The U.S. Real Gross Domestic Product continues to grow, and the economy to expand, despite challenges such as the conflict in the Middle East. This quarter, GDP increased by 1.5%, which, although lower than last quarter’s growth by 0.6%, still shows an increase in consumer spending, investment, and exports.
Over the four major areas that GDP is measured, personal consumption expenditures increased the most, up to 2.12%, from 0.37% in the first quarter. Private domestic investment also increased by 0.53%. Increases in imports meant that, despite an increase in exports, net exports of goods and services decreased. Finally, government spending also decreased by 0.14%.
Increases in personal consumption occurred for both goods and services. Americans continued to spend on items like prescription drugs, motor vehicles, and furnishings, and on services such as food and accommodation, financial services, and insurance. Recovery in personal spending is likely helped by larger tax returns for households from the Working Families Tax Cuts (i.e., the One Big Beautiful Bill Act) and the FIFA World Cup, which increased tourism and hospitality spending. Increased personal spending also indicates that, despite energy challenges from the war with Iran, consumers are resilient and the economy is in strong shape.
Within private investment, increases were led by industrial equipment, transportation equipment, information processing equipment, and intellectual property products such as software. This continues positive trends from the first quarter of 2026, as businesses show confidence in the need for greater production and are purchasing more equipment. Investment in information processing equipment also likely indicates continued development and backing of AI and data centers, an investment in innovation.
GDP growth is paired with an 0.2% growth in disposable income in June, and a personal savings rate of 2.7%. Although the disposable income rate is slightly lower than usual, it is the same as June 2025, when disposable income also increased by 0.2%. Personal savings are also down as consumers spend more.
Although the amount of goods exported increased, primarily led by petroleum exports, exported services decreased. Imported goods, particularly telecommunications equipment such as semiconductors, increased. These imports signal, as with private investment, strong AI backing and development.
The Federal Reserve also voted to maintain interest rates in the 3.50%-3.75% range despite discussion of raising them, showing confidence in the stability of the US economy.
GDP growth and increased consumer spending are positive signs for the economy, which grows despite challenges from the conflict in Iran.