US economy picks up pace in Q2, grows 2.2% as consumer spending, AI investment surge

The US economy grew at a 2.2% annual pace in the second quarter as consumer spending and business investment remained strong, marking an upgrade from the government’s earlier estimate of 1.5%, the Commerce Department said on Wednesday. The economy expanded 2.5% in the January-March quarter, the Associated Press reported.

Growth in gross domestic product, which measures the output of goods and services, was supported by a sharp pickup in consumer spending and continued strength in business investment. Consumer spending, which accounts for about 70% of US economic activity, rose at a 3.8% annual rate in April-June, compared with 0.7% in the first quarter.

The overall GDP figure was held back by a surge in imports. Imports rose at a 12.6% annual pace in the second quarter, partly driven by increased shipments of computer chips and other products supporting artificial intelligence investment. The jump in imports shaved nearly 1.7 percentage points off GDP growth.

AI investment powers business spending

Business investment excluding housing rose at a 9% annual rate in the second quarter, reflecting continued spending linked to the artificial intelligence boom.

A measure of underlying economic strength that excludes volatile government spending and trade expanded at a 4.6% rate, accelerating sharply from 1.8% in the first quarter.

Housing investment also increased, rising 2.8% and recording its first increase since the end of 2024. The housing market has remained under pressure from elevated mortgage rates.

The US economy has remained resilient despite fighting with Iran and the resulting spike in energy prices. The latest GDP estimate was the final of three Commerce Department readings for the second quarter, AP reported.

The government’s first estimate of third-quarter GDP growth is due on October 29.