U.S. Economy Grew at Sluggish 1.5% Pace in Second Quarter
Consumer spending stayed strong even as a surge in imports tied to AI investment dragged down overall growth, the Commerce Department said.
The U.S. economy expanded at a 1.5% annual pace from April through June, the Commerce Department reported Wednesday, unchanged from its earlier estimate and down from a 2.1% pace in the first quarter.
The deceleration was driven largely by imports, which are subtracted from GDP because the measure counts only domestic production. Imports rose at a 12.5% annual pace in the second quarter, partly due to a surge in shipments of computer chips and other products supporting artificial intelligence investment, slicing 1.64 percentage points off growth.
Consumer spending, which accounts for about 70% of U.S. economic activity, increased at a healthy 3.4% annual rate, up sharply from 0.5% in the first quarter.
Beyond the headline number, the economy showed resilience despite fighting with Iran and the resulting spike in energy prices. Business investment excluding housing rose at an 8.5% pace, reflecting the AI investment boom. A measure of the economy's underlying strength, which strips out volatile government spending and trade figures, grew at a strong 4.2% rate, up from 1.7% in the first quarter.
Housing investment rose for the first time since the end of 2024, even as high mortgage rates have kept the housing market depressed.
Wednesday's report was the second of three Commerce Department estimates of second-quarter growth. The final report is due September 30.
This article was produced with the assistance of artificial intelligence (AI), in accordance with our editorial policy.
