Catenaa, Wednesday, July 30, 2025- US economic growth likely rebounded in the second quarter as the flow of imports subsided, with an anticipated moderate increase in consumer spending.
The Commerce Department’s advance gross domestic product report on Wednesday would be heavily distorted by trade, as was the case in the January-March quarter when GDP contracted for the first time in three years.
Economists said President Donald Trump’s protectionist trade policy, including sweeping tariffs on imports as well as delaying higher duties, had made it difficult to get a clear pulse on the economy.
They urged focusing on final sales to private domestic purchasers, viewed by economists and policymakers alike as a barometer of underlying US economic growth, which is forecast to have slowed from the first quarter’s moderate growth pace.
A Reuters survey of economists forecast GDP likely increased at a 2.4% annualized rate last quarter after declining at a 0.5% pace in the first quarter. The size of the economy is also expected to swell above $30 trillion for the first time ever before accounting for inflation.
The survey was, however, concluded before data on Tuesday showed the goods trade deficit shrinking to its smallest in nearly two years in June and inventories rising marginally.
That prompted economists to upgrade their GDP growth estimates by as much as 0.8 percentage points to as high as a 3.3% pace.
Trade chopped off a record 4.61 percentage points from GDP in the first quarter. Though a reversal is expected, some of the boost could be offset by low inventories, the result of the ebb in the flow of foreign merchandise.
Trade and inventories are the most volatile components of GDP. Inventories added 2.59 percentage points to GDP in the January-March quarter.
Economists estimated the economy grew less than 1.5% in the first half of the year. They anticipated a lackluster second half, which would limit growth to around 1.5% or even less for the full year, a sharp slowdown from the 2.8% notched in 2024.
Though the White House has announced a number of trade agreements, economists said the nation’s effective tariff rate remained one of the highest since the 1930s and noted that about 60% of the nation’s imports remained uncovered by a deal.
