index increased 5.1 percent.” That compared with a 4.6% increase in the first quarter.

The broader gross domestic purchases price index, which measures prices paid by U.S. residents, rose at a 5.7% annualized rate in the second quarter, up from 3.6% in the prior quarter. Core PCE, which excludes food and energy and is watched as a gauge of underlying inflation, increased 3.4% after rising 4.4% in the first quarter.

Current-dollar GDP, which measures output without adjusting for inflation, increased at a 7.9% annualized rate in the second quarter.

A closely watched measure of underlying demand painted a firmer picture than the headline GDP number alone. Real final sales to private domestic purchasers rose 3.9% in the second quarter, up from 1.7% in the first.

That measure tracks private domestic demand by focusing on spending by households and businesses while stripping out some of the volatility tied to inventories, trade and government. The pickup suggests private-sector demand inside the U.S. economy was considerably stronger than the top-line GDP figure implied.

The decline in government spending also deserves some caution in interpretation. The BEA said the drop was led by federal nondefense consumption expenditures and “primarily reflected sales of crude oil from the Strategic Petroleum Reserve.”

In other words, that category was affected by how the national accounts treat SPR oil sales, rather than signaling a simple, broad-based pullback in public services. That accounting effect helped restrain headline growth in the quarter.

Thursday’s report was the BEA’s advance estimate, the government’s first official reading on quarterly growth and one that is based on partial and early source data. It is routinely revised as more complete information becomes available. The agency’s second estimate for second-quarter GDP is scheduled for Aug. 26.