The United States economy showed stronger growth than previously estimated in the second quarter of the year, government figures showed on Thursday.
According to the second estimates released by the US commerce department, the gross domestic product (GDP) rose at an annual rate of 3.3% between April and June, an upward revision from the 3.0% figure released in July.
The rebound followed a difficult start to 2025, when the economy shrank by 0.5% in the first quarter, the first contraction in three years, largely due to the impact of Trump’s trade wars.
The first-quarter downturn was driven by a surge in imports, as companies rushed to stockpile foreign goods ahead of new tariffs. Since imports are deducted from GDP, this sudden rise dragged the figures down.
However, the trend flipped in the second quarter, with imports plunging at a 29.8% pace, a shift that added more than five percentage points to April–June growth.
The US bureau of economic analysis said that the increase in the country’s GDP was mainly driven by a sharp drop in imports, which count as a subtraction in GDP, along with higher consumer spending.
The department also reported that consumer spending was slightly stronger than first estimated. Consumer spending, which makes up about 70% of GDP, rose at a 1.6% annual rate. While still modest, this was better than both the 0.5% growth seen in the first quarter and the 1.4% initially estimated for the second quarter.
However, this growth was partly held back by weaker investment and lower exports.
Corporate profits from current production, which include inventory valuation and capital consumption adjustments, grew by $65.5 billion in the April–June period, compared with a fall of $90.6 billion in the previous quarter.
Private investment, however, declined steeply, dropping at a 13.8% annual pace, the biggest fall since the second quarter of 2020, when the coronavirus pandemic was at its peak. A reduction in private inventories alone shaved nearly 3.3 percentage points off second-quarter GDP growth, AP reported.
The real gross domestic income increased 4.8% in the second quarter against the 0.2% achieved in the first quarter. The average of real GDP and real GDI rose by 4.0% in the second quarter, a sharp turnaround from the 0.1% decline recorded in the first quarter.
Government spending also weighed on the economy. Federal expenditure fell at a 4.7% annual rate, following a 4.6% decline in the first quarter.
A measure within the GDP data that reflects the economy’s underlying strength, which includes consumer spending and private investment but excludes volatile factors such as exports, inventories and government spending, grew 1.9% in the second quarter. That matched the growth rate in the first quarter.
Since his return to the White House, Trump has overturned decades of US trade policy that traditionally favoured free trade. He has imposed double-digit tariffs on imports from nearly every country and targeted key products such as steel, aluminium and cars. Trump argues that tariffs protect American industry, encourage factories to return to the United States, and help finance the sweeping tax cuts he signed into law on July 4.
Mainstream economists, however, warn that tariffs could harm the economy by raising costs and making protected US firms less competitive. They point out that tariffs are paid by importers in the United States, who often pass on the extra costs to customers through higher prices. While the inflationary impact so far has been limited, they caution it could grow over time, AP reported.
The unpredictable way Trump has introduced tariffs, sometimes announcing them, suspending them, and then launching new ones, has left businesses unsettled and uncertain about making investments or hiring.
The third estimate for the GDP growth of the second quarter will release on September 25.
According to the second estimates released by the US commerce department, the gross domestic product (GDP) rose at an annual rate of 3.3% between April and June, an upward revision from the 3.0% figure released in July.
The rebound followed a difficult start to 2025, when the economy shrank by 0.5% in the first quarter, the first contraction in three years, largely due to the impact of Trump’s trade wars.
The first-quarter downturn was driven by a surge in imports, as companies rushed to stockpile foreign goods ahead of new tariffs. Since imports are deducted from GDP, this sudden rise dragged the figures down.
However, the trend flipped in the second quarter, with imports plunging at a 29.8% pace, a shift that added more than five percentage points to April–June growth.
The US bureau of economic analysis said that the increase in the country’s GDP was mainly driven by a sharp drop in imports, which count as a subtraction in GDP, along with higher consumer spending.
The department also reported that consumer spending was slightly stronger than first estimated. Consumer spending, which makes up about 70% of GDP, rose at a 1.6% annual rate. While still modest, this was better than both the 0.5% growth seen in the first quarter and the 1.4% initially estimated for the second quarter.
However, this growth was partly held back by weaker investment and lower exports.
Corporate profits from current production, which include inventory valuation and capital consumption adjustments, grew by $65.5 billion in the April–June period, compared with a fall of $90.6 billion in the previous quarter.
Private investment, however, declined steeply, dropping at a 13.8% annual pace, the biggest fall since the second quarter of 2020, when the coronavirus pandemic was at its peak. A reduction in private inventories alone shaved nearly 3.3 percentage points off second-quarter GDP growth, AP reported.
The real gross domestic income increased 4.8% in the second quarter against the 0.2% achieved in the first quarter. The average of real GDP and real GDI rose by 4.0% in the second quarter, a sharp turnaround from the 0.1% decline recorded in the first quarter.
Government spending also weighed on the economy. Federal expenditure fell at a 4.7% annual rate, following a 4.6% decline in the first quarter.
A measure within the GDP data that reflects the economy’s underlying strength, which includes consumer spending and private investment but excludes volatile factors such as exports, inventories and government spending, grew 1.9% in the second quarter. That matched the growth rate in the first quarter.
Since his return to the White House, Trump has overturned decades of US trade policy that traditionally favoured free trade. He has imposed double-digit tariffs on imports from nearly every country and targeted key products such as steel, aluminium and cars. Trump argues that tariffs protect American industry, encourage factories to return to the United States, and help finance the sweeping tax cuts he signed into law on July 4.
Mainstream economists, however, warn that tariffs could harm the economy by raising costs and making protected US firms less competitive. They point out that tariffs are paid by importers in the United States, who often pass on the extra costs to customers through higher prices. While the inflationary impact so far has been limited, they caution it could grow over time, AP reported.
The unpredictable way Trump has introduced tariffs, sometimes announcing them, suspending them, and then launching new ones, has left businesses unsettled and uncertain about making investments or hiring.
The third estimate for the GDP growth of the second quarter will release on September 25.
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