Second-Quarter Growth Held at 1.5%. The Inflation Reading Underneath It Went Up.

The Bureau of Economic Analysis released its second estimate of second-quarter GDP on August 26. The headline did not move: real GDP grew at an annual rate of 1.5%, the same as the advance estimate. Almost every figure underneath it did move, and the revisions do not all point the same way.

What stayed the same

Real GDP growth of 1.5% was unchanged, after a downward revision of less than 0.1 percentage point. For comparison, the first quarter of 2026 grew 2.1%.

What was revised

• PCE price index: 5.3%, revised up 0.2 percentage point
• PCE price index excluding food and energy: 3.6%, revised up 0.2 percentage point
• Gross domestic purchases price index: 5.8%, revised up 0.1 percentage point
• Real final sales to private domestic purchasers: 4.2%, revised up 0.3 percentage point

Two revisions cancelled each other in the headline. Consumer spending was revised up, led by services and within that by health care; goods were revised down, in recreational goods and vehicles and in energy goods. Imports were also revised up, partly on Puerto Rico territorial adjustment data. Imports subtract from GDP, so a bigger import figure offsets a bigger spending figure.

Two measures of the same quarter

BEA publishes a second reading of the economy alongside GDP. Gross domestic income adds up what was earned rather than what was spent. In principle the two are the same number; in practice they differ, and the gap is itself information.

• Real GDP, second quarter: 1.5%
• Gross domestic income, second quarter: 2.2%
• Gross domestic income, first quarter: 1.2%

GDI accelerated by a full percentage point between the first and second quarters while GDP slowed. The income side of the accounts describes a stronger quarter than the spending side does.

Corporate profits

Profits from current production increased $400.9 billion in the second quarter. In the first quarter the increase was $74.4 billion. That is a more than fivefold difference in the quarterly change, and it is consistent with the stronger GDI reading, since profits are a component of national income.

The tension in one place

Domestic demand ran hot and the price indexes ran hotter. Real final sales to private domestic purchasers — households and businesses buying from the domestic economy, stripped of trade and inventories — grew 4.2%. The PCE price index grew 5.3% over the same quarter, and 3.6% excluding food and energy. Headline GDP of 1.5% understates what domestic buyers were doing and says nothing about what they paid.

Why it matters

A revision that leaves the headline alone can still change the picture. This one raised the measured price level, raised measured domestic demand, and widened the gap between the two ways of counting the same three months. Anyone reading 1.5% as the whole quarter is reading the least revised number in the release.