US Economy Grows 3% in Q2 Reversing Contraction

The U.S. economy grew at an annualized rate of 3% in the second quarter of 2025, surpassing expectations and rebounding from a 0.5% contraction in the first quarter largely caused by import surges ahead of President Trump's tariff announcements. This growth was driven primarily by a significant decline in imports and a pickup in consumer spending, which rose 1.4%, supported by a steady labor market. However, business investment slowed sharply, and the housing sector continued to drag on growth due to high borrowing costs. Despite the overall positive GDP figures, underlying measures of domestic demand showed more modest gains, reflecting ongoing uncertainty from trade policies and weaker business spending. President Trump welcomed the strong GDP report and urged the Federal Reserve to lower interest rates to stimulate further economic activity, though the Fed is expected to maintain current rates amid cooling inflation. The mixed economic signals highlight resilience in the consumer sector amid cautious business investment and trade-related challenges, suggesting a complex outlook for the U.S. economy in the coming months.