US Q2 GDP: +3.0%, expected: 2.4%

The U.S. economy — as measured by gross domestic product, the most comprehensive indicator of economic performance — expanded at a 3% annual rate over April, May, and June, according to Wednesday’s report from the Commerce Department. This marked a reversal from the first quarter, when GDP shrank at a 0.5% rate.

However, both quarterly figures were influenced by major fluctuations in international trade, as businesses and consumers initially prepared for and then reacted to President Trump’s global tariff strategy. In the early months of the year, imports surged as companies rushed to bring in foreign goods ahead of the new tariffs, which weighed down first-quarter GDP, since imports are counted as a subtraction in GDP calculations.

In contrast, imports fell sharply during the second quarter, following the imposition of steep tariffs. This decline made the spring GDP figures appear stronger. At the same time, exports also dropped.

Growth remains slower than in the past two years. Consumer spending — the main engine of the economy — increased at just a 1.4% annual pace in the second quarter. Meanwhile, both business and residential investment declined, though spending by state and local governments rose.

Taking the average of GDP growth across the first and second quarters, the economy grew at an annual rate of approximately 1.25% during the first half of the year — notably below the nearly 3% growth seen in each of the two prior years.

“We expect the economy to lose more momentum,” said Samuel Tombs of Pantheon Macroeconomics. He anticipates GDP will grow at only a 1% annualized rate in the latter half of the year, as consumers grapple with rising prices for imports and companies face ongoing policy uncertainty.

A clearer picture of private-sector demand comes from real final sales to private domestic purchasers, which excludes trade and government outlays. That measure grew at a 1.2% annual pace in the second quarter, down from 1.9% in the first.