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The U.S. economy grew more strongly than previously estimated in the second quarter of 2026, while inflation remained above the Federal Reserve’s target in August. The Commerce Department revised annualized second-quarter GDP growth to 2.2%, up from 1.5%, reflecting stronger consumer spending and investment, including construction and AI infrastructure. Real final sales to private domestic purchasers, a measure of underlying demand, were also revised up to 4.6%. Meanwhile, the PCE price index rose 3.4% year over year in August, unchanged from July, while monthly headline and core inflation increased 0.3% and 0.2%, respectively. The figures suggest continued economic resilience, supported by a solid labor market, strong stock returns, and household spending, but persistent price pressures remain a challenge for the Federal Reserve as it seeks to return inflation to its 2% target.
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