Gross Domestic Product

GDP growth slowed while inflation stayed elevated. The U.S. economy expanded at an annualized rate of 1.5 percent in the second quarter of 2026, down from 2.1 percent in the first quarter. The softer headline reflected weaker government spending, a larger drag from imports, and an inventory pullback, rather than deteriorating consumer spending and business investment. Increased imports, driven in part by continued demand for AIrelated equipment, also suggest that recent tariff actions have yet to materially narrow the trade deficit. Meanwhile, inflation persisted. The core personal consumption expenditures price index rose at a 3.4 percent annualized rate in the second quarter, down from 4.4 percent in the first quarter but still above the Federal Reserve’s 2 percent inflation target. With the Fed holding rates in July, elevated inflation may delay rate relief and extend pressure on CRE transactions, although activity has improved this year.