NPR News

The U.S. economy rebounds to 3% growth in second quarter — but tariffs skew picture

By Scott Horsley

Published July 30, 2025 at 6:03 AM PDT

The U.S. economy grew at an annual rate of 3% in the second quarter of the year, marking a turnaround from the previous three months. Consumer spending, which is the biggest driver of the economy, rose at an annual rate of 1.4%.

The U.S. economy grew this spring after a slowdown earlier this year. A report from the Commerce Department shows the nation's GDP grew at an annual rate of 3% in the second quarter of the year.

Updated July 30, 2025 at 7:33 AM PDT

The U.S. economy grew this spring after a slowdown earlier in the year.

The nation's gross domestic product — the broadest measure of economic activity — grew at an annual rate of 3% in April, May and June, according to a report Wednesday from the Commerce Department. That's a turnaround from the three previous months when GDP contracted at a rate of 0.5%.

Both measures were somewhat distorted by big swings in international trade as businesses and consumers first braced for, then reacted to, President Trump's worldwide tariffs. Imports surged early in the year, as businesses tried to stockpile foreign goods before the tariffs took effect. That had the effect of depressing GDP in January, February and March, because imports are subtracted from the government's measure of economic activity.

Imports then dropped in the second quarter of the year as double-digit tariffs took effect, making the spring GDP figure look somewhat rosier. Exports also fell during the quarter.

Growth is still slower overall than previous two years

Consumer spending, which is the biggest driver of economic activity, rose at an annual rate of 1.4% in the spring. Business and residential investment were down during the quarter, while spending by state and local governments rose.

Averaging the first- and second-quarter GDP measures, the U.S. economy grew at an annual rate of about 1.25% during the first half of the year. That's a slowdown from each of the two previous years, when the economy grew nearly 3%.

"We expect the economy to lose more momentum," said Samuel Tombs of Pantheon Macroeconomics. He's projecting annualized GDP growth of only about 1% in the second half of the year, as consumers wrestle with increased prices for imported goods and businesses respond to uncertainty over the Trump administration's economic policies.

Real final sales to private domestic purchasers — which strips out trade and government spending — grew at an annual rate of 1.2% in the second quarter, compared to 1.9% in the first three months of the year.