US GDP growth dips as inflation and trade deficits pressure economy

What the report says

Al Jazeera, citing a Thursday report from the US Commerce Department’s Bureau of Economic Analysis, reported that US economic growth slowed in the second quarter of 2026. Gross domestic product expanded 1.5 percent from April through June, down from 2.1 percent in the first quarter. The report attributed the weaker pace to pressure from a widening trade deficit and higher fuel costs linked to tensions between the United States and Iran.

The article said consumer spending rose 3.2 percent during the quarter, helped in part by tax refunds connected to President Donald Trump’s “One Big Beautiful Bill Act,” while petrol prices also pushed household costs higher. Al Jazeera reported that the average US petrol price was $4.09 per gallon, citing AAA, compared with $3.84 a month earlier and $2.98 at the time the US and Israel first struck Iran on February 28.

Al Jazeera also noted that investment tied to artificial intelligence and data centres has supported growth, while contributing to import demand and trade imbalances. Rachel Ziemba of the Center for a New American Security told the outlet the economy remains reliant on technology investment, with questions about whether the data-centre-driven expansion can be sustained.

Inflation remained a central concern. The Personal Consumption Expenditure Price Index, a key Federal Reserve gauge, rose 3.7 percent in June from a year earlier, easing from 4.1 percent in May. The Fed held interest rates at 3.5 to 3.75 percent on Wednesday. Al Jazeera reported that US stocks rose after the GDP and inflation data, led by gains in technology shares, while gold prices also advanced.