The United States economy expanded at a faster pace than initially thought in the second quarter of 2025 amid resilient consumer demand, robust business investment, and a sharp narrowing of the trade deficit.
Real gross domestic product (GDP) increased at an annualised 3.8% rate in the April–June period, the Commerce Department’s Bureau of Economic Analysis (BEA) said on Thursday in its third estimate, posting the strongest growth since the third quarter of 2023, and revised up from the previous 3.3% estimate.
Markets had expected no change from the prior reading.
The agency noted, “The increase in real GDP in the second quarter primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending. These movements were partly offset by decreases in investment and exports.”
Imports collapsed after a record surge in early 2025, when firms front-loaded purchases ahead of new duties, resulting in the largest trade deficit swing on record. The smaller deficit added 4.83 percentage points to growth, following a 4.68 percentage-point drag in the first quarter, when GDP contracted 0.6%.
Consumer spending was stronger than previously estimated, rising at a 2.5% pace compared with the earlier 1.6%.
Outlays on services such as transport, finance, and insurance helped underpin demand.
Business investment also contributed, with spending on intellectual property products revised up to 15% and equipment spending to 8.5%.
Meanwhile, the latest figures revealed initial claims for unemployment benefits fell by 14,000 to 218,000 in the week ending September 20, suggesting companies are still holding on to workers.
However, analysts cautioned that second-quarter strength is unlikely to last. Inventory accumulation slowed, inflation pressures remain muted, and policy uncertainty continues to weigh on corporate profits.
Final sales to private domestic purchasers - a measure of underlying demand - rose 2.9%, a sharp upward revision but still pointing to moderating growth ahead.
The BEA also revised historical data from 2020 through early 2025. Growth in 2024 was left unchanged at 2.8%, though quarterly patterns were adjusted.
