US economy grew 1.5% in second quarter, inflation remains high

The U.S. economy expanded at a sluggish 1.5% pace from April to June, a slowdown from the first quarter's 2.1% growth and below economists' forecasts. Rising imports acted as a drag on the overall expansion, although consumer spending showed an increase. The Federal Reserve's favored inflation gauge, the personal consumption expenditures (PCE) price index, rose 3.7% in June compared to the previous year. This marks a slight deceleration from May's 4.1% annual increase, but it remains well above the central bank's 2% target. Core inflation, excluding volatile food and energy prices, also saw a minimal decrease, rising 3.3% annually, nearly unchanged from May's 3.4%. The Federal Reserve maintained its benchmark interest rate at its current level for the fifth consecutive meeting. However, three regional directors dissented, advocating for a rate hike to combat persistent inflation. High prices have become a significant concern for Americans, especially with midterm elections approaching in November, which will determine control of Congress. The U.S. economy has displayed remarkable resilience, weathering geopolitical tensions with Iran and subsequent energy price hikes. The labor market has shown strength this year, with employers adding an average of 92,000 jobs per month, a stark contrast to the meager gains in 2025. This job growth has provided consumers with the means to spend. Despite the positive employment figures and economic resilience, persistent inflation continues to be a major frustration for Americans. The high cost of living remains a significant issue, overshadowing the central bank's efforts to stabilize prices. This report on second-quarter GDP growth is the first of three estimates from the Commerce Department.