Updated @ 10:33 AM EDT on July 30, 2025
After slowing down earlier in the year, the U.S. economy expanded this spring.
According to a report released by the Commerce Department on Wednesday, the country’s gross domestic product, which is the most comprehensive indicator of economic activity, increased by 3% annually in April, May, and June. Compared to the three months prior, when GDP shrank by 0.5%, that is a significant improvement.
Large fluctuations in global trade caused some distortion in both measurements as consumers and companies first prepared for and then responded to President Trump’s global tariffs. Businesses attempted to stockpile foreign goods before the tariffs went into force, which led to a spike in imports early in the year. In January, February, and March, this resulted in a decline in GDP since imports are deducted from the government’s indicator of economic activity.
Following the implementation of double-digit tariffs, imports fell in the second quarter of the year, which somewhat improved the spring GDP statistic. The quarter also saw a decline in exports.
Growth is still slower overall than previous two years
The largest contributor to economic activity, consumer spending, increased 1.4% annually in the spring. State and local government spending increased throughout the quarter, but business and residential investment decreased.
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The U.S. economy expanded at an annual pace of roughly 1.25% in the first half of the year, based on the average of the GDP measurements from the first and second quarters. Compared to the two prior years, when the GDP expanded by around 3%, that represents a downturn.
“We expect the economy to lose more momentum,” Pantheon Macroeconomics’ Samuel Tombs stated. In the second half of the year, he predicts annualized GDP growth of just under 1% as businesses react to the uncertainties surrounding the economic plans of the Trump administration and consumers contend with rising import prices.
When trade and government spending are excluded, real final sales to private domestic buyers increased at an annual pace of 1.2% in the second quarter as opposed to 1.9% in the first three months of the year.
Copyright 2025 NPR
