The U.S. economy expanded at a 1.5% annual pace from April through June, a slowdown from the 2.1% growth recorded in the first quarter, according to the latest estimate from the Commerce Department.
Despite the deceleration in gross domestic product, consumer spending, which constitutes about 70% of U.S. economic activity, increased at a healthy 3.4% annual rate. This marks a significant rise from the 0.5% increase observed in the January-March period.
The primary factor dampening the headline growth figure was a surge in imports. These are subtracted from GDP calculations as they represent foreign production. Imports rose at a 12.5% annual pace during the second quarter, partly driven by increased shipments of computer chips and other components supporting artificial intelligence investments. This surge in imports reduced second-quarter growth by an estimated 1.64 percentage points.
Economic Resilience
Beyond the headline numbers, the U.S. economy has shown notable resilience. Business investment, excluding the housing sector, grew at a robust 8.5% pace in the second quarter, a trend largely attributed to the ongoing boom in artificial intelligence investment. A key measure of the economy's underlying strength, which excludes volatile government spending and trade figures, expanded at a strong 4.2% rate, up from 1.7% in the first quarter.
Investment in the housing sector also saw an increase, marking its first rise since late 2024. The housing market has been previously impacted by high mortgage rates.
This report represents the second of three Commerce Department estimates for second-quarter GDP growth. The final estimate is scheduled for release on September 30.