United States GDP

Economic growth decelerates in the second quarter of 2026

GDP reading: The United States' GDP expanded 1.5% on a seasonally adjusted quarter-on-quarter annualized (SAAR) basis in Q2, following 2.1% growth in the previous quarter. Private spending was the key contributor to growth, buoyed by higher-than-normal tax refunds and a solid labor market. Tech investment was another relevant driver, while net exports, government spending and a private inventory drawdown were drags.

Drivers: Relative to the previous period's data, readings in Q2 softened for government consumption (-0.8% on a seasonally adjusted quarter-on-quarter annualized (SAAR) basis vs +4.4% in Q1), exports of goods and services (+4.5% vs +10.9% in Q1) and imports of goods and services (+11.5% vs +11.8% in Q1). In contrast, readings strengthened for private consumption (+3.2% vs +0.5% in Q1) and fixed investment (+7.0% vs +6.5% in Q1).

Panelist insight: Digging deeper into the latest data, ING’s James Knightley said: “Investment continues to grow nicely, with tech investment still leading the way, although non-tech business investment also showed renewed vigour. Even residential investment made a positive contribution after a torrid run. It was a run-down in inventories (subtracting 0.7ppt from the headline GDP growth rate) and a big jump in imports that proved big drags on growth – both tied to frenzied spending in the tech sector. Government spending fell by 0.8%, which is likely a legacy of the huge swings seen over the previous two quarters linked to the prolonged government shutdown late last year.” On the outlook, TD Economics’ Andrew Foran said: “This was a holistically solid reading for the economy, which when combined with moderate stabilization in the labor market provides a steady hand-off to the second half of the year. While rising interest rates, volatile energy prices, and new tariff policies could act as near-term headwinds, we expect the economy to be able to sustain growth of roughly 2% through the second half of the year on the back of continued investments in AI and moderate growth in consumer spending.”

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