3 minEconomy
U.S. GDP Grew 2.2% in Second Quarter as AI Investment Boom Fuels Spending
The Commerce Department's final estimate shows the U.S. economy expanded at a 2.2% annual pace from April through June, driven by consumer spending and an artificial intelligence investment boom, though economists warn growth is increasingly dependent on AI-related gains.
The U.S. economy grew at a 2.2% annual pace in the second quarter, the Commerce Department reported Wednesday, a stronger performance than economists had expected and a notable upgrade from the department's previous estimate of 1.5%. The April-through-June expansion followed a 2.5% pace in the first quarter, marking a modest deceleration but one that still reflects an economy buoyed by robust consumer spending and a wave of business investment tied to artificial intelligence.
Consumer spending, which accounts for roughly 70% of U.S. economic activity, rose at a healthy 3.8% annual rate in the second quarter, up sharply from just 0.7% in the January-to-March period. That surge has been supported by a strong stock market, where enthusiasm over AI prospects has enriched wealthy investors and given them more money to spend. Business investment excluding housing climbed at a 9% clip, reflecting the ongoing AI investment boom, while a measure of the economy's underlying strength that strips out volatile government spending and trade figures grew at a strong 4.6% rate, up from 1.8% in the first quarter.
The headline growth number was held back by imports, which are subtracted from GDP because the measure counts only domestic production. Imports rose at a 12.6% annual pace from April through June, partly driven by a surge in shipments of computer chips and other products supporting AI investment, and cut nearly 1.7 percentage points from second-quarter growth. The economy has nonetheless proven surprisingly resilient in the face of fighting with Iran and the energy price spike it caused.
Michael Pearce, chief U.S. economist at Oxford Economics, cautioned that the expansion is increasingly concentrated in one sector. «The economy is increasingly reliant on AI gains and the corresponding wealth effects boosting higher-income households' spending power to fuel recent growth,» Pearce said. «The economy remains sensitive to a sudden reversal of optimism on AI.»
Housing investment rose 2.8%, ticking up for the first time since the end of 2024, though the housing market remains depressed by high mortgage rates. Wednesday's report was the last of three Commerce Department estimates of second-quarter GDP growth. The first look at third-quarter growth is due Oct. 29.
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