GDP Slowed in Second Quarter of 2026 — What That Means

Growth registered at an annual rate of 1.5%, down from 2.1% in the first quarter of 2026.

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Updated Aug 26, 2026

Updated on Aug 26.

Real gross domestic product grew by an annual rate of 1.5% in the second quarter of 2026, down from 2.1% in the first quarter, according to the second estimate released on Aug. 26 by the Bureau of Economic Analysis.

GDP was negative in the first quarter of 2025, rebounded to 3.8% in the second quarter, rose by 4.4% in the third quarter and finished slower at 0.5% in the final quarter.

Growth in the second quarter of 2026 was largely due to increases in consumer spending, exports and investment, partly offset by a decline in government spending. Consumer spending was revised higher from the advance estimate, while imports were also revised higher.

Imports, which are subtracted from GDP, increased in the second quarter after rising in the first quarter. Imports fell in the last three quarters of 2025.

Exports increased in the second quarter, although the pace of growth slowed from the first quarter. Exports of goods increased, while exports of services fell.

» MORE: Are we in a recession?

What is GDP?

GDP, or gross domestic product, is the market value — in current dollars — of all goods and services produced within the United States in a given period; Real GDP adjusts that measure for inflation. Changes in GDP are expressed on an annualized basis.

Does recent GDP data signal there is trouble ahead?

Second quarter growth in 2026 increased at 1.5%, slower than the first quarter (2.1%). In 2025, real GDP increased 2.1%.

Negative growth, or contraction, is generally a red flag that there is a slowdown happening in the economy. It shows that consumers and businesses may be spending less. Two consecutive quarters without growth is the traditional definition of a recession.

Current growth in the economy is largely driven by consumer spending and AI investment. Uncertainty is driven by the continuing war in Iran and ever-evolving trade policies.