The U.S. economy picked up speed in the second quarter, expanding at a 3.3% annualized rate—a stronger pace than previously estimated, according to a revised report from the Bureau of Economic Analysis (BEA) released on Thursday.
This latest figure improves on last month’s 3% initial growth rate and marks a turnaround from the 0.5% contraction recorded at the start of the year. One more adjustment to these numbers is anticipated before they are finalized.
The GDP data, widely seen as a bellwether of economic health, offer a mixed signal in part due to the impact of the Trump administration’s tariff policies. Many firms accelerated imports in the first quarter ahead of higher tariffs, which pulled down GDP, while a sharp reduction in imports in the second quarter—since imports are subtracted from GDP—gave the figure a boost.
Nonetheless, the upward revision offers evidence the U.S. economy is withstanding recent policy headwinds better than previously thought. Consumer activity, the backbone of economic output, increased more robustly than early estimates suggested, rising 1.6% compared to the initial 1.4% reading. Demand for goods and services also accelerated, with a closely watched metric—real final sales to private domestic purchasers—climbing 1.9% in the second quarter, up notably from the earlier 0.7% estimate.
For Federal Reserve officials and market watchers, the improved GDP outlook eases some concerns about the fallout from tariffs and the drag of elevated interest rates. Hiring slumped through the summer, prompting speculation the Fed could move to lower rates in September, but the stronger growth print reduces the urgency for immediate monetary easing.
Over the first half of the year, U.S. GDP has grown at roughly a 2.1% pace. Measures of underlying inflation were largely unchanged in the latest report: Core personal consumption expenditures prices, which strip out the food and energy sectors, rose 2.5%. The headline PCE index ticked down to 2%, consistent with the Fed’s long-term inflation target.
