US Economy Bounces Back with 3% Growth in Q2

US Economy Bounces Back with 3% Growth in Q2

Wednesday 30th July 2025 – 13:45 (BST)

The US economy grew 3% on an annualised basis in the second quarter, marking a solid recovery from the 0.5% contraction at the start of the year. The stronger-than-expected reading, which topped forecasts of 2.4%, suggests the economy is holding up better than many had feared.

Much of the rebound came from a sharp drop in imports, which fell over 30% after surging nearly 38% in the previous quarter. That earlier spike reflected a rush to stockpile goods ahead of planned tariffs. With inventories now full, restocking has slowed, but the improvement in the trade balance gave GDP a sizeable lift.

Consumer spending picked up, particularly on goods, and government spending edged higher after falling in Q1. Conversely, business investment lost momentum and equipment expenditure slowed – pointing to increased caution among companies.

Exports slipped 1.8%, the steepest drop since mid-2023, while changes in private inventories shaved more than 3 percentage points off growth. The details suggest the headline figure was flattered by trade movements rather than broad-based strength.

For the dollar, the stronger GDP print could offer support, especially if it leads markets to think the Federal Reserve will keep rates higher for longer. But with parts of the economy still showing strain, the pressure remains on Fed chief Jerome Powell who recently got backing from President Trump.