US economic growth rebounds in second quarter

U.S. economic growth rebounded in the second quarter of 2025, largely due to the unwinding of a surge of imports triggered by President Trump’s tariffs.

U.S. gross domestic product (GDP) expanded an annualized rate of 3 percent between April and June after falling 0.5 percent in the first quarter of the year, according to data released Wednesday by the Bureau of Economic Analysis (BEA).

The BEA said the increase came “primarily” due to a decline in imports, which detract from GDP and surged during the first quarter ahead of Trump’s tariffs. Imports fell in the following three months as companies braced for the imposition of new taxes.

Economists cautioned Wednesday against reading too much into the headline number.

“A 3.0 percent expansion in the second quarter doesn’t signal a roaring economy any more than the 0.5 percent contraction in the first quarter pointed to an economic downturn,” Olu Sonola, head of U.S. economic research at Fitch Ratings, wrote in a commentary. 

Distortions from import and inventories left aside, the number reflected an increase in consumer spending offset by a decrease in domestic investment.

More worryingly for economists, the report also showed a contraction in final sales to domestic purchasers, which declined to 1.2 percent from 1.9 percent in the first quarter.

Final sales is the sum of spending and fixed investment in the economy, which White House policies are designed to bolster. Fixed investment increased by 0.4 percent after surging to a 7.8 percent increase in the first quarter.

“Fixed investment barely grew in the second quarter as tariff and energy policy uncertainty likely weighed on the appetite to invest,” Skanda Amarnath, a former Fed economist, wrote in a commentary. “The clouds are continuing to darken.”

Sonola said the decline in final sales “reflect[s] a slowdown in the real private sector economy.”

The top-line number exceeded economists’ expectations of around 2.4 percent growth. Some predictions were as high as 3.3 percent for the quarter after recent import data showed the goods trade deficit falling to its lowest point in two years.

The White House has been moving quickly on trade deals ahead of an Aug. 1 deadline for “reciprocal” tariffs that were first announced in April before being paused.

A new round of trade talks with China led by Treasury Secretary Scott Bessent started Monday in Stockholm.

The sketch of a deal with the European Union was announced over the weekend, though it has received widespread criticism at the country level, with the heads of France and Belgium knocking the deal. The French prime minister said the deal amounted to a form of submission.

Other deals were announced recently for Japan, South Korea and Indonesia, following previous announcements for Vietnam and China.

Various estimates for the overall U.S. tariff level range between 10 percent and 15 percent — the highest level in decades and, by some measures, a century. Tariffs on China are now at about 50 percent.

Tariffs have been weighing on business and consumer sentiment in different tallies and polls. Along with producing reduced investment levels and hiring uncertainty, tariffs are just now starting to show up in prices.

The consumer price index increased to a 2.7 percent annual increase in its latest reading, from a previous reading of 2.4 percent. The personal consumption expenditures price index ticked up 2.3 percent increase in May from 2.2 percent in April.

Updated at 9:43 a.m. EDT