US economy grows at a sluggish 1.5% in second-quarter with inflation remaining stubbornly high

WASHINGTON (AP) — The U.S. economy expanded at a sluggish 1.5% pace from April through June as rising imports weighed on growth, yet consumers continued to spend. And the Federal Reserve’s favored measure of inflation grew more slowly last month. But it remained above the central bank’s 2% target at a time when Americans are frustrated about the high cost of living ahead of the midterm elections, now less than 100 days away.

Growth in U.S. gross domestic product — the nation’s output of goods and services — decelerated from 2.1% in the first three months of 2026, the Commerce Department reported Thursday, coming in below economists' expectations. But consumer spending — which accounts for about 70% of U.S. economic activity — increased at a 3.2% annual clip, up from 0.5% in the January-March period.

A measure of the economy’s underlying strength – which strips out volatile government spending and trade numbers – looked good, expanding at a 3.9% annual pace, up from 1.7% from January through March.

Business investment, excluding housing, rose at an 8.4% pace, down from 10.6% from January through March but strong, reflecting a surge in investment in artificial intelligence.

Imports are subtracted from the economic figures because GDP is only supposed to count what is produced in the United States. Imports rose at an 11.5% pace, partly on a surge in shipments of computer chips and other products that support AI investment. The imports shaved 1.5 percentage off second-quarter GDP growth.

"The consumer rescued the quarter,'' said Olu Sonola, head of U.S. economics at Fitch Ratings. “AI investment remains a powerful growth story, but the import surge underpinning the buildout is a reminder that an AI boom does not automatically translate into an equally large boost to U.S. GDP.”

The Commerce Department also said Thursday that its personal consumption expenditures (PCE) price index, the one favored by the Fed, rose 3.7% last month from June 2025 , down from a 4.1% year-over-year increase in May. Excluding volatile food and energy prices, so-called core consumer prices were up 3.3% from a year earlier, little-changed from 3.4% increase in May. Prices actually fell 0.1% from May to June on a 9.2% drop in the price of gasoline and other energy products.

The PCE prices were about in line with economists' expectations. But the year-over-year increase in prices has been stuck above the Fed's 2% target for more than five years, and some Fed officials are getting impatient with progress against inflation.

The Fed on Wednesday chose to leave its benchmark interest rate unchanged for the fifth straight meeting. But three regional Fed presidents dissented, saying they wanted to raise rates to combat elevated inflation.

The American economy has been surprisingly resilient in the face of the Iran war and the spike in energy prices it caused. The job market has bounced back this year from a lackluster 2025, giving consumers the wherewithal to spend. Employers are adding an average 92,000 jobs a month this year, compared with fewer than 10,000 a month in 2025 when high interest rates and President Donald Trump’s erratic use of tariffs discouraged businesses from hiring.

Higher costs have frustrated Americans ahead of November’s midterm elections, which will determine whether President Donald Trump’s Republicans keep full control of Congress

A new AP-NORC poll found that the public is souring on the Iran war. And about 7 in 10 U.S. adults — 72% — say it’s “extremely” or “very” important for the U.S. to prevent domestic oil and gas prices from rising, up from 67% in March.

An employee checks a customer's identification card before checking out alcohol at a cash register in a grocery store in Arlington Heights, Ill., Monday, July 6, 2026. (AP Photo/Nam Y. Huh)

Gas prices are displayed at a Sinclair gas station along Interstate 70, Thursday, July 23, 2026, in Golden, Colo. (AP Photo/David Zalubowski)

A customer shops at a grocery store in Arlington Heights, Ill., Monday, July 6, 2026. (AP Photo/Nam Y. Huh)

Federal Reserve Board Chairman Kevin Warsh speaks at a news conference at the Federal Reserve in Washington, Wednesday, July 29, 2026. (AP Photo/Mark Schiefelbein)

LOS ANGELES (AP) — At 60, Too $hort is helping usher hip-hop into what he calls its senior citizen era. Just don’t expect him to rap like one.

