US Q2 GDP Growth Revised Higher to 3.3%

The second estimate of Q2 GDP shows the US economy expanded at an annual rate of 3.3%, higher than expected. The BEA's data indicates a strong rebound from earlier in the year, despite ongoing economic challenges.

The U.S. economy has shown remarkable resilience, with the second estimate of Q2 GDP indicating an annual growth rate of 3.3%, surpassing expectations. This figure represents a significant rebound from the 0.5% contraction experienced in the first quarter of 2025 [1].

The Commerce Department’s Bureau of Economic Analysis (BEA) revised its initial estimates, reflecting upward revisions in consumer spending and business investment. Consumer spending, accounting for about two-thirds of the U.S. economy, was revised up to a 1.6% annualized rate, while business investment, or nonresidential fixed investment, saw an upward revision to 5.7% [2].

The revisions to GDP were partly offset by downward revisions to government spending and an upward revision to imports. Notably, imports fell by 29.8% in the second quarter, significantly boosting the growth rate [3]. This decline in imports can be attributed to President Donald Trump’s tariff policies, which led businesses to accelerate their purchases in the first quarter to avoid higher costs [1].

Despite the positive GDP figures, some economists caution that the strength of the rebound is largely a result of temporary factors, such as the sharp decline in imports. The underlying momentum of the economy is expected to sputter, with projections for the second half of the year indicating sub-1% GDP growth [2].

The Federal Reserve is closely monitoring the U.S. labor market, which has shown unusually weak job growth in recent months. The average pace of monthly job growth from May through July was the weakest since 2009, outside of the pandemic recession in 2020 [2]. This weak job growth could lead to a slowdown in economic activity and potentially influence the Federal Reserve’s interest rate decisions at its mid-September monetary policy meeting.

Inflation metrics remained stable, with the personal consumption expenditures (PCE) price index at 2% in the second quarter, matching the Federal Reserve’s target. The core PCE, excluding food and energy, held steady at 2.5%, indicating controlled inflationary pressures [3]. The Federal Reserve’s benchmark interest rate remains at 4.25%–4.5% through September, and analysts anticipate a potential rate cut, supported by easing inflation and sustained consumer spending.

The U.S. economy is projected to grow at a 2.2% pace in the third quarter, with robust consumption and recovering corporate profits fueling optimism. However, challenges such as tariff-induced inflation and ongoing trade volatility may impact long-term economic forecasts [3].

References:
[1] https://finance.yahoo.com/news/us-economy-grew-faster-pace-142927924.html
[2] https://keyt.com/news/2025/08/28/the-us-economys-rebound-in-the-second-quarter-was-stronger-than-previously-reported-2/
[3] https://www.mixvale.com.br/2025/08/28/u-s-economy-expands-3-3-in-q2-fueled-by-robust-consumption/