The U.S. economy grew 3% in the second quarter of the year, far surpassing the 2.3% forecast and calming fears of a looming recession. The unexpected boost was fueled by improved trade dynamics and stronger consumer spending, according to data released Tuesday.
The robust GDP performance marks a sharp rebound from the first quarter, when the economy briefly contracted.
What Drove the Growth?
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Consumer spending rose 1.4%, up from 0.5% in Q1
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Imports plunged by 30.3%, easing the trade imbalance
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Exports fell slightly by 1.8%, but the net trade picture improved overall
The shift in imports reflects the winding down of stockpiling that occurred earlier in the year as businesses raced to beat Trump’s tariffs.
Trump Reacts: “WAY BETTER THAN EXPECTED!”
President Donald Trump celebrated the report in a Truth Social post:
“WAY BETTER THAN EXPECTED!”
He called on the Federal Reserve to cut interest rates, arguing that inflation remains low and Americans should be encouraged to buy and refinance homes.
“MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!” Trump wrote.
Analysts: Fed Likely to Hold Firm
Despite Trump’s demands, economists say the Federal Reserve is unlikely to announce a rate cut during its decision announcement this afternoon.
“The strength in these numbers likely puts to bed the possibility of a rate cut,” said Isaac Stell, Investment Manager at Wealth Club.
“Powell and co are likely to rebuff requests for rate cuts and keep a steady footing.”
Markets React
The modest movement suggests investors are welcoming the solid economic performance but expect the Fed to remain cautious in the near term.
