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The economy slowed a bit — but Americans continued to spend
The US economy grew at a slower annualised rate of 1.5% in the second quarter of 2026, but consumer spending remained strong. The figures matter because household spending is the main driver of the economy, while persistent inflation continues to complicate the outlook for families and policymakers.
Growth slowed from 2.1% in the first quarter and came in below economists’ expectations, partly as imports weighed on the GDP calculation. Consumer spending rose at a 3.2% annualised rate, up from 0.5% in the previous quarter, while an underlying measure excluding volatile trade and government spending grew by 3.9%; inflation eased in June but remained above the Federal Reserve’s 2% target.
In short
- US economic growth slowed to 1.5% in the second quarter.
- Consumer spending strengthened despite the slower headline GDP figure.
- Inflation eased but remained above the Federal Reserve’s target.
Explained simply
The size of a country's economy is measured by how much goods and services it produces each year, called economic growth. Growth matters because it typically means more jobs, higher wages and greater prosperity for ordinary people.
Consumer spending is the money households spend on everyday essentials like food, clothes and bills. In the US, this spending drives a large portion of the overall economy. Policymakers and investors closely watch consumer spending patterns as a key indicator of whether families feel financially confident.
The Federal Reserve, America's central bank, sets interest rates and tries to keep inflation around 2% a year. Higher inflation means prices rise faster than wages, so it erodes people's purchasing power and is a concern for both families and policymakers.
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