BEA Revises U.S. Q2 GDP Up to 2.2% as Inflation Remains Elevated

The U.S. economy grew faster in the second quarter than previously reported, according to fresh data from the Bureau of Economic Analysis, which also showed that the stronger national figure masked a wide gap among states, from 4% growth in New York to a 2.3% contraction in West Virginia.

In its third estimate for gross domestic product, or GDP, the broad measure of economic output, the BEA said Wednesday that real U.S. GDP increased at an annualized rate of 2.2% in the April-through-June quarter. That was up sharply from the agency’s prior estimate of 1.5%. The BEA also revised first-quarter 2026 growth to 2.5%. The main drivers of second-quarter growth were consumer spending, investment and exports, while imports also increased and weighed on the GDP calculation.

The upward revision from the second estimate mainly reflected stronger investment, including private inventories and private fixed investment, along with higher consumer spending and government spending, especially federal defense, the agency said. Wednesday’s release also incorporated the BEA’s annual update to national, industry and state accounts, covering the first quarter of 2021 through the first quarter of 2026, helping explain the size of the revisions.

At the state level, real GDP increased in 44 states and the District of Columbia in the second quarter, underscoring both the breadth of growth and the unevenness beneath the national total. New York posted the fastest annualized growth rate at 4%, while West Virginia recorded the steepest decline at 2.3%. The BEA said finance and insurance was the leading contributor to growth in New York and Delaware, while mining was the leading contributor to declines in West Virginia and Wyoming.

The same report showed inflation remained elevated. The personal consumption expenditures price index, a key inflation gauge for the Federal Reserve, rose at a 5% annualized rate in the second quarter, while core PCE, which excludes food and energy, increased 3.3%. The price index for gross domestic purchases rose 5.6%. The figures come after the Fed’s most recent policy move on Sept. 16, when it raised its target federal funds rate by a quarter percentage point to a range of 3.75% to 4%.

Separate data in Wednesday’s release showed current-dollar personal income increased by $314.3 billion in the second quarter, or 4.7% at an annual rate, and rose in 49 states and the District of Columbia. Wisconsin posted the largest gain at 6.4%, while North Dakota was the only state to decline, at 4.2%. Corporate profits from current production increased $384 billion in the quarter, though that figure was revised down by $16.9 billion from the prior estimate.