US economic growth rebounded in the second quarter of 2025 after contracting for the first time in three years in the first quarter.
According to a preliminary estimate by the Bureau of Economic Analysis (BEA), Gross Domestic Product (GDP) grew at an annualized rate of 3% in the April-June period. Analysts interviewed by Bloomberg had previously expected growth of only around 2.6%.
This surge came after a large surge in imports ahead of the implementation of new tariffs by President Trump caused GDP to shrink by 0.5% in the first quarter. BEA explained that the recovery in the second quarter was driven by a decline in imports that included components that are excluded in the calculation of GDP.
However, Thomas Ryan, an economist at Capital Economics, warned that there are still signs of a slowdown in economic growth. Sales to private domestic buyers, a key indicator of the health of the real economy, rose just 1.2% in the second quarter, down from 1.9% in the first quarter, the slowest pace of growth since 2022.
“Some of this slowdown is due to temporary factors such as the drop in oil prices after Emancipation Day, so we still see the economy as healthy overall,” Ryan said in a note.
The GDP data released on Wednesday covers economic activity from April to June, the first three months of Trump’s massive tariffs. However, it does not take into account the additional tariff updates announced in July.
Investors are now closely watching how this aggressive tariff policy will affect economic growth. In April, Trump’s initial announcement of the “Emancipation Day” tariffs shocked markets and sparked recession fears.
But in recent months, economic data has performed better than expected, allaying those concerns. According to popular betting platform Polymarket, the probability of a recession in the US in 2025 is now just 17%, down from a high of 66% on May 1.
