Personal income increased US$115.1 billion (0.4 per cent at a monthly rate) in July

Durrant Pate/Contributor

The American economy improved slightly last month, as real gross domestic product (GDP) rose at an annual rate of 1.5 per cent in the second quarter of 2026 (April, May, and June), according to the second estimate released today by the U.S. Bureau of Economic Analysis (BEA). 

In the first quarter, real GDP increased 2.1 per cent. The contributors to the increase in real GDP in the second quarter were increases in consumer spending, exports, and investment that were partly offset by a decrease in government spending. 

Imports, which are a subtraction in the calculation of GDP, increased. Real GDP increased at the same rate as in the advance estimate. An upward revision to consumer spending was partly offset by an upward revision to imports. 

Deceleration in real GDP  

Compared to the first quarter, the deceleration in real GDP in the second quarter reflected a downturn in government spending and decelerations in investment and exports that were partly offset by an acceleration in consumer spending. Imports increased more in the second quarter than in the first quarter.

Real final sales to private domestic purchasers increased 4.2 per cent in the second quarter, revised up 0.3 percentage point from the previous estimate. The price index for gross domestic purchases increased 5.8 per cent in the second quarter, revised up 0.1 percentage point from the previous estimate.

The personal consumption expenditures (PCE) price index increased 5.3 per cent, revised up 0.2 percentage point, while the PCE price index excluding food and energy rose 3.6 per cent, also revised up 0.2 percentage point. Disposable personal income (DPI), which is personal income less personal current taxes, increased US$125.9 billion (0.5 per cent), and PCEs increased US$36.3 billion (0.2 per cent). 

PCE and personal savings data 

Personal outlays, the sum of PCE, personal interest payments, and personal current transfer payments, advanced US$36.6 billion in July. Personal saving was US$712.0 billion in July, while the personal saving rate is up 3.0 per cent.

The increase in current-dollar personal income in July primarily reflected increases in compensation, government social benefits, and personal income receipts on assets. The US$36.3 billion increase in current-dollar PCE in July reflected an increase of US$86.2 billion in spending on services that was partly offset by a decrease of US$49.9 billion in spending on goods.

Real gross domestic income (GDI) increased 2.2 per cent in the second quarter, compared with an increase of 1.2 per cent in the first quarter. The average of real GDP and real GDI increased 1.8 per cent, compared with an increase of 1.7 per cent.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased US$400.9 billion in the second quarter, compared with an increase of US$74.4 billion in the first quarter.