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Posted on 07/30/2025 6:29:29 AM PDT by Red Badger
Key Points
Gross domestic product jumped 3% for the second quarter, better than the 2.3% estimate and reversing a 0.5% decline in the prior period.
Consumer spending rose 1.4% in the second quarter, better than the 0.5% in the prior period.
While exports declined 1.8% during the period, imports fell 30.3%, reversing a 37.9% surge in Q1.
President Donald Trump responded to the GDP report with a fresh demand for the Federal Reserve to lower interest rates.
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The U.S. economy grew at a much stronger-than-expected pace in the second quarter, powered by a turnaround in the trade balance and renewed consumer strength, the Commerce Department reported Wednesday.
Gross domestic product, a sum of goods and services activity across the sprawling U.S. economy, jumped 3% for the April through June period, according to figures adjusted for seasonality and inflation.
That topped the Dow Jones estimate for 2.3% and helped reverse a decline of 0.5% for the first quarter that came largely due to a huge drop in imports, which subtract from the total, as well as weak consumer spending amid tariff concerns.
Financial markets reacted little to the report, with stock index futures mixed and Treasury yields higher.
“The word of the summer for the economy is ‘resilient,’” said Heather Long, chief economist at Navy Federal Credit Union. “The consumer is hanging in there, but still on edge until the trade deals are done.”
The period reported Wednesday includes President Donald Trump’s April 2 “liberation day” tariff announcement. Imports had jumped in the first quarter as companies sought to get ahead of the announcement.
Over the past three months, Trump has been engaged in multiple rounds of saber-rattling and often intense negotiations with U.S. trading partners that have jangled nerves but nonetheless coincided with a subdued but solid pace of economic growth.
The talks have largely resulted in tariffs well above where they were at the beginning of the year but not as severe as initially proposed.
Consumer spending rose 1.4% in the second quarter, better than the 0.5% in the prior period. While exports declined 1.8% during the period, imports fell 30.3%, reversing a 37.9% surge in Q1.
The GDP tally showed strength across key areas of the economy, as well as evidence that inflation is ebbing though not eradicated.
The personal consumption expenditures price index, the Federal Reserve’s key inflation metric, showed a gain of 2.1% for the quarter, just above the central bank’s 2% target. Core PCE inflation, which the Fed considers a better gauge for longer-run trends as it excludes volatile food and energy prices, increased 2.5%. The respective numbers for the first quarter were 3.7% and 3.5%.
The Fed meets later Wednesday and is expected to hold its key overnight borrowing rate steady in a 4.25%-4.5% range, where it has been since December.
Trump responded to the GDP report with a fresh demand for the Federal Reserve to lower interest rates.
“2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED!” Trump posted on Truth Social. Using his nickname for Fed Chair Jerome Powell, the president added ”‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!”
There were some signs of a slowdown in the report.
Final sales to private domestic purchasers, a metric that Fed watches closely as a demand indicator, rose just 1.2%, down from the 1.9% increase in Q1 and the slowest gain since the fourth quarter of 2022.
Trump has been complaining about high mortgage rates, which have held back the housing market. Residential investment fell 4.6% in Q2.
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Democrats will claim it’s the Biden Economy.............
Economists are worse than weathermen.
2.8% and there’s no deficit spending … amazing
That’s why I call them :
ECONO-MISSEDs.......................
Told ya so
DJT
In other words, the economy would have been better, but for the tariffs imposed by that incompetent know-nothing Trump.
“even as Trump’s tariffs hit“
CNBC is a rat propaganda op masquerading as a financial news network.
One thing that always tends to go unmentioned in these kind of articles is that businesses make plans based on what they anticipate will happen in the future. Trump’s election signified that there would be a much more pro-business and pro-energy environment in the country for the next few years at least. That gave businesses more incentive to go ahead with expansions, or at least removed a lot of the negative uncertainties they would have felt with a continuation of the Biden-Harris policies.
But the experts!
Tariffs are bringing in a Trillion a year without inflation.
The math is not obvious: Imports surging 37.9% then falling 30.3% actually means imports are 3.9% lower than when they started.
If that seems wrong, consider this: Suppose something costs $100, and then gets marked up 50%. Now it costs $150. Now, it gets marked off 50%. It doesn’t cost $100, but rather only $75, since 50% of $150 is a much larger amount than than 50% of $100... so the 50% price reduction from $150 is a lot more money than the 50% price increase from $100.
Publix does that every day!....................
Of course, imports still reflect people importing goods from EU, Canada, Mexico, etc., ahead of the Aug 1 tariff hikes... so imports will likely fall much more.
The media spin is irrelevant. The chicken little “experts” continue to be wrong. Every month they are wrong they promise us the next month or the next quarter will be when Americans feel the pain. Inflation ,they say, is in check because folks arent buying stuff . Thats clearly not right. And they werent buying stuff because they were scared…. Or tariffs driven import drops made things less available. It would actually seem like supply and demand are both alright.
businesses make plans based on what they anticipate will happen in the future.
The company I’ve worked at for 3 years (and some change) now has frozen hiring and spending, plus instituted a 10+% cut in future projects/spending. I work IT, and it’s hampering us as we have 15+ year old devices that aren’t supported by the vendors anymore, and can’t buy replacement, but get audited and told to replace them. Wonderful catch-22 for us, of course.
"The chief business of the American people is business" - Calvin Coolidge
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