US GDP Growth Slows in Q2

The US economy expanded an annualized 1.5% in Q2 2026, below 2.1% in Q1 and forecasts of 2.1% the advance estimate from the BEA showed. Nonresidential fixed investment slowed (8.4% vs 10.6% in Q1). Investment in structures contracted for a tenth consecutive quarter (-5% vs -4.7%) and growth in intellectual property products also eased (8.8% vs 13.8%) while equipment investment remained robust (15.2% vs 15.8%). Meanwhile, residential investment rose 1.5%, marking its first increase in six quarters. Net trade exerted a larger drag (-1.01 pp vs -0.37 pp) due to a slowdown in export growth (4.5% vs 10.9%), while import growth remained strong (11.5% vs 11.8%). Government spending fell 0.8% (vs +4.4%) following sales of crude oil from the Strategic Petroleum Reserve. Private inventories subtracted 0.67 pp from GDP growth. In contrast, consumer spending accelerated (3.2% vs 0.5%), led by prescription drugs, new light trucks, furniture, food services and accommodation.

The US economy likely expanded at an annualized rate of 2.1% in Q2, matching the pace recorded in Q1 and signalling continued resilience despite the conflict in the Middle East, elevated gasoline prices, and the impact of tariffs. Consumer spending is expected to have remained robust, accelerating from the previous quarter as larger tax refunds and the FIFA World Cup provided additional support. Business spending on equipment likely posted another quarter of double-digit growth, driven by continued investment in AI-related technologies. However, investment in structures is expected to have remained weak, contracting for a tenth consecutive quarter, while residential investment likely declined for a sixth straight quarter. Meanwhile, net trade is expected to have weighed on overall growth, possibly subtracting more than one percentage point from GDP.

The US economy expanded an annualized 2.1% in Q1 2026, revised up from 1.6% in the second estimate, and above 0.5% in Q4 2025. The contribution from net trade was less negative than initially estimated (-0.37 pp vs -1.25 pp), as imports growth was revised lower (11.8% vs 21.1%) and exports rose 10.9% (vs 13.1%). In addition, gross private domestic investment increased 7.9%, higher than 7% in the previous estimate. Business investment in equipment surged 15.8% (vs 17.2%), and spending on intellectual property products went up 13.8% (vs 11.6%). In contrast, investment in structures fell 4.7% (vs -5.4%), and residential declined 7.8% (vs -6.2%). Meanwhile, consumer spending rose 0.5%, well below 1.4% previously reported, led by a big slowdown in services demand (0.5% vs 1.8%) while goods remained subdued (0.5% vs 0.4%). Government spending was up 4.4%, in line with the previous estimate, recovering from a 5.6% contraction, as activity resumed following the end of the government shutdown.