U.S. Economy Expands 3.3% in Q2

Strong Q2 Growth Amid Trade Adjustments

The U.S. economy demonstrated robust recovery in the second quarter of 2025, with GDP growth revised to an annualized 3.3%, up from the initial estimate of 3.0%. This rebound marked a significant improvement from the first quarter’s 0.5% contraction, which was largely attributed to a surge in imports as businesses sought to preempt the impact of tariffs. The second quarter saw a reversal of this trend, as imports fell by 29.8%, contributing approximately 5 percentage points to GDP growth.

Consumer spending, which constitutes about 70% of the GDP, played a key role in driving the recovery. Revised data indicated a 1.6% growth in consumer spending, surpassing the initial estimate of 1.4% and significantly improving from the 0.5% growth in the prior quarter. However, private investment remained a weak spot, declining by 13.8%, the steepest drop since Q2 2020, as businesses grappled with uncertainties stemming from trade policy adjustments and tariff implications.

Tariffs and Economic Concerns Persist

While the second quarter's growth figures reflected stabilization, the underlying effects of tariffs continue to pose economic challenges. The trade deficit in goods narrowed substantially, shrinking to $85.88 billion in June from March’s elevated levels. This contraction resulted from businesses reducing imports following an earlier rush to stockpile goods ahead of tariff implementations.

Economists, however, remain cautious about the broader economic implications of tariffs. These measures, while intended to protect domestic industries, have raised costs for importers and, by extension, consumers. The inflationary impact, although described as modest thus far, could escalate if businesses pass on higher costs to consumers. Additionally, the unpredictability of trade policies has created an environment of uncertainty, deterring investments and complicating long-term economic planning.

Despite the recovery in Q2, experts forecast slower economic growth in the second half of the year, with expectations of a 1.5% annualized pace. This outlook reflects ongoing concerns about trade policies, global economic headwinds, and their combined impact on consumer confidence and business investment.