The US economy grew at an annual rate of 1.5% in the second quarter, down from 2.1% in the first three months of the year. The slowdown was attributed to lower government spending, investment, and exports, which offset a boost in consumer spending that grew at a rate of 3.2%. Despite prices rising at 3.5%, analysts such as Michael Pearce and Bradley Saunders said the growth slowdown underplays the strength of the US economy, with both expecting growth to return above 2% later this year. The Personal Consumption Expenditures Price Index increased by 3.7%, a measure of inflation closely watched by the Federal Reserve.
Written by the local model on 2026-08-21,
using this article's own text rather than the other coverage of the
same event (that is the story summary below).
Story summary
The US economic growth rate slowed down unexpectedly to 1.5% in the second quarter, a decrease from 2.1% in the previous quarter, according to the Commerce Department. Analysts had forecasted a growth rate of around 2%. The slowdown was attributed to lower government spending, investment, and exports, which offset the boost in consumer spending. Consumer spending, which accounts for more than two-thirds of economic activity in the US, grew at a rate of 3.2%, driven by increased purchases of motor vehicles, furniture, and prescription drugs. Despite rising prices, Americans continued to spend on these items. The slowdown comes as the world's largest economy continues to be affected by the financial impact of the war with Iran and US businesses navigate tariffs.
Written for “US Economic Slowdown” on 2026-08-31,
grounded in this article and the 0 other(s) covering the same event.
Why this leaning score
The article's language is largely neutral, but it uses phrases like 'surprise slowdown' and 'undersells a healthy economy', which slightly suggest that the economic downturn is not as significant or worrying as it could be, implying a mild right-leaning bias in framing.
Written under an earlier scoring contract, which gave a paragraph
rather than checkable quotes. Re-analysing this article replaces it.
Leaning score -0.15 for article 164 · logged 2026-07-31
The Commerce Department said the US economy grew at an annual rate of 1.5% in the second quarter, down from 2.1% seen in the first three months of the year.
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economy → say → year
Analysts had forecast growth to remain around 2%.
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growth → forecast → ?
It comes as the world's largest economy continues to weather the financial impact of the war with Iran and US businesses navigate tariffs.
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businesses → come → tariffs
The second quarter downturn was due to lower government spending, investment and exports, which offset the boost in consumer spending.
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which → offset → spending
Consumer spending, which accounts for more than two-thirds of economic activity in the US, grew at a rate of 3.2% last quarter after slowing to 0.5% earlier this year.
Despite prices rising at 3.5% in the year to June, Americans continued to spend on motor vehicles - particularly light-duty trucks - furniture and prescription drugs, according to surveys.
uncertain
Americans → account → surveys
Michael Pearce, chief US economist at Oxford Economics, said the growth slowdown underplayed the "strength" of the US economy and suggested the pace would return to above 2% later this year.
uncertain
pace → say → %
He said there were signs that investment in industries away from the AI boom was "reviving".
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investment → say → boom
Pearce added that "surging AI-related investment is still the biggest game in town", but said the rise in imports of microchips used in its development mean its contribution to growth remained "modest".
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contribution → add → growth
The Federal Reserve decided to hold interest rates for a fifth time in a row in Wednesday, with new chairman Kevin Warsh warning there was no "magic wand" to tackle rising prices.
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Warsh → decide → prices
Prices in the US have been rising at a rate above the Fed's 2% target for more than five years, but the Commerce Department said consumer spending remained resilient.
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spending → rise → years
The Fed said US economic activity was expanding at a "solid pace despite uncertainty caused by the conflict in the Middle East".
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activity → say → East
The main economic concern from the conflict has been rising oil prices, which have surged again following recent escalations.
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which → rise → escalations
Higher oil prices typically lead to increased prices at the pumps, with average gasoline prices now back above $4 a gallon.
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prices → lead → 4
But Bradley Saunders, North America economist for Capital Economics, said while growth had slowed in recent months, the figure "seriously undersells a healthy economy".
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figure → say → economy
He said the statistics showed households had "shrugged off" the hit to budgets from higher fuel prices.
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households → say → prices
Separate data on the cost living was also released on Thursday.
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data → release → Thursday
The Personal Consumption Expenditures Price Index, a measure of inflation closely watched by the Federal Reserve, increased by 3.7%.
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Index → watch → %
