The US economy expanded at a faster pace than initially reported during the spring months, driven by solid consumer expenditure and a decline in imports, according to updated figures released by federal authorities. Gross domestic product (GDP) advanced at an annualized rate of 3.8% between April and June, an upward revision from the earlier estimate of 3.3%. This marks the strongest quarterly growth in nearly two years, following a contraction in the first quarter of 2025 when the economy contracted by 0.6%. That earlier downturn was largely attributed to businesses accelerating imports ahead of tariffs imposed under former President Donald Trump, which negatively impacted GDP calculations since imports subtract from the total.
The Commerce Department noted that the improved performance stemmed from both rising household consumption and reduced import levels. Consumer spending, a key driver of the nation’s economic activity, increased by 2.5% year-on-year through June, up from a prior estimate of 1.6%. Despite ongoing trade policy uncertainties and inflationary pressures, American consumers have continued to support economic momentum.
Recent retail sales data further underscore this resilience, showing a 0.6% month-on-month rise in August—exceeding market forecasts. However, this positive trend contrasts with labor market indicators that suggest weakening conditions. Nonfarm payrolls grew by only 22,000 in August, falling short of expectations, while the unemployment rate edged up from 4.2% to 4.3%, according to Labor Department statistics.
Nonetheless, there are signs of stability emerging. Initial claims for unemployment benefits dropped last week to their lowest point since July, indicating that the job market may not be deteriorating as rapidly as the August employment report implied.
Bill Adams, chief economist at Comerica Bank, commented that the latest GDP and claims data offer reassurance after the disappointing jobs numbers. “These figures should help alleviate some of the concern sparked by the softness in the August labor report,” he said.
Lydia Boussour, senior economist at EY-Parthenon, observed that economic momentum held firm in the first half of the year despite growing headwinds from trade policies. Still, she warned that the effects of tariffs and regulatory uncertainty are becoming more apparent, potentially leading to slower growth and elevated inflation in the coming quarters.
— news from BBC
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US economic growth revised up on strong consumer spending
The US economy grew faster than previously thought this spring, fuelled by robust consumer spending and falling imports, according to new government data. n nGross domestic product (GDP), which measures goods and services production, rose at an annualised rate of 3.8% in the period from April through June – up from the previous estimate of 3.3%. n nThe second quarter growth – the fastest pace in nearly two years – followed a contraction earlier this year. n n”[It] reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending,” the Commerce Department said. n nConsumer spending rose by 2.5% in the year to the end of June, up from a previous estimate of 1.6%. n nIn the first three months of 2025, the US economy shrank at a rate of 0.6% as companies rushed in imports to get ahead of US President Donald Trump ‘s tariffs, which chipped away at GDP. n nAmerican consumers, the engine of the world ‘s largest economy, have remained resilient in the face of tariffs and economic uncertainty. n nRetail sales rose 0.6% in August from the prior month, beating expectations, according to data from the Commerce Department released last week. n nThe continued strength in spending, which has defied worries about a slowdown, is in contrast to recent data showing a weakening labour market. n nEmployers added just 22,000 jobs in August, fewer than expected, while the unemployment rate ticked up from 4.2% to 4.3%, according to the Labor Department. n nBut initial claims for unemployment insurance fell last week to their lowest level since July, the Labor Market said on Thursday, in a sign that the jobs market might not be in as dire shape as other data have suggested. n n”The latest economic data are considerably more upbeat than the droopy August jobs report,” said Bill Adams, chief economist for Comerica Bank. n n”The latest GDP and jobless claims data should ease the bout of anxiety kicked off by the weak August jobs report.” n nEconomic momentum remained steady in the first half of the year despite mounting policy headwinds, said Lydia Boussour, senior economist at EY-Parthenon. n nBut she cautioned that “with the impact of tariffs and policy uncertainty becoming increasingly visible, slower US growth and higher inflation are still on the horizon.”