U.S. economy grows 3% in Q2 amid trade turmoil

In the United States, the economic landscape shifted significantly during the spring of this year, following a period of contraction earlier. According to a report released by the Commerce Department, the nation's gross domestic product (GDP) experienced a growth rate of 3% annually from April to June. This rebound followed a decline of 0.5% in the previous three months, driven by various factors, including a highly dynamic international trade environment. During the first part of the year, businesses and consumers adjusted to President Donald Trump's global tariffs, leading to significant changes in import and export levels. In anticipation of these tariffs, imports surged earlier in the year as companies attempted to stockpile foreign goods. However, this surge adversely affected the GDP calculation since imports are subtracted from the economic activity measure, resulting in a negative growth for January through March. As the tariffs took effect and imports declined, the GDP figures for the second quarter appeared more favorable. Despite this growth, it should be noted that the overall pace of economic expansion remains slower compared to the previous two years, which had also recorded growth rates near 3%. Consumer spending, responsible for the bulk of economic activity, increased at a modest annual rate of 1.4% in the spring. Meanwhile, both business and residential investments decreased, while state and local government spending saw an uptick. To average out the first and second-quarter GDP growth rates, the economy recorded approximately a 1.25% increase in the first half of the year, framing a picture of a more cautious economic environment. Experts suggest that the predicted outlook for the second half of the year indicates a possible further loss of momentum. Samuel Tombs of Pantheon Macroeconomics foresees an annualized GDP growth of only about 1% as consumers navigate rising prices for imported goods and businesses grapple with uncertainties surrounding the Trump administration's policies. Real final sales to private domestic purchasers, which excludes trade and government contributions, grew at a rate of 1.2% in the second quarter, reflecting a slight decrease from 1.9% in the first quarter. This data paints a complex and somewhat cautionary view of the U.S. economy's trajectory moving forward.