WASHINGTON (AP) — The U.S. economy grew at a slower pace of 1.5% from April to June. However, personal consumption remained strong.
The Commerce Department reported Wednesday that growth in gross domestic product, the country’s output of goods and services, slowed from a 2.1% pace from January to March. The growth rate for the second quarter remained unchanged from the ministry’s initial forecast.
Still, personal consumption, which accounts for about 70% of economic activity in the United States, steadily increased at an annual rate of 3.4%, up from 0.5% in the January-March period.
The reason for the sluggish growth was imports. These are subtracted from the growth rate since GDP is supposed to only count US domestic production. Imports rose at an annual rate of 12.5% from April to June, downing second-quarter growth by 1.64 percentage points, due in part to a surge in shipments of computer chips and other products that support investments in artificial intelligence.
Beyond the headline numbers, the U.S. economy has proven surprisingly resilient in the face of the war with Iran and the resulting spike in energy prices. Reflecting the AI investment boom, business investment excluding housing increased at an 8.5% pace in the second quarter. In addition, an indicator of the underlying strength of the economy (subtracting unstable government spending and trade statistics) grew at a high rate of 4.2%, up from 1.7% in the first quarter.
Housing investment increased, turning positive for the first time since the end of 2024. The housing market is depressed due to high mortgage interest rates.
Wednesday’s report was the second of three Commerce Department reviews of second-quarter GDP growth. The third and final report is scheduled to be submitted on September 30th.