The Oakland hip-hop pioneer is still recording, touring and talking slick more than four decades after he began selling homemade tapes on the streets of the Bay Area. While the genre has long treated aging like an unwritten career-ending offense, Too $hort is breaking the rule and challenging the culture’s elder statesmen to keep going with him.

His latest proof is “Sir Too $hort Vol. 2: Drink & Smoke,” his 23rd studio album, produced entirely by longtime collaborator Lil Jon. It arrives Friday, exactly 20 years after the release of his enduring hit “Blow the Whistle.”

Too $hort, whose catalog also includes classics like “The Ghetto” and “Shake That Monkey,” says he isn’t interested in slowing down anytime soon. That was certainly evident when he and E-40 performed at the NFL Honors in February.

In an interview with The Associated Press this week, Too $hort reflected on turning 60, challenging hip-hop’s age limits, preserving the legacy of Lil Jon’s late son, DJ Young Slade, the staying power of “Blow the Whistle” and why he has no plans to stop until “the wheels fall off.”

This interview has been edited for length and clarity.

TOO $HORT: At the age of 14 or 15, my mentality was, “Let people hear this music. We’re going to rock some house parties and high school dances and sell some tapes to fans in the streets.” When I got my foot in the door, I knew this was going to be my job. It was always “till the wheels fall off.” It was never, “Let’s do this for 30 or 40 years.”

I’ve always said the day hip-hop is no longer my job is probably the day I’ll stop. But the love I have for hip-hop won’t allow me to stop recording. I’ve never taken a long break. I’ve continuously been in the studio, continuously doing shows. I just keep it going because it’s my job.

TOO $HORT: I truly love making music. It’s never felt like work. I could have stopped after “Blow the Whistle” and been like, “Story told.” But somebody’s got to go out into these uncharted waters and blaze the trail. Look at E-40,Snoop Dogg,Fat Joe and the other guys who kept going after the kids were grown and the grandkids were on the way.

Who laid the rule down that in hip-hop you gotta stop at 40? Every milestone they said was old. First it was 30, then it was 40, then it was 50. Now we got senior citizen rappers, and this ... is real. Hip-hop is entering the place where jazz, blues and R&B have older artists who are still performing and recording. We should too.

TOO $HORT: I don’t know if you could give me the ingredients and tell me how to do it again; I don’t think I could. It had to happen organically. I give Lil Jon a lot of credit because he’s made a lot of songs we’ve loved since the day they came out. We make good music together, and that’s why I’m excited for people to hear what we’re still doing 30 years after we first worked together.

TOO $HORT: His son passed away after we finished recording. We had actually done about twice as many songs as ended up on this project. I saw how it affected Jon, and I had recently lost my brother, so I knew that feeling of loss. The whole time, Slade was producing or co-producing a lot of the tracks I was working on. The first thing that came to me was that I’d be more than proud to be part of his son’s legacy and give something to the world that would help him live forever. Jon keeps saying, “Slade’s legacy,” and I’m just trying to be a part of that and show the world we lost another good, talented person.

TOO $HORT: We did one in 2020, but it wasn’t a battle. We had a good time. We did a lot of laughing, a lot of togetherness. I didn’t want to battle 40 then, and I don’t want to battle him now. That’s my best friend in hip-hop. I’d sign up for me and 40 against anybody. That’d be fun. They haven’t had two groups. … I put that out there: Who wants to battle Too $hort and E-40 in Verzuz?

Too $hort poses for a portrait on Tuesday, July 28, 2026, in Los Angeles. (AP Photo/Jae C. Hong)

Too $hort poses for a portrait on Tuesday, July 28, 2026, in Los Angeles. (AP Photo/Jae C. Hong)

Too $hort poses for a portrait on Tuesday, July 28, 2026, in Los Angeles. (AP Photo/Jae C. Hong)

Too $hort poses for a portrait on Tuesday, July 28, 2026, in Los Angeles. (AP Photo/Jae C. Hong)

Too $hort poses for a portrait on Tuesday, July 28, 2026, in Los Angeles. (AP Photo/Jae C. Hong)