The US economy grew at a 2.2% annualised rate in the second quarter, revised sharply up from 1.5%, on robust consumer spending and AI-infrastructure investment.

The Bureau of Economic Analysis said on Wednesday that consumer spending — which drives two-thirds of the economy — grew 3.8%, revised up from 3.4%. First-quarter growth was also revised up to 2.5%.

Business spending on equipment kept up double-digit growth as companies poured money into AI data centres.

But households are feeling the strain. August inflation ran at 3.4%, well above the Federal Reserve’s 2% target, and consumer confidence has dived to a near 12-and-a-half-year low on gasoline-price worries.

The revision suggests the economy has held up despite headwinds from the US-Israeli war with Iran, helped by AI investment and tax refunds supporting spending.

Economists say the mix of stronger growth and cooling inflation could stay the Fed’s hand on further rate hikes — though energy prices remain the wild card.