The U.S. Economy: Structural Challenges Amid Low Growth and High Inflation In the second quarter of 2026, the U.S. GDP annualized growth rate slowed to 1.5%, down from 2.1% in the first quarter. While the economy remains in expansion, downward pressures are intensifying. Geopolitical conflicts have pushed up global energy prices, driving up gasoline costs in the U.S. and pushing inflation back to 3.5%—significantly above the Federal Reserve’s 2% target—continuing to squeeze household spending. The structure of economic growth has shifted dramatically: nearly two-thirds of GDP growth in the first half of the year came from AI-related investments. Tech giants like Microsoft and NVIDIA have continued to heavily invest in server and chip infrastructure, shifting growth drivers from consumer spending to corporate investment. However, the benefits are unevenly distributed: high prices and elevated interest rates are suppressing broad-based consumption, and much of the required infrastructure relies on imports, meaning the gains from AI growth are not reaching ordinary citizens. The Federal Reserve is caught in a policy bind: cutting rates risks reigniting inflation, while raising rates further weighs on economic growth. Internal disagreements among policymakers persist, and markets still anticipate further rate hikes. Polls show over 60% of Americans disapprove of the current economic situation. With multiple factors converging, the U.S. economy is likely to weaken further in the second half of 2026. The combination of high inflation, low growth, and high interest rates is unlikely to reverse in the short term—and this economic outlook will directly impact the upcoming election. In plain terms: neither cutting nor raising rates is easy this下半年. Trump’s Senate prospects look grim, and midterm election defeat is highly probable.