GDP surged in the second quarter after sliding earlier this year

The U.S. economy surged between April and June after shrinking in the first three months of the year, driven by a large shift in imports tied to President Trump's trade policies.

The country's GDP increased at an annual rate of 3% in the second quarter, the Commerce Department said Wednesday. That's higher than the 2% pace the GDP was forecast to grow for the April-to-June period, according to economists polled by financial data firm FactSet.

The number represents a surprising turnaround from the first three months of 2025, when GDP fell 0.5%, the worst quarterly performance for the U.S. economy since early 2022. The new data also shows consumers increased spending since the last quarter, with a growth of 1.4%, up from 0.5% from January to March. The number is, however, still down significantly from 4% in the final quarter of 2024.

One measure of the economy's underlying strength tucked into the GDP report is the "final sales to private domestic purchasers," which excludes government spending, inventories, and net exports. That number rose at a 1.2% annual rate from April to May — the weakest since late 2022. When considered alongside the 2.9% pace in the fourth quarter of 2024 and the 1.9% in the first quarter of this year, this quarter's number indicates that demand from consumers and businesses is dampening.

GDP data offers a broad yardstick for measuring the overall health of the economy, with periods of fast growth typically coinciding with robust consumer spending, ample job growth and healthy corporate profits. This year, however, experts say the Trump administration's tariffs on U.S. economic partners have complicated the picture.

"As was the case in Q1, volatile trade flows are skewing the GDP performance (the 3% growth primarily reflects a decrease in imports and an acceleration in consumer spending that were partially offset by a downturn in investment)," Adam Crisafulli, head of investment research firm Vital Knowledge, said in a report.

Thomas Ryan, a North America economist at investor advisory firm Capital Economics, said in a note that the surge in GDP "overstates the economy's underlying strength" given the fact that it was largely driven by a 30% slump in imports after President Trump's tariffs took effect.

GDP slumped in the first quarter, falling 0.5% from January to March, largely due to a surge in U.S. imports as consumers and businesses rushed to buy goods from abroad before stepped-up tariffs took effect.

The latest data shows that in the second quarter that trend started to shift with a large drop in imports and a rise in exports — signaling that the United States is closing the trade gap President Trump has repeatedly cited as the basis for his tariff policy.

Still, experts say there's more to the data than what meets the eye. If you combine the 3% growth rate in GDP in the second quarter with the 0.5% decline in first-quarter, the average growth rate for the first six months of 2025 is 1.25%.

In a note shared yesterday before the GDP report, Dean Baker, a senior economist at Center for Economic and Policy Research, suggested that number would be "exceptionally weak" when stacked up against 2024's average growth rate which was 2.8%.

• Economy
• Tariffs
• Inflation
• Trump Administration
• Gross Domestic Product