MarketWatch reports that the U.S. economy demonstrated renewed vigor in the second quarter of 2025, with gross domestic product expanding at a 3.8% annualized rate, according to updated figures from the Commerce Department. This marked the strongest quarterly performance in nearly two years and was largely attributed to robust consumer activity. n nRevisions to earlier data revealed that household spending grew at a 2.5% pace, up from a previously reported 1.6%, reinforcing the role of the consumer as the primary engine of economic growth. Business investment also contributed, with equipment outlays rising at an 8.5% rate and intellectual property investment climbing at 15.0%. n nThe trade deficit shrank significantly as import volumes declined following a surge in the first quarter, adding a record 4.83 percentage points to GDP. This reversal helped offset the earlier drag caused by front-loaded imports ahead of tariff increases. n nDespite the strong headline number, analysts warn that underlying momentum may be cooling. The first quarter saw a contraction of 0.6%, and economists project only modest growth in the second half of the year due to ongoing trade policy uncertainty. Full-year 2024 growth is estimated at 2.8%. n nLabor market data showed initial unemployment claims falling to 218,000 in mid-September, below expectations, while continuing claims edged lower to 1.926 million. However, the unemployment rate rose to 4.3% in August, reflecting sluggish job creation. n nCore capital goods orders increased 0.6% in August, beating forecasts, though shipments declined slightly. Financial markets interpreted the strong GDP data as reducing the urgency for further Federal Reserve rate cuts, leading to a rise in Treasury yields and the dollar, while stocks retreated. n
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‘Thanks to the mighty consumer,’ GDP shows more spring in U.S. economic growth MarketWatch