The U.S. real GDP grew 3.0% year-over-year in the second quarter of 2025, a sharp rebound from a 0.5% contraction in Q1, marking the largest quarterly increase in recent years and surpassing market expectations of 2.4%. This strong growth reversed the first quarter’s downturn caused by weak consumer spending and exports, indicating a short-term economic recovery.
Breakdown of detailed data performance:
- Trade factors drove the GDP growth, with a significant decline in imports reducing the subtraction in GDP calculations, thereby boosting the headline GDP figure;
- Domestic demand, including consumer spending and business investment, remained weak with no substantial expansion;
- Businesses adjusted their trade activities in response to the planned U.S. tariffs, causing notable shifts in trade flows and resulting in distorted GDP data;
- Economists suggest focusing on the "private domestic final sales" indicator to better reflect the actual state of domestic demand in the U.S.
In summary, although the Q2 GDP growth shows an improvement in the economy with a 3.0% increase, part of this growth is due to trade flow adjustments skewing the data. Weak domestic demand remains a key challenge for the U.S. economy. For the full year 2025, economic forecasts remain cautious with expected GDP growth between 0.9% and 1.4%, influenced by ongoing trade tensions. Trade policies and tariffs continue to impact business investment and supply chains, potentially affecting future economic momentum. Companies should closely monitor U.S.-China trade policies and adapt their supply chain strategies accordingly.
