The U.S. economy grew at an annualized rate of 2.2% in the second quarter of 2026, exceeding economist expectations of 1.5%. Growth was driven by increased consumer spending, investment in data centers and construction, and exports, with real estate, information, and durable goods manufacturing leading sector contributions.
The Federal Reserve's preferred inflation measure, the PCE index, rose 3.4% in August, below expectations of 3.7%, suggesting less urgency for an interest rate hike in October. Core PCE also beat expectations at 3%, down from 3.3% in July, partly due to methodology changes by the Bureau of Economic Analysis. New York Fed President John Williams indicated no need for urgency on rate hikes, with markets now pricing in only a 35% chance of an October increase.
The U.S. economy grew at an annualized rate of 2.2% in the second quarter, exceeding economist expectations of 1.5% growth, according to the Commerce Department's final GDP reading released by the Bureau of Economic Analysis.
The Federal Reserve's preferred inflation gauge, the PCE price index, rose 3.4% annually in August, below economist expectations of 3.7%, while core PCE climbed 3% versus the forecast of 3.3%. The smaller-than-expected increases were partly attributed to methodology adjustments by the Bureau of Economic Analysis, and market traders responded by reducing expectations for an October Fed rate hike.