Oil prices turn lower as Bessent says U.S. may have Iran deal "today or tomorrow"
Investing.com - U.S. economic growth eased in the second quarter, dragged down in part by a surge in imports needed to underpin rapid artificial intelligence infrastructure development, as well as a decrease in government spending.
An increased amount of capital goods, particularly telecommunications equipment and semiconductors, came into the country, reflecting a rush of expenditures on the products powering AI systems. Imports function as a subtraction in the calculation of gross domestic product, a key measure of overall economic activity.
At the same time, spending by the federal government decreased, primarily due to a jump in sales of crude oil from the Strategic Petroleum Reserve as the U.S. pushed to fill supply gaps opened by the Iran war’s disruptions to global oil flows. Such sales are deducted from government consumption expenditures.
However, despite uncertainty around fluctuations in gasoline pump prices linked to the Middle East conflict, consumer spending -- the principal driver of the American economy -- remained strong, rising to 3.2% from 0.5% in the first quarter.
Overall, GDP in the quarter ended in June expanded by 1.5%, versus expectations that it would match the January-March period’s reading of 2.1%, according to preliminary data from the Bureau of Economic Analysis on Thursday.
Meanwhile, the core personal consumption expenditures price index for the quarter stood at 3.4%, down from 4.4% in the January-March period and slower than forecasts of 3.5%. The underlying PCE reading excluding food and energy is often closely monitored by the Federal Reserve as an inflation tracker.
On Wednesday, the Fed kept interest rates unchanged, although three members of the central bank voted for a hike to combat energy-fueled inflation pressures. Fed Chair Kevin Warsh, however, stressed that the economy is showing "impressive resilience," highlighting solid productivity and AI investment.
An underlying metric of growth, which brings together consumer spending and gross private investment, rose by 3.9%, up from 1.7% in the first quarter of 2026.
"With monthly spending data providing a solid handover to third-quarter consumption growth and signs that the investment boom is broadening, the second-quarter GDP figure seriously undersells a healthy economy," said Bradley Saunders, North America Economist at Capital Economics, in a note.
Markets don't take breaks—but you can.
While you're enjoying summer, the market keeps moving. The good news? ProPicks AI never stops working—analyzing thousands of stocks using 100+ financial metrics to surface winning opportunities for you.
Our Tech Titans strategy has more than doubled the S&P 500 since launching in Nov 2023, catching winners like Siemens Energy (+231.5%) and Sandisk (+189%) before the crowd.
Invest smarter this summer—without sacrificing your downtime.