US gross domestic product expanded at an annualized 2.2% rate in the second quarter of 2026, the Commerce Department's final estimate, up from the previous 1.5% reading and following 2.5% growth in the first quarter. Underlying demand was stronger: final sales to private domestic purchasers rose 4.6%, up from 1.8% in the first quarter and matching the strongest pace since 2021. Consumer spending increased 3.8%, while business investment excluding housing rose 9%, reflecting a surge in artificial-intelligence infrastructure spending. Separate data showed business investment growing 7.7%, about twice as fast as consumer spending, with data-center construction helping drive the gain. The expansion has not translated into stronger household purchasing power. Inflation-adjusted disposable income stalled in August after rising 0.3% in July, while real wage growth declined for a fifth consecutive month. Consumers nevertheless increased real personal consumption expenditures 0.6% in August, pushing the personal saving rate down to 4.1% from 4.6% in July and 5.2% a year earlier. Private employers added 90,000 jobs in September, more than double August's revised 36,000 gain, although hiring remained concentrated in sectors including health care. Consumer confidence fell to its lowest level in more than a decade, while President Trump's economic ratings reached new lows. Underlying inflation excluding food and energy ran at a 2% annualized rate over the latest three months, supporting expectations that the Federal Reserve can wait before raising rates again. New York Fed president John Williams said there was no need for urgency after the central bank's September rate increase, while leaving open another increase later this year if growth stays strong and inflation remains elevated. The two-year Treasury yield slipped to about 4.85%, and the probability of a quarter-point October rate increase fell to 35% from 51%, according to CME FedWatch. Williams said surging AI investment was straining equipment supplies and making its inflationary effect increasingly important, though he expected those pressures to ease as supply catches up. The first estimate of third-quarter GDP is due Oct. 29.