US GDP Revised Higher to 2.2% on Consumer Spending

The US Economy grew faster than previously estimated in the second quarter of 2026, with stronger Consumer Spending and continued business investment helping economic activity withstand inflation pressures and other headwinds.

According to the US Bureau of Economic Analysis (BEA), real gross domestic product increased at an annualized rate of 2.2% in the April-June quarter, up from the earlier estimate of 1.5%. The latest figure was also stronger than economists surveyed by Reuters had expected, as they had anticipated no revision to the previous estimate.

US GDP Growth Revised Sharply Higher

The latest GDP report represents a significant upgrade to the government’s earlier assessment of second-quarter economic growth. The economy had initially been estimated to have expanded at a 1.5% annualized pace during the quarter.

The revision came as updated data showed that consumer spending was stronger than previously reported. Business investment also remained an important source of economic activity, particularly spending associated with the expansion of artificial intelligence infrastructure.

The BEA’s third estimate was released as part of its scheduled September 30 economic data update. The agency also revised historical national economic accounts as part of its annual update process. 0

Consumer Spending Emerges as a Major Growth Driver

Consumer spending, which represents more than two-thirds of the US economy, increased at a 3.8% annualized rate in the second quarter. That was higher than the previously reported 3.4% pace.

The acceleration was notable compared with the first quarter, when consumer spending grew at only a 0.7% annualized rate. The stronger performance indicates that household demand remained an important support for the economy during the spring and early summer.

Services were a particularly important part of the upward revision to consumer spending in the earlier GDP estimate. The BEA’s second estimate had already shown that newly available information led to an upward revision in services spending, including healthcare services. 1

First-Quarter GDP Also Revised Higher

The latest report did not only change the second-quarter figure. The BEA also revised first-quarter GDP growth to 2.5%, compared with the previously reported 2.1% rate.

The revisions provide a stronger picture of economic activity during the first half of 2026 than earlier government estimates had suggested. The economy therefore entered the second half of the year with more momentum than the previous GDP releases indicated.

However, quarterly GDP figures are revised as additional information becomes available, meaning later releases can continue to change the historical picture.

AI Investment Supports Business Spending

Another important feature of the second-quarter economy was strong business investment. Companies continued to spend heavily on equipment and infrastructure, with artificial intelligence-related investment becoming an increasingly important part of corporate capital spending.

Business spending on equipment maintained double-digit growth during the quarter. Investment connected with the buildout of AI infrastructure has become a significant source of demand for technology equipment, computing capacity and related infrastructure.

The strength of AI-related investment also highlights an important feature of the current US economic expansion: corporate spending on emerging technologies is supporting economic activity even as some traditional areas of demand face higher costs and uncertainty.

Domestic Demand Shows Strong Momentum

A broader measure of underlying domestic demand also strengthened in the latest GDP revision. Final sales to private domestic purchasers increased at a 4.6% annualized rate in the second quarter, compared with the previous estimate of 4.2%.

This measure excludes trade, inventories and government spending and is therefore closely watched as an indicator of private-sector demand within the US economy.

Growth in final sales to private domestic purchasers was much stronger than in the first quarter. The first-quarter figure was revised to 1.8%, compared with the earlier estimate of 1.7%.

The figures suggest that underlying private-sector demand was stronger in the second quarter than the headline GDP number alone might indicate.

Gross Domestic Income Also Revised Higher

The income side of the economy also showed stronger growth. Gross domestic income, or GDI, increased at a 2.6% annualized rate in the second quarter, compared with the earlier estimate of 2.2%.

GDI measures economic activity from the income generated by production, including income received by workers and businesses. Economists often examine both GDP and GDI because the two approaches measure the economy from different sides.

The average of GDP and GDI, sometimes referred to as gross domestic output, increased at a 2.4% annualized rate in the second quarter. That was substantially higher than the previous estimate of 1.8%.

Corporate profits were also strong, contributing to the upward revision in GDI.

Households Face Rising Inflation Pressure

Despite strong consumer spending, household finances are facing pressure from higher prices. Gasoline costs have become particularly important as elevated energy prices increase transportation and other household expenses.

The continued strength of consumer spending therefore presents a mixed picture. Americans are still spending at a solid pace, but higher prices can reduce the amount of purchasing power available to households.

Consumer confidence has also weakened. A Conference Board survey released during the week showed consumer confidence falling to a level near a 12-and-a-half-year low in September.

The contrast between spending and confidence is important for the economic outlook. Consumers can continue spending even when they feel less optimistic, particularly when they draw down savings or reduce the amount of income they save.

