The US economy posted annualized growth of 1.5% in the second quarter of 2026, below the 2% consensus estimate and down from 2.1% in the first quarter, according to the Bureau of Economic Analysis.

The slowdown was driven by weaker government spending, softer export growth and slower business investment, while stronger household spending provided some support.

The GDP report comes as the continuing Middle East war under President Donald Trump weighs on global growth and energy markets. Although disruptions to regional energy infrastructure have driven fuel prices higher, US consumers continued to spend, with personal consumption expenditures rising 2.1% during the quarter compared with 0.4% in the previous period.

The report also indicated that the rapid pace of AI-related capital spending eased, with private domestic investment growth slowing from 1.4% to 0.5%. Export growth softened as weaker travel spending offset higher oil exports, and government expenditure declined.

The data followed the Federal Reserve’s decision to leave interest rates unchanged, a move that raised investor concerns over the central bank’s ability to manage inflation pressures linked to the ongoing war.