US GDP growth fell to 1.5 percent in the second quarter of 2026, driven by a widening trade deficit and inflationary pressures from volatile petrol prices.
Key facts
- •US GDP growth dropped from 2.1 percent in the first quarter to 1.5 percent in the second quarter of 2026.
- •The trade deficit in May widened to $77.6 billion, a 42 percent increase over the previous month.
- •Petrol prices hit a high of $4.48 per gallon in May before falling to $3.96 by late June.
- •Consumer confidence has fallen for three consecutive months as of July.
- •Business investment in equipment rose by more than 15 percent, largely driven by the artificial intelligence sector.
The United States economy experienced a slowdown in the second quarter of 2026, with GDP growth reaching 1.5 percent. This figure represents a decline from the 2.1 percent growth recorded in the first quarter, according to data released by the Bureau of Economic Analysis on Thursday.
By the numbers
Trade Deficit and Investment Trends
A widening trade deficit has acted as a drag on economic growth, as imports of goods like semiconductors and industrial equipment rose to support an artificial intelligence investment boom. While business investment in equipment grew by over 15 percent, exports failed to keep pace. In May, the trade deficit reached $77.6 billion, a 42 percent increase from the previous month.
Inflation and Consumer Spending
Fluctuating petrol prices significantly influenced inflation throughout the quarter, peaking at $4.48 per gallon in May before retreating to $3.96 by the end of June. Despite these pressures, discretionary spending surged in June, particularly among high-income earners. However, consumer confidence has declined for three consecutive months as of July, with expectations for little improvement for the remainder of the year.
Economic Uncertainty
Experts point to pervasive uncertainty regarding trade policies and potential layoffs as factors dampening business investment and hiring. President Donald Trump’s tariff policies have led other nations to seek trade alternatives, while domestic businesses remain cautious about making long-term commitments in an unpredictable economic environment.
Timeline
- March to AprilPetrol prices increased by 5.4 percent.
- MayPetrol prices reached $4.48 per gallon and the trade deficit grew to $77.6 billion.
- JunePetrol prices fell to $3.96 per gallon and discretionary spending surged.
- JulyConsumer confidence fell for the third consecutive month.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Al Jazeera.
