US economic growth slows in second quarter but domestic demand robust

The U.S. economy grew at a 1.5% annualized rate in the second quarter, down from the previous quarter's pace, according to the Commerce Department's advance GDP estimate. The slowdown was driven by a widening trade deficit, but underlying domestic demand remained robust. Consumer spending accelerated, and business investment in equipment tied to artificial intelligence infrastructure was strong. The data suggests the economy is cooling but not contracting, with resilient consumer and business spending offsetting external headwinds. Economists had expected a slightly higher reading, and the report will factor into Federal Reserve policy deliberations.

Global Impact

The slowdown in U.S. growth, driven by trade, signals weaker external demand from major trading partners, particularly Europe and China. Domestically, the robust AI-related investment underscores a structural shift in capital spending that benefits U.S. technology firms and suppliers.