AI Stock Gains and Household Savings

The performance of financial markets has also played a role in supporting household spending. An AI-driven stock market rally has increased the value of some household investments and may provide additional financial support for consumers with exposure to equities.

At the same time, households have been drawing on savings and saving a smaller share of their income. That can help maintain consumer spending in the short term, although it may become harder to sustain if household financial buffers continue to decline.

This dynamic will be closely watched as the US economy moves through the second half of 2026.

Economic Growth Faces New Headwinds

The stronger GDP figures provide evidence that the US economy remained resilient during the second quarter, but the outlook is not without risks.

Inflation remains a major concern for households and policymakers. Higher energy prices can feed into transportation costs and other consumer prices, potentially limiting household purchasing power.

Geopolitical tensions have also added uncertainty to the economic environment. The Reuters report noted that businesses continued investing aggressively in AI while tax refunds from legislation enacted the previous year supported consumer spending. 2

At the same time, weaker consumer confidence suggests that households may become more cautious if inflation remains elevated or employment and income conditions weaken.

Federal Reserve Policy Remains Important

The stronger economic data also matter for monetary policy. The Federal Reserve raised interest rates in September for the first time in three years as policymakers sought to address persistent inflation pressures.

Economic growth, consumer spending and inflation will all be important factors in determining the future direction of US monetary policy.

Recent market developments show that investors are closely monitoring economic data for clues about the path of interest rates. Reuters reported that softer-than-expected inflation data on September 30 reduced expectations of an immediate additional rate increase, while the stronger final GDP reading provided evidence of continued economic resilience. 3

What the GDP Revision Means for the US Economy

The 2.2% second-quarter GDP growth rate gives a stronger picture of the US economy than the earlier 1.5% estimate. Consumer spending, domestic demand, corporate profits and business investment all point to meaningful economic activity during the quarter.

However, the data also reveal some of the challenges facing the economy. Consumers are spending strongly despite declining confidence and higher costs, while businesses are continuing to invest heavily in AI-related infrastructure.

This combination could keep economic growth relatively resilient, but its durability will depend on whether household spending can remain strong without excessive reliance on savings and whether businesses continue making large technology investments.

Key Economic Indicators From the Latest GDP Report

• Second-quarter real GDP: 2.2% annualized, revised from 1.5%.
• First-quarter GDP: 2.5%, revised from 2.1%.
• Consumer spending: 3.8% annualized, revised from 3.4%.
• Final sales to private domestic purchasers: 4.6%, revised from 4.2%.
• Gross domestic income: 2.6%, revised from 2.2%.
• Average of GDP and GDI: 2.4% annualized.
• Business equipment spending: Continued to grow at a double-digit pace.

What to Watch in the Third Quarter

The third quarter will provide an important test of whether the strong second-quarter performance can continue. Consumer spending, inflation, business investment and financial market conditions will remain among the most important indicators.

The resilience of household demand will be particularly important because consumer spending is the largest component of the US economy. A sustained decline in confidence or continued pressure from higher energy prices could eventually affect spending patterns.

Meanwhile, AI-related investment remains an important source of business demand. Continued spending on computing infrastructure and equipment could provide support for economic growth, although the pace of investment may change as companies assess the returns from their AI spending.

Frequently Asked Questions

What was US GDP growth in the second quarter of 2026?

US real GDP increased at a 2.2% annualized rate in the second quarter of 2026, according to the latest BEA estimate.

Why was US GDP revised higher?

The revision reflected stronger consumer spending, business investment and other updated economic data compared with earlier estimates.

How much did consumer spending grow?

Consumer spending increased at a 3.8% annualized rate in the second quarter, up from the previously reported 3.4% pace.

What was US GDP growth in the first quarter?

First-quarter GDP growth was revised to 2.5%, compared with the previously reported 2.1% rate.

How important is consumer spending to the US economy?

Consumer spending accounts for more than two-thirds of overall US economic activity, making it one of the most important drivers of GDP growth.

Did AI investment contribute to economic growth?

Yes. Business investment connected with the expansion of AI infrastructure was an important source of economic activity, while equipment spending continued to record double-digit growth.

What happened to gross domestic income?

Gross domestic income increased at a 2.6% annualized rate in the second quarter, up from the earlier estimate of 2.2%.

What are the biggest risks to US economic growth?

Inflation, higher energy costs, weaker consumer confidence and changes in household savings and business investment are among the factors that could influence future economic growth.