U.S. economy grew 2.2% in Q2, consumer spending up
Q2 growth was revised up to 2.2% from 1.5%; meanwhile, wealthier consumers are spending more, which could boost new-vehicle sales.
On the Dash:
- U.S. economy grew 2.2% in the second quarter, topping the earlier estimate of 1.5%.
- Consumer spending rose 3.8%, and Cox Automotive raised its 2026 new-vehicle sales forecast to 16.1 million.
- J.D. Power and GlobalData forecast October sales at a 15.6 million SAAR, with record $823 payments.
The U.S. economy grew at a 2.2% annual pace from April through June, according to the Commerce Department’s final estimate of second-quarter gross domestic product. The reading topped the previous estimate of 1.5% and slowed from a revised 2.5% pace in the first quarter.
Meanwhile, consumer spending, about 70% of U.S. economic activity, rose at a 3.8% annual pace, up from 0.7% in the first quarter, according to The Associated Press. Analysts view that spending backdrop as good news for new-vehicle sales, prompting Cox Automotive to raise its full-year forecast.
Stock market gains and wealthier households drive spending
According to The Associated Press, a strong stock market, fueled by enthusiasm for artificial intelligence, has boosted spending by giving wealthy investors more money to spend. Real final sales to private domestic purchasers, a measure that excludes government spending and trade, grew at 4.6%, up from 1.8% in the first quarter, according to the Bureau of Economic Analysis.
Additionally, Cox Automotive raised its 2026 new-vehicle sales forecast to 16.1 million units from 15.8 million. Senior Economist Charlie Chesbrough said a wealthier customer base and more business buying are insulating the market, with record-high stock markets supporting sales. Demand has proven durable despite higher fuel prices, elevated interest rates and softer consumer sentiment, according to Cox Automotive’s forecast release.
AI investment lifting business spending
Business investment, excluding housing, grew at a 9% pace in the second quarter, driven by the AI investment boom, the Associated Press reported. Imports also rose 12.6%, partly on a surge in chips and other AI-related shipments, but growth slowed by nearly 1.7 percentage points.
The economy also held up amid tensions with Iran and the energy price spike they caused. Housing investment rose 2.8%, its first increase since the end of 2024, though high mortgage rates still weigh on the market, according to The Associated Press.
Dealers face steady sales
CBT News previously reported that J.D. Power and GlobalData forecast October new-vehicle sales at a 15.6 million SAAR, unchanged from a year earlier. Retail sales are expected to decline 1.4% on a selling-day-adjusted basis. The average monthly payment is forecast to reach an October record of $823, while the average loan rate is projected at 6.81%, up 19 basis points. Retail consumers were projected to spend $48.7 billion on new vehicles in September, a 6.6% increase. The first estimate of third-quarter GDP is due Oct. 29.