US economic growth slows to 1.5% in second quarter

Growth in the US slowed in the three months to June, according to official figures.

The Commerce Department said the US economy grew at an annual rate of 1.5% in the second quarter, down from 2.1% seen in the first three months of the year.

It comes as the world’s largest economy continues to weather the financial impact of the war with Iran and US businesses navigate tariffs.

The growth figure was lower than analysts had estimated, with the downturn due to lower government spending, investment and exports. However, the economy received a boost from an increase in consumer spending.

The latest growth figures come after the Federal Reserve decided to hold interest rates for a fifth time in a row in Wednesday, with new chairman Kevin Warsh warning there was no “magic wand” to tackle rising prices.

Prices in the US have been rising at a rate above the Fed’s 2% target for more than five years, but the Commerce Department said consumer spending remained resilient.

The Fed said US economic activity was expanding at a “solid pace despite uncertainty caused by the conflict in the Middle East”.

The main economic concern from the conflict has been rising oil prices, which had surged again following recent escalations.

Brent crude, the global benchmark for oil prices, was about $90 a barrel on Thursday. Higher oil prices typically lead to increased prices at the pumps, with average gasoline prices now back above $4 a gallon.