US Economic Growth Slows in Q2

Government spending, investment and exports weaken as economic growth slows.

The United States economy expanded at a slower pace in the second quarter of the year, with growth falling short of expectations amid weaker government spending, slower investment and the economic impact of the Iran conflict.

According to the US Commerce Department's Bureau of Economic Analysis (BEA), the country's gross domestic product (GDP) grew at an annualised rate of 1.5% during the second quarter, below analysts' expectations of around 2%. The economy had expanded by 2.1% in the first quarter.

The BEA said the slowdown was mainly driven by reduced government spending and weaker investment and export activity. These factors were partially offset by stronger consumer spending.

The agency also noted that higher imports contributed to the weaker GDP reading, as imports are deducted when calculating economic growth.

Despite maintaining positive growth, the US economy has faced mounting pressure from ongoing geopolitical tensions, including the Iran conflict, which has pushed up global energy and fertiliser prices. Businesses and consumers have also continued to deal with the effects of earlier price increases.

Investment linked to artificial intelligence has remained a key source of economic support, helping sustain business activity even as consumer spending has been constrained by elevated living costs.

The latest figures come as economic conditions remain a major political issue ahead of the November midterm elections, when Democrats will seek to regain control of Congress from President Donald Trump's Republican Party.

Responding to the report, White House spokesperson Kush Desai said the latest data showed that "the core drivers of economic growth continue to surge," expressing confidence in the strength of the US economy.