Economic Trends
First Estimate: 2Q U.S. GDP Rebounded with 3.0% Gain
U.S. GDP rebounded sharply in the second quarter of 2025, driven by stronger consumer spending and a drop in imports.
U.S. economic growth rebounded considerably during 2025’s second quarter amid tariff trade swings after a modest 1Q decline, according to data released July 30 by the Commerce Department.
The Bureau of Economic Analysis’ advance estimate report showed that U.S. gross domestic product increased at an annual rate of 3.0% in April-June. This followed a 0.5% decline in 1Q25.
The Bureau said the increase in GDP in 2Q primarily reflected a decline in imports — which detract from economic growth — and an increase in consumer spending. Meanwhile, those factors were partially offset by decreases in investment and exports.
MDM’s 2Q25 MarketPulse Report (store link)
Compared to 1Q, the increase in real GDP in the second quarter predominantly reflected a downturn in imports and an acceleration in consumer spending, partially offset by a downturn in investment.
Economists polled by major news outlets expected a 2.3-2.4% increase in the Commerce Department’s first estimate.
On July 29, however, economists updated their expectations following new data that revealed the U.S. goods trade deficit shrunk to its smallest figure in nearly two years in June and inventories rose marginally. Economists upgraded GDP growth estimates by as much as 0.8-percentage-points to 3.3%.
MDM Analysis:
While the net 3.0% growth in 2Q GDP is undoubtedly a solid improvement from 1Q, tariff impacts cloud the country’s true April-June economic growth. This is evidenced by the major drop shown in 2Q imports that contributed 4.99 percentage points to the new GDP figure after negatively impacting it by 4.61 points in 1Q. Consumer spending — the largest engine of the U.S. economy — improved during 2Q, but contributed only 1.0 point as business investment weakened.
Excluding volatile trade and inventory figures, U.S. growth advanced at a much softer 1.2% during 2Q when using the Bureau’s data for final sales to private domestic purchasers — seen as an important measure of broader economic health.
The 2Q GDP second estimate will be released in a report issued on Aug. 28.
