US Growth Slows Unexpectedly as Consumers Keep Spending Through Global Turmoil

The US economy delivered an unexpected slowdown in the three months to June, even as Americans continued to spend at a robust pace. New figures from the Commerce Department show growth slipping to an annual rate of 1.5%, down from 2.1% in the first quarter and well below analysts’ expectations of a steady 2%.

The world’s largest economy is still absorbing the financial shockwaves of the ongoing conflict with Iran, while US businesses navigate rising tariffs and global uncertainty. Despite those pressures, consumer spending which drives more than two‑thirds of US economic activity surged at 3.2% last quarter, rebounding sharply from just 0.5% earlier in the year.

Americans continued to open their wallets for motor vehicles, especially light‑duty trucks, as well as furniture and prescription medications, even with inflation running at 3.5% in the year to June.

The slowdown, officials say, stemmed from weaker government spending, softer business investment and a drop in exports factors that outweighed the strength of household consumption.

Americans continued to open their wallets for motor vehicles, especially light‑duty trucks, as well as furniture and prescription medications, even with inflation running at 3.5% in the year to June.

The slowdown, officials say, stemmed from weaker government spending, softer business investment and a drop in exports — factors that outweighed the strength of household consumption.

Michael Pearce, chief US economist at Oxford Economics, argued the headline figure understates the economy’s resilience. He said the underlying momentum remains solid and predicted growth would climb back above 2% later this year. Pearce also noted early signs that investment outside the booming AI sector is “reviving,” suggesting broader economic activity may strengthen in the months ahead.