The U.S. economy staged a sharp recovery in the second quarter of 2025, expanding at an annualized rate of 3.3%, according to revised figures released Thursday by the Commerce Department.
The rebound follows a surprise 0.5% contraction in the first quarter, the first quarterly decline in three years, which had been largely attributed to the fallout from President Donald Trump’s aggressive trade policies.
The updated figures exceeded the department’s earlier estimate of 3% growth for April through June, underscoring stronger-than-expected consumer spending and private investment.
The Q1 downturn was driven in large part by a surge in imports, as U.S. companies scrambled to stockpile goods before Trump’s sweeping tariffs took effect. That trend reversed in the second quarter, with imports plunging 29.8%, a shift that alone added more than five percentage points to GDP growth.
Consumer spending, which accounts for about 70% of U.S. economic activity, grew at an annualized rate of 1.6%, outperforming both the first quarter’s sluggish 0.5% and the initial 1.4% estimate for Q2.
Private investment, however, contracted sharply, falling 13.8%, its steepest decline since the second quarter of 2020 during the COVID-19 pandemic. A drawdown in business inventories alone shaved an estimated 3.3 percentage points off growth. Federal government spending also slid 4.7%, following a 4.6% drop in the first quarter.
A key underlying GDP measure, which strips out volatile components such as trade, inventories, and government spending, increased by 1.9%, matching Q1’s pace and signaling steady but modest core momentum.
Since returning to the White House, Trump has upended decades of U.S. trade liberalization, imposing double-digit tariffs on most imports and targeting specific sectors like steel, aluminum, and automobiles. The administration argues the measures will shield domestic industry, repatriate manufacturing, and help finance sweeping tax cuts enacted on July 4.
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