Imports Drag Q2 Economic Growth to 1.5%

The U.S. economy grew at a sluggish 1.5% annual pace from April through June, the Commerce Department reported Wednesday, unchanged from its first estimate of second-quarter growth.

Growth decelerated from the 2.1% pace recorded from January through March.

The drag came from imports, not from American shoppers: consumer spending, about 70% of U.S. economic activity, rose at a healthy 3.4% annual clip, up from 0.5% in the first quarter.

Why Growth Looked Weak

Imports are subtracted from GDP because the measure is meant to count only domestic production. They rose at a 12.5% annual pace in the second quarter — driven in part by a surge in shipments of computer chips and other products tied to artificial intelligence investment — and sliced 1.64 percentage points off the growth number.

Underneath the headline figure, the Associated Press reports the economy has been surprisingly resilient despite the fighting with Iran and the spike in energy prices it caused. Business investment excluding housing rose at an 8.5% pace, reflecting the AI investment boom. A measure of the economy's underlying strength, which strips out volatile government spending and trade, grew at a 4.2% rate, up from 1.7% in the first quarter.

Housing investment ticked up for the first time since the end of 2024, after a stretch in which high mortgage rates depressed the market.