The US economy hit the gas and the brakes at once. GDP grew at a 1.5% annualized rate last quarter, short of the 1.8% forecast, as a flood of AI-driven imports and a thinner government wallet offset the best consumer spending in a year. Inflation’s still running hot, so the miss handed the Fed’s rate hawks a fresh talking point.
- Since imported goods don’t count as domestic output, the chip boom erased more than a point from GDP — while inventories tacked on another 0.67-point drag.
- Even so, the Fed held rates at 3.5%-3.75% on Wednesday in a 9-3 vote — representing a three-way break from consensus.
Shoppers didn’t blink: Despite gas costing $4.22 a gallon, Americans kept spending anyway. Data from American Express backed that up with stronger card spending and profit. Not everyone is convinced it holds, though. General Mills says shoppers are getting pickier, and the savings rate hit its lowest level since 2022. Some of that resilience is temporary, too, since June’s 23.4% jump in spectator sports outlays likely reflects World Cup fever. With tax refund season over, summer’s spending streak may be living on borrowed time.
