U.S. economy grows at sluggish 1.5% in Q2, consumer spending remains strong

The U.S. economy expanded at a sluggish 1.5% annual rate in the second quarter, down from 2.1% in the first quarter, according to the Commerce Department’s Aug. 26 report. Consumer spending, which drives roughly 70% of U.S. economic activity, surged at a 3.4% annual pace—up from just 0.5% in January through March—showing resilience despite broader economic headwinds. The slowdown was largely driven by a 12.5% surge in imports, which subtracted 1.64 percentage points from GDP growth. The spike in imports was partly attributed to increased shipments of computer chips and other AI-related components, reflecting the ongoing AI investment boom. Business investment also rose, further underscoring the AI-driven economic shift. The second-quarter GDP figure matched the department’s initial estimate and remains unchanged. The final third estimate is scheduled for release on Sept. 30. The economy has shown surprising resilience amid geopolitical tensions, including the conflict with Iran and the resulting spike in energy prices.