US Economy Grows Faster Than Expected in Q2
US Economy Grows Faster Than Expected in Q2
The News
The U.S. economy expanded faster between April and June than previously estimated, as growth bounced back after slumping in the first quarter, new government data shows.
The Commerce Department said Thursday that the country's gross domestic product — the nation's output of goods and services — grew at a 3.3% annual pace in the second quarter after shrinking 0.5% in the first three months of 2025. The agency had initially estimated second-quarter growth at 3%.
Reactions
"There was an upward revision to business investment in structures, equipment and intellectual property, as well as consumer spending," Ryan Sweet, chief U.S. economist at Oxford Economics, said in a report. "Investment related to AI is helping mask some of the weakness elsewhere in the economy, but the good news is that there is little sign that this support is set to fade anytime soon."
"While the US economy grew at an upwardly revised annualized rate of 3.3% in Q2 2025, the strength was largely a mirage, reflecting a sharp decline in imports after businesses accelerated purchases in response to tariffs in Q1," EY-Parthenon Chief Economist Gregory Daco said in a research note.
What's Next
Concerns about the health of the economy have grown amid recent signs of a cooldown in hiring across the U.S., with employers adding a weaker than expected 73,000 jobs in July. Investors expect Federal Reserve officials to cut interest rates at their next policy meeting in September in a bid to shore up economic growth.
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The first-quarter GDP drop, the first retreat of the U.S. economy in three years, was mainly caused by a surge in imports, which are subtracted from GDP as businesses scrambled to bring in foreign goods ahead of new U.S. tariffs taking effect. That trend reversed as expected in the second quarter. Imports fell at a 29.8% pace, boosting April-June growth by more than 5 percentage points.
The economy grew at an average rate of only 1.4% in the first six months of the year, Daco noted, pointing to weak private-sector demand outside of an ongoing surge of investment in AI.
According to the Atlanta Federal Reserve Bank's GDPNow forecasting tool, the economy is growing at 2.2% clip this year.
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