‘Early signs for the third quarter are pointing up,’ said one bank’s chief economist.
The U.S. economy sharply rebounded in the second quarter following a contraction in the first three months of 2025.
The GDP surged 3 percent in the April—June period, up from the 0.5 percent decline in the first quarter, according to the advanced estimate from the Bureau of Economic Analysis.
Economists had penciled in a 2.4 percent growth rate.
Last quarter’s gross domestic product (GDP)—the total value of all goods and services produced in the national economy—was fueled by a decline in imports and a modest increase in consumer spending.
Imports plummeted by 30.3 percent, down from the previous quarter’s 38 percent spike when companies stockpiled foreign goods to avoid higher tariff-related costs.
Exports fell by 1.8 percent after rising by 0.4 percent in the January–March span.
“Impacts from trade policy has showed up. The decrease in imports were led by nondurable consumer goods, mainly medicinal, dental, and pharmaceutical items,” Jeffrey Roach, chief economist at LPL Financial, said in a note emailed to The Epoch Times.
Economists have closely monitored the trade component of the GDP data, as imports subtract from the total.
Real consumer spending advanced by 1.4 percent from the 0.5 percent first-quarter jump. Recent numbers suggest that shoppers have reopened their wallets, but market watchers have debated whether this is because they have shrugged off tariffs or are trying to front-run higher prices.
Despite the category’s 24 percent increase in the first quarter, gross private domestic investment, or GPDI, fell by almost 16 percent. This is a key component, as it highlights investments by private companies and individuals in the economy, ranging from home construction to spending on factories and machinery.
Government consumption made a negligible contribution to the final GDP reading. There was a divergence between the three levels of government, as federal outlays fell by 3.7 percent, while state and local spending increased by 3 percent.
On the inflation front, the GDP price index—a gauge of prices of goods and services produced domestically—climbed by a lower-than-expected 2 percent, lower than the 3.8 percent increase in the first quarter.
personal consumption expenditures (PCE) prices, which reflect changes in the cost of goods and services purchased by households, increased by 2.1 percent, easing from 3.7 percent in the previous quarter and coming in below the market expectation of 2.9 percent.
Core PCE, which excludes the typically volatile categories of food and energy, rose at a higher-than-anticipated rate of 2.5 percent, though this marks a slowdown from the 3.5 percent recorded in the prior three-month period.
By Andrew Moran
