US GDP Growth Slows to 1.5% as Inflation, Trade Gap Widen
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- US GDP grew 1.5% in Q2 2026, down from 2.1% in Q1, according to the Commerce Department's Bureau of Economic Analysis report released Thursday.
- Consumer spending jumped 3.2% for the quarter, fueled by tax refunds from Trump's 'One Big Beautiful Bill Act' and rising petrol prices (AAA average $4.09/gallon, up from $2.98 when the US and Israel first struck Iran on Feb 28).
- AI investment is cited as a key growth driver despite being heavily import-reliant and widening trade deficits, with Nvidia reportedly in talks for a $250m investment in OpenAI; analyst Rachel Ziemba warned of circular-financing concerns.
- PCE inflation rose 3.7% annually in June, down from May's 4.1% surge, with the Fed noting inflation remains 'elevated.'
- The Federal Reserve held interest rates at 3.5–3.75% on Wednesday, citing persistent inflation.
- US markets rallied midday on the data: Nasdaq +2.6%, S&P 500 +1.2%, Dow +0.5%; gold extended gains 1.9% to $4,108.30/oz.
Why it matters: The report exposes a lopsided economy: AI-driven investment and tax-refund-fueled consumer spending mask weakening fundamentals, with PCE inflation still at 3.7% — above the Fed's 2% target — and a widening trade deficit signaling the growth engine is narrow and potentially circular.
