On 30/7, the Bureau of Economic Analysis (BEA) of the US Department of Commerce reported that the US GDP grew by 3% in the second quarter compared to the same period last year. This contrasts with the first quarter, when GDP fell by 0.5% for the first time in three years. The growth rate also exceeded Dow Jones' forecast of 2.3%.
In the second quarter, consumer spending increased by 1.4%. Exports decreased by 1.8% and imports decreased by 30.3%, a reversal from the first quarter.
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Port of Oakland in California (USA) in May 2025. Photo: Reuters |
Port of Oakland in California (USA) in May 2025. Photo: Reuters
The GDP figures indicate improvements in many key sectors of the economy. Inflation is also cooling down. The personal consumption expenditures (PCE) price index, the Federal Reserve's (Fed) preferred inflation gauge, rose 2.1% in the second quarter. Core PCE (excluding food and energy prices) rose 2.5%. Both figures are significantly lower than in the first quarter.
However, analysts on Reuters suggest the GDP figures were significantly distorted by trade, similar to the first quarter. They explain that Trump's uncertain trade policies make it difficult to accurately assess the state of the economy.
In the first quarter, businesses increased imports before tariffs were imposed, leading to a record goods trade deficit and pulling down GDP. This trend reversed in the second quarter, causing GDP to rebound.
Data earlier this week showed a sharp decline in the US goods trade deficit in June. Meanwhile, inventories surged. Trade and inventories are the most volatile components in the GDP calculation formula.
Economists predict stagnant US growth in the second half of the year. Although the White House has announced several trade agreements with partners, US import tariffs are currently among the highest since the 1930s.
They also predict the Fed will hold its benchmark interest rate steady in its policy meeting this week. The Fed cut interest rates three times last year and is currently maintaining them at 4.25-4.5%.
Ha Thu (Reuters)
