US GDP growth slowed to 1.5% in Q2 as inflation stayed elevated
Why it matters: Consumer spending held up, but 3.7% inflation and weaker government spending, investment and trade dragged on growth.
The U.S. economy grew at an annual rate of 1.5% in the second quarter, slowing from 2.1% in the first three months of the year, Commerce Department data showed Thursday. The softer reading came as consumer spending remained solid but was offset by lower government spending, weaker investment and trade swings as imports rose faster than exports. A separate Commerce report showed the Personal Consumption Expenditures Price Index rose 3.7% in June, keeping inflation well above the Federal Reserve’s 2% target. The Fed left interest rates unchanged on Wednesday. Economists cited resilient household spending but warned that higher prices, lower savings and borrowing could test consumers later this year.