U.S. GDP Growth Down to 1.5 Percent Amid Iran War Effects

U.S. real GDP growth stood at just 1.5 percent in Q2 of 2026, the Bureau of Economic Analysis announced Thursday. The very mediocre result amid negative effects of the Iran war is just the latest in a string of dismal quarterly reports. While in Q1 of 2022, GDP turned negative due to soaring energy prices after the invasion of Ukraine, tariff front-loading of U.S. imports had the same effect in Q1 of 2025 leading up to the announcements of Liberation Day last year.

While the Iran war did not have such a swift effect on GDP, it has nevertheless eaten away at results. Inflation remained high, especially for energy as global supply chains were disrupted, dampening real GDP growth. Rising oil prices as well as goods shortages are both bad for business. On the upside, U.S. consumption remained robust and the AI hype and its investments kept businesses spending money.

Real income in the U.S. has fallen once more as inflation has picked up again, causing consumer spending to move at a slower pace in real terms – the latter carrying the U.S. economy to a large degree. The Trump administration's tariff regime that is putting additional costs on importers is also seen as a factor raising prices and eating up money that could be invested elsewhere, further slowing growth.