Economy expanded at 1.5% rate in second quarter of 2026

The economy grew at an inflation-adjusted 1.5% annual rate in the second quarter, the Bureau of Labor Statistics reported in a preliminary estimate of gross domestic product.The reading, which is the first of three estimates for second-quarter GDP, indicates that economic growth slowed from the first quarter of this year, which clocked a 2.1% GDP growth rate, adjusted for seasonal variations. But it is an increase from the fourth quarter of last year, which saw anemic 0.5% growth. Commerce has been driven in part by sustained strong consumer spending. It has also been underpinned by the investment being poured into artificial intelligence, which has led to a boom in data center construction.The positive GDP report, released on Thursday, is evidence that the Trump administration will point to as proof that his economic agenda is bringing about results.Still, the latest numbers come as President Donald Trump has struggled with poor economic approval ratings. Trump entered office promising to lower prices after years of high inflation under former President Joe Biden, but the price growth of many goods and services has remained stubbornly high.Other economic variables, such as GDP and the unemployment rate, have been more favorable to the president and give Republicans data to cite to voters in the midterm elections.Steady GDP growth also offers the Federal Reserve some leeway as it attempts to drive down inflation.The Fed’s goal is 2% inflation, and it has been years since that target has been reached.The consumer price index, the most closely watched inflation gauge, was running at 3.5% for the 12 months ending in June. That was a decrease from a recent high of 4.2% in May, but it is still much too high.Like GDP, the labor market has remained steady. The economy has added jobs at a pace strong enough to keep unemployment trending down. The economy added 57,000 jobs last month.The unemployment rate fell one-tenth of a percentage point to 4.2%, the Bureau of Labor Statistics reported this month. That is low by historical standards.FED HOLDS RATES STEADY, WITH THREE OFFICIALS DISSENTINGOn Wednesday, the Fed voted once again to hold interest rates steady as the central bank continues to monitor the situation with inflation and the overall economy.Still, some on the Fed board think rates should be increased to further put pressure on inflation. Three of the Fed board members voted to raise interest rates at the meeting this week.