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US economy grows at 1.5% rate in second quarter amid inflation and geopolitical tensions

Published July 30, 2026 at 8:04 PM UTC

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The U.S. economy expanded at an annualized rate of 1.5% in the second quarter of 2026, slightly below economists' expectations of 1.8%. This growth occurred amid geopolitical tensions in the Middle East and a surge in energy prices. Despite these challenges, consumer spending and business investment, particularly in artificial intelligence (AI), remained key drivers of economic activity. Consumer spending, which accounts for roughly two-thirds of U.S. economic activity, rose at a 3.2% annualized rate, up from 0.5% in the previous quarter. Federal Reserve Chairman Kevin Warsh highlighted the economy's resilience, noting strong business investment in AI-driven infrastructure. Additionally, inflation, measured by the Federal Reserve's preferred gauge, eased in June as energy prices stabilized temporarily during a pause in the Middle East conflict.