US second-quarter GDP revised upward to 2.2% as consumer and AI spending hold

Upward revisions for the first half of 2026

The US Commerce Department's Bureau of Economic Analysis published its third estimate for second-quarter gross domestic product on Wednesday, reporting an annualized growth rate of 2.2%. The reading marked an upward revision of 0.7 percentage points from the previously reported 1.5% pace. Economists polled by Reuters had expected the estimate to remain unrevised. The BEA also revised economic growth for the first quarter of 2026 upward from 2.1% to 2.5%. The statistical agency updated historical GDP series back to 2021 to incorporate newly available information. Growth held up despite external pressure from the US-Israeli conflict with Iran. Measured on a non-annualized basis matching European reporting standards, real GDP grew by 2.2% year over year in the second quarter and by 2.6% in the first quarter.

Consumer activity and business investment in technology

Consumer spending, which accounts for more than two-thirds of the American economy, grew at an annualized rate of 3.8% in the second quarter. That pace was revised up from 3.4% and followed a 0.7% expansion recorded during the January to March quarter. Personal consumption expenditures added 2.5 percentage points to the headline 2.2% rate. Spending was supported by tax refunds resulting from previous tax legislation as well as stock market gains tied to artificial intelligence technologies. Private domestic investment increased at an annualized rate of 4.6%, contributing 0.8 percentage points to growth. Business outlays were led by a 13.4% annualized rise in equipment purchases and a 9.2% increase in intellectual property. Residential investment contracted by 3.3% on a non-annualized basis, though it recorded a 2.8% annualized increase.

Sector performance and international trade balance

Output expanded across several key industries, led by real estate and rental activities, information services, durable goods manufacturing, and finance and insurance.

Consumer spending, investment and exports contributed to real GDP growth in the second quarter. Imports, which are subtracted in the calculation of GDP, also increased.

Annualized imports increased by 12.6%, led by a 15.3% jump in imported goods. Total exports rose 5.0%, while service exports fell by 3.2%, creating a drag on headline output. The rise in foreign goods occurred despite trade restrictions enacted by the Donald Trump administration, including tariffs on Canadian products. On a non-annualized basis, goods exports rose 8.2% while goods imports increased 6.4%.

Income measures and household sentiment

Gross domestic income expanded at an annualized rate of 2.6% in the second quarter, revised up from an initial estimate of 2.2%, following a 2.5% pace in the first quarter. The average of GDP and GDI, termed gross domestic output, increased at a 2.4% rate. Final sales to private domestic purchasers, which strip out trade, inventories, and government spending, rose at a 4.6% annualized pace, revised up from 4.2%. Despite strong second-quarter numbers, household balance sheets faced pressure from inflation, especially fuel prices. A Conference Board survey released on Tuesday indicated that consumer confidence fell in September to near a twelve-and-a-half-year low, as households reduced savings rates to maintain purchases.