The U.S. economy surged between April and June after shrinking in the first three months of the year, driven by a large shift in imports tied to President Trump’s trade policies.
By the numbers
The country’s GDP increased at an annual rate of 3% in the second quarter, the Commerce Department said Wednesday. That’s higher than the 2% pace forecast for the April-to-June period, according to economists polled by financial data firm FactSet.
The number represents a turnaround from the first three months of 2025, when GDP fell 0.5%, the worst quarterly performance for the economy since early 2022. The new data also shows consumers increased spending since the last quarter, with growth of 1.4%, up from 0.5% from January to March. The number is still down significantly from 4% in the final quarter of 2024.
When it comes to assessing the strength of the economy, a more revealing number tucked into the GDP report is what is known as “final sales to private domestic purchasers,” which excludes government spending, inventories and net exports. That number rose at only a 1.2% annual rate from April to May — the weakest since late 2022 and a sign that demand is weakening.
What the numbers mean
GDP data offers a broad yardstick for measuring the overall health of the economy, with periods of fast growth typically coinciding with robust consumer spending, ample job growth and healthy corporate profits. This year, however, experts say the Trump administration’s tariffs on U.S. economic partners have complicated the picture.
“As was the case in Q1, volatile trade flows are skewing the GDP performance (the 3% growth primarily reflects a decrease in imports and an acceleration in consumer spending that were partially offset by a downturn in investment),” Adam Crisafulli, head of investment research firm Vital Knowledge, said in a report.
Thomas Ryan, North America economist at investor advisory firm Capital Economics, said in a note that the surge in GDP “overstates the economy’s underlying strength” because the growth spurt in the second quarter was largely driven by a 30% decline in imports after U.S. tariffs took effect.
GDP slumped in the first quarter, falling 0.5% from January to March, largely due to a surge in U.S. imports as consumers and businesses rushed to buy goods from abroad before stepped-up tariffs took effect.
In calculating GDP, imports are seen as reducing growth because they reflect purchases from overseas, rather than goods and services produced in the U.S. By contrast, exports boost a country’s GDP because they reflect domestic goods and services that were sold abroad.
The upshot: Through the first half of 2025, the economy grew at an average rate of 1.25%. That’s markedly slower than the pace of growth in 2024, when GDP for the full year rose 2.8%, noted Dean Baker, a senior economist at Center for Economic and Policy Research.
Where the economy is headed
Although the 3% GDP rate in Wednesday’s report may be skewed by the president’s trade policies, experts say the overall economy remains solid and shows no signs of crumbling.
“Beneath the topline figure, the economy is switching to a lower gear but not going in reverse,” Bernard Yaros, lead US economist at Oxford Economics, said in a research note.
Yaros added that consumers are slowing — but not switching off — their spending, which accounts for roughly two-thirds economic activity.
Still, EY-Parthenon chief economist Gregory Daco notes that economic activity is slowing as inflationary pressures rise — a trend likely to persist throughout the summer. He predicts real GDP growth to slow to a rate of 0.9% year over year by the fourth quarter.
Another indicator of the health of the economy will come Wednesday afternoon, when the Federal Reserve announces its rate decision. The central bank is again expected to hold rates steady. The Labor Department is also scheduled to release its monthly jobs report on Friday, offering a snapshot of how the labor market is faring.
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
