A shopper uses a smartphone to pay for produce during a farmers market at the Ferry Building in San Francisco on July 16, 2026.
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Washington —
The world’s largest economy unexpectedly lost steam heading into the summer as the destabilizing conflict in the Middle East upended energy markets
US gross domestic product, which captures all the goods and services produced in the economy, expanded at an annualized rate of 1.5% from April through June. That was well below the 2.1% rate in the prior quarter, and lower than the 2.1% economists predicted in a poll by data firm FactSet
GDP is adjusted for seasonal swings and inflation
Businesses investing heavily in AI and consumers flush with bigger tax refunds boosted growth at the start of the year. But those factors appear to have fizzled out in the second quarter, according to the latest GDP report. The Iran war, which intensified this month, has not only jacked up inflation, it’s also made it difficult for consumers, businesses and policymakers to plan ahead
Higher inflation has also taken a bite out of people’s paychecks, according to government data, though inflation-adjusted earning returned to positive territory when price increases slowed sharply in June
This story is developing and will be updated
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