The U.S. economy grew at a robust 3% annual rate between April and June, defying expectations and recovering from an earlier contraction linked to trade-related disruptions under President Donald Trump’s administration.
The Associated Press, Washington covered a report released Wednesday by the Commerce Department, gross domestic product (GDP)—which measures the total output of goods and services—reversed course after shrinking at a 0.5% annual pace in the first quarter. That decline was largely driven by a surge in imports as companies rushed to secure foreign goods ahead of planned tariffs, which are subtracted from GDP calculations.
While economists had anticipated some improvement, the strength of the second-quarter rebound caught many by surprise, with most forecasting growth closer to 2%. A significant factor in the turnaround was a sharp drop in imports—the steepest since the COVID-19 pandemic began—which contributed more than five percentage points to the second quarter’s overall growth. Consumer spending also showed modest improvement, rising 1.4%, compared to just 0.5% in the previous quarter.
Federal government spending and investment fell at a 3.7% annual rate on top of a 4.6% drop in the first quarter.
On his Truth Social media platform, Trump heralded the GDP gain and stepped up his pressure on the Federal Reserve to cut interest rates: “2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! “Too Late” MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!’’
However, not all indicators were positive, the AP claims. Private investment declined at a striking 15.6% annual rate, marking the largest drop since the onset of the pandemic. Additionally, as companies worked through stockpiled inventory accumulated earlier in the year, the drawdown reduced overall growth by 3.2 percentage points.
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