The U.S. economy continued to grow in the spring, but at a subdued pace that underscored how uneven the recovery remains. On August 26, the Bureau of Economic Analysis said real gross domestic product increased at a 1.5% annual rate in the second quarter of 2026, while price measures tied to consumer spending and overall domestic production stayed high. That mix of slower output growth and persistent inflation remains central to the national economic picture.
GDP growth stayed positive, but the pace remained soft
The Bureau of Economic Analysis said in its second estimate released August 26 that real GDP increased at an annual rate of 1.5% in the April-through-June quarter. That matched the government’s earlier estimate and marked a slower pace than the 2.1% growth rate recorded in the first quarter, according to BEA.
BEA said the second-quarter increase reflected gains in consumer spending, exports, private inventory investment, nonresidential fixed investment, and federal government spending. Those increases were partly offset by declines in residential fixed investment and state and local government spending, according to the report.
The agency also reported that current-dollar GDP increased 7.2% in the second quarter, compared with a 5.0% increase in the first quarter. Corporate profits from current production decreased $26.5 billion in the second quarter, a reversal from a $204.7 billion increase in the prior quarter, according to BEA.
Associated Press reported that the second-quarter result pointed to a sluggish expansion rather than an outright contraction. The report also noted that the 1.5% pace came as inflation remained a major issue for households and policymakers heading into the late summer.
Inflation measures embedded in the GDP report remained elevated in the second quarter. BEA said the personal consumption expenditures price index increased 5.3%, revised up 0.2 percentage point from the advance estimate, while the core PCE price index excluding food and energy rose 3.6%, also revised up 0.2 point.
A broader inflation measure tied to domestic production was also high. BEA reported that the gross domestic purchases price index increased 5.7% in the second quarter, and the GDP price index rose 6.4%, indicating broad price pressures across the economy.
The inflation backdrop has carried into more recent data as well. Associated Press reported this week that a key inflation gauge remained elevated in July, with higher costs for services including health care, utilities, and financial services continuing to weigh on consumers.
What remains unclear is how quickly those price pressures will ease in the second half of the year. Federal Reserve officials have continued to focus on inflation readings, and recent AP reporting said policymakers are still confronting price growth that remains above the central bank’s target.
The second-quarter data suggests the economy is still expanding, but not with enough momentum to fully offset the strain of higher prices. BEA’s breakdown showed that consumer spending helped support growth, but weaker residential investment signaled continued pressure in interest-rate-sensitive parts of the economy.
AP reported that some of the quarter’s business spending was tied to imports, limiting the boost to domestic output. The same coverage said geopolitical pressures, elevated energy costs, and trade tensions have contributed to a climate in which inflation has been difficult to bring down even as growth slows.
For households, the practical effect is straightforward: the economy is still growing, but many essentials and services remain expensive. For businesses, the data points to a landscape where demand is still present but costs, borrowing conditions, and profit pressure remain key constraints.
The next major update on third-quarter growth will come later this fall, while inflation reports in the coming weeks will help shape expectations for the Federal Reserve. For now, the official second-quarter figures show an economy that is still moving forward, but at a restrained pace and with price pressures still firmly in place.