News Brief · United States · Published 28 Aug 2026, 11:42
U.S. GDP growth slowed to 1.5% annualised in Q2 2026
U.S. real GDP grew at a 1.5% annualised rate in the second quarter of 2026, down from 2.1% in Q1, as faster consumer spending was offset by weaker government spending, investment and exports.
.jpg%3Fwidth%3D1600&w=3840&q=75)
The U.S. Bureau of Economic Analysis kept its second estimate of Q2 real GDP growth at an annualised 1.5%. Consumer spending, exports and investment added to output, while government spending fell and imports—which are subtracted when GDP is calculated—rose. Underlying private demand was stronger: real final sales to private domestic purchasers increased 4.2%. Price pressure also remained elevated, with the PCE price index rising at a 5.3% annualised rate and the core measure rising 3.6%.
What happened
Real GDP increased at a 1.5% annualised rate in Q2 2026, slower than Q1's 2.1%. The second estimate was unchanged from the advance estimate: stronger consumer spending was offset by a higher estimate for imports. Real gross domestic income rose 2.2%, while corporate profits from current production increased by $400.9 billion.
Why it matters
The slowdown points to softer headline growth, but the 4.2% rise in private domestic final sales shows that household spending and business investment remained firmer than GDP alone suggests. Strong quarterly price growth also complicates the Federal Reserve's inflation-growth trade-off.
Economic context
For A-Level Economics, this release is useful evidence for aggregate demand and economic growth. Link consumption, investment, government spending and net exports to AD; remember that BEA reports quarterly growth at an annualised rate, and that higher imports reduce measured GDP even when they reflect strong domestic demand.
Key data
- Real GDI
- 2.2%
- PCE price index
- 5.3%
- Core PCE price index
- 3.6%
- Real GDP, Q1 (annualised)
- 2.1%
- Real GDP, Q2 (annualised)
- 1.5%
- Private domestic final sales
- 4.2%
Related coverage
Euro-area households lowered near-term inflation expectations
The ECB survey shows how consumers see future prices, incomes and spending, expectations that can influence wage demands and present behaviour.
Read brief →UK public-finance release puts borrowing and debt back in focus
The July fiscal snapshot shows how tax receipts, public spending and debt interest shape the government's room for economic policy.
Read brief →UK retail sales rose across the three months to July
The latest official retail release offers a timely view of household demand as real incomes and borrowing costs pull in opposite directions.
Read brief →Fed minutes explain the debate behind July's rate decision
The detailed record shows how US policymakers assessed inflation, employment and the risks around keeping monetary policy restrictive.
Read brief →UK July inflation release updates the cost-of-living picture
The latest consumer-price data show where household costs are changing and give the Bank of England new evidence on inflation persistence.
Read brief →UK factory-gate prices reveal pressure moving through supply chains
July producer-price data show how manufacturers' input and output costs may feed into consumer inflation, margins and business decisions.
Read brief →