Growth slows from 2.1% in 1st quarter as government spending falls, investment and exports lose momentum.

The US economy expanded at an annualized rate of 1.5% in the second quarter of 2026, falling short of market expectations, according to an advance estimate released Thursday.

Economists had forecast gross domestic product (GDP) growth of 2.1% for the April-June period.

The Bureau of Economic Analysis said the economy slowed from a revised 2.1% expansion in the first quarter.

The second-quarter increase reflected gains in consumer spending, investment and exports, which were partly offset by a decline in government spending.

Imports, which are subtracted from GDP calculations, also increased.

The slowdown from the previous quarter was driven by a downturn in government spending and weaker growth in investment and exports, while consumer spending accelerated. Imports rose at a faster pace than in the first quarter.

Real final sales to private domestic purchasers, a measure of underlying private-sector demand, increased 3.9%, accelerating from 1.7% in the first quarter.

Inflationary pressures strengthened during the quarter, with the gross domestic purchases price index rising 5.7%, up from 3.6% in the previous three-month period.

The personal consumption expenditures (PCE) price index increased 5.1%, compared with 4.6% in the first quarter.

Core PCE inflation, which excludes volatile food and energy prices, eased to 3.4% from 4.4%.

Current-dollar GDP increased at an annualized rate of 7.9% during the quarter.