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Yesterday, the US Bureau of Economic Analysis reported that US GDP growth slowed to 1.5% on an annualized basis in Q2/2026, falling short of market expectations for a 2.1% gain. Almost all of the weakness stemmed from exceptionally strong imports, which subtracted 1.5 percentage points from the headline figure. However, private spending – our preferred measure of cyclical conditions, which makes up 85% of the economy and excludes volatile government spending and trade – accelerated to a 4% annualized rate in Q2, its strongest pace in three years. As today’s chart shows, IT capex continued to rise sequentially, consumer spending recovered from a sluggish Q1, and growth broadened to residential and other business investment following several soft quarters. The latest figures validate our thesis that the US economy is poised to accelerate in 2027. After a gain of 2% this year, our baseline scenario is for GDP growth to pick up to 2.3% in 2027.