The US economy expanded at a slower-than-expected pace in the second quarter, as net trade exerted the most drag since headline growth posted a narrow contraction during the first three months of 2025.

That’s the CliffsNotes version of Thursday’s advance read on US GDP, and like all such cheat-sheet summaries, it doesn’t suffice if you actually care about the nuance.

Officially, growth clocked in at 1.5%, meaningfully below the 2.1% consensus.

I hesitate even to feature the simple figure above because in this case, the headline’s not representative. But there it is anyway. Growth slowed versus the final estimate for Q1.

Under the hood, the demand measures were very strong. Personal consumption expanded at a 3.2% annual pace, the quickest since Q3 2025. And business spending posted another blockbuster advance, rising at an 8.4% rate, an impressive encore following Q1’s double-digit pace.

The key final sales to private domestic purchasers line, which controls for trade swings, showed a 3.9% advance.

As the figure shows, that telegraphs the briskest pace of underlying demand since the beginning of 2023, when “no landing” entered the macro lexicon.

Notably, the price index, at 6.2%, was the highest since Q2 of 2022 when CPI peaked in the US. The quarterly core PCE print was 3.4%, slightly below the 3.5% consensus expected.

The figure below shows you the breakdown for headline growth.

As noted, net trade was the big drag. Inventories likewise pulled the headline lower. Personal spending contributed 2.12ppt and fixed investment 1.2ppt.

Bottom line: This release was far stronger than the headline suggested. The trade drag’s just noise. The private domestic purchasers print was a blockbuster and you’ll note that the personal consumption pace — the 3.2% annual rate — beat consensus by nearly a full percentage point.

This is good news. Unless you’re looking for an excuse to cut rates.