U.S. Economy Grew at a 1.5% Annual Rate in the Second Quarter as Government Spending Fell
The U.S. economy grew at a 1.5% annual rate in the second quarter of 2026, slowing from a 2.1% rate in the first quarter, according to an advance estimate released July 30 by the Bureau of Economic Analysis.
The report showed that economic activity continued to expand, but at a slower pace than earlier in the year. Consumer spending, investment and exports all increased during the quarter. Those gains were partly offset by a decrease in government spending.
Imports also increased. Because imports are subtracted in the calculation of gross domestic product, their rise weighed on the reported second-quarter growth rate.
Consumer demand remained positive
The GDP release was accompanied by June data on personal income and outlays, providing a separate monthly view of household finances and spending.
Personal income increased by $54.9 billion in June, a 0.2% increase from the previous month. Disposable personal income, the amount remaining after personal current taxes, rose by $48.3 billion, also a 0.2% monthly gain.
Personal consumption expenditures increased by $65.2 billion, or 0.3%, during the month. The figures indicate that income and consumer spending both moved higher in June even as the broader quarterly growth rate moderated.
That combination is one of the central signals in the release: household demand continued to rise, while the overall pace of economic expansion was slower in the second quarter than in the first.
How the second-quarter result was shaped
The increase in consumer spending, investment and exports helped lift real GDP during the April-through-June quarter. Government spending moved in the opposite direction and reduced the overall result.
Higher imports also affected the calculation. Imports can reflect demand for goods and services, but they are deducted when GDP is calculated because GDP measures domestic production. As a result, an increase in imports lowers the contribution to the reported GDP total, all else being equal.
The data therefore show several forces operating at once: households spent more, investment increased and exports rose, while government spending declined and imports grew. The release does not assign the quarter’s slower growth to one single factor.
What the annual rate means
The 1.5% figure is an annualized quarterly rate. It expresses the pace of the second-quarter change as if that pace continued for a full year; it does not mean the economy expanded by 1.5% over each of the three months in the quarter.
The comparison with the first quarter is also based on annualized real GDP rates: 1.5% for the second quarter versus 2.1% for the first. The figures provide a measure of the direction and pace of national economic activity, while the June income and spending data offer a more recent monthly snapshot of household conditions.
Next update is scheduled for Aug. 26
The July 30 figure is an advance estimate rather than the final second-quarter GDP result. The Bureau of Economic Analysis may revise the number in later releases as additional information becomes available.
BEA’s release schedule lists Aug. 26, 2026, for the second estimate of second-quarter GDP. That release is also scheduled to include July personal income and outlays data.
Until that update, the 1.5% annual rate remains the initial official reading for second-quarter real GDP. The next release will show whether the estimate changes and will provide a new monthly look at income and consumer spending.
Sources
- GDP (Advance Estimate), 2nd Quarter 2026 and Personal Income and Outlays, June 2026, U.S. Bureau of Economic Analysis
- BEA Release Schedule, U.S. Bureau of Economic Analysis
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