US Economy Grows Just 1.5% in Q2 as Inflation Holds at 3.3%
Second-quarter GDP fell short of forecasts while core inflation remained sticky at 3.3%, signaling a cautious economic outlook.
The U.S. economy expanded at a 1.5% annualized rate in the second quarter, missing analyst expectations as a pullback in federal government spending and a drawdown in business inventories weighed on overall output, according to fresh data reported by CNBC.
The shortfall was not driven by weakness in consumer demand or the broader private sector, but rather by government-side contraction — a distinction that matters for how policymakers and investors interpret the slowdown. Inventory declines, which can reflect businesses working through existing stock rather than ordering new goods, also contributed to the drag.
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On the inflation front, core prices — which strip out volatile food and energy costs — rose 3.3% in June. That figure remains well above the Federal Reserve's 2% target, keeping pressure on central bank officials to hold interest rates at elevated levels or consider further tightening if price pressures prove persistent.
Together, the two data points paint a picture of an economy losing some momentum while inflation remains stubborn, a combination that complicates the Fed's path toward any potential rate cuts. Markets and economists will be watching upcoming employment and consumer spending data closely for clearer signals about whether the slowdown deepens or stabilizes in the third quarter.
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