U.S. GDP Growth Slows to 1.5% in Q2 2026 Amid Iran Conflict
The U.S. economy grew at an annualized rate of 1.5% in the second quarter of 2026, according to data from the Bureau of Economic Analysis (BEA), down from a first-quarter growth rate of 2.1%. The slowdown was attributed largely to disruptions caused by the ongoing conflict with Iran, which affected shipping through the Strait of Hormuz and led to higher global energy prices. U.S. gasoline prices rose above $4 per gallon during the quarter compared to an earlier average of $2.98. Despite these challenges, household spending accelerated sharply in Q2 after a weak first-quarter performance, while business investment surged at 8.4%, driven by AI-related expenditures. Real final sales to private domestic purchasers also rose significantly. However, growth was dampened by a sharp increase in imports and reduced government spending due to crude oil releases from the Strategic Petroleum Reserve. Inflation remained above target levels for over five years, with the PCE price index rising 3.7% year-over-year in June and core PCE up 3.3%. The Federal Reserve held interest rates steady but faced internal dissent on whether a rate hike was necessary.
Topics: AI investment economic growth energy prices Iran conflict U.S. GDP