US economy expands at sluggish 1.5% pace in second quarter, but consumer spending stayed strong

By PAUL WISEMAN, AP Economics Writer

WASHINGTON (AP) — The U.S. economy grew at a sluggish 1.5% pace from April through June. But consumer spending stayed strong.

The Commerce Department reported Wednesday that growth in gross domestic product — the nation’s output of a goods and services — decelerated from a 2.1% pace from January through March. The second-quarter growth number was unchanged from the department’s first estimate.

Still, consumer spending — which accounts for about 70% of U.S. economic activity — increased at a healthy 3.4% annual clip, up from 0.5% in the January-March period.

The reason for the lackluster growth number was imports. They are subtracted from growth because GDP is only supposed to count domestic U.S. production. Imports rose at a 12.5% annual pace from April through June, partly due to a surge in shipments of computer chips and other products that support artificial intelligence investment, and sliced 1.64 percentage points off second-quarter growth.

Beyond the headline figures, the U.S. economy has proven surprisingly resilient in the face of fighting with Iran and the spike in energy prices it caused. Business investment, excluding housing, rose at a 8.5% pace in the second quarter, reflecting the AI investment boom. And a measure of the economy’s underlying strength — which strips out volatile government spending and trade numbers — grew at a strong 4.2% rate, up from 1.7% in the first quarter.

Investment in housing rose, ticking up for the first time since the end of 2024. The housing market has been depressed by high mortgage rates,.

Wednesday’s report was the second of three Commerce Department looks at second-quarter GDP growth. The third and final report is due Sept. 30.