The US economy expanded at an annualized rate of just 1.5% in the second quarter, falling short of consensus expectations for gross domestic product growth.
The Commerce Department’s report highlights a marked deceleration in activity, with the quarterly progression holding at a modest 0.4%.
The slowdown reflects the mounting economic impact of the ongoing conflict in Iran, which has disrupted energy markets and introduced significant volatility into global supply chains.
Rising oil prices and heightened shipping risks have begun to weigh on consumer spending and business investment, dampening the momentum seen in earlier quarters.
While the headline figure disappointed investors expecting a more robust rebound, a closer look at the data suggests that the top-line miss was partly driven by temporary factors related to energy inflation and inventory adjustments.
However, the underlying trend points to a cooling economy as geopolitical tensions persist and monetary policy remains restrictive.
Markets are likely to reassess the Federal Reserve’s policy path in light of the weaker growth data, with traders now pricing in a higher probability of rate cuts in the coming months.
The report adds to the growing list of indicators suggesting that the US economy is losing steam amid external shocks and internal headwinds.