US economy grew 3.8% in 2nd quarter, far exceeding previous estimate

(NEW YORK) — The U.S. economy expanded significantly more than initially estimated over a recent three-month period, suggesting robust growth despite uncertainty set off by President Donald Trump’s tariff policy, federal government data on Thursday showed.

The U.S. economy grew at an annualized rate of 3.8% in the second quarter in the government’s final estimate, besting a 3.3% rate issued in its second estimate and far exceeding a 3% initial estimate.

The figure marked a sharp acceleration from an annualized contraction of -0.5% over the first three months of 2025. Still, taken together, the data indicates an economic slowdown over the first half of 2025.

A boost in consumer spending helped propel the economic surge over three months ending in June, the U.S. Commerce Department said. Consumer spending, which accounts for about two-thirds of U.S. economic activity, is a key bellwether for the outlook of the nation’s economy.

To some degree, however, Trump’s levies have blurred the GDP findings.

The government’s GDP formula subtracts imports in an effort to exclude foreign production from the calculation of total goods and services. Changes in the reading on this account reveal neither underlying economic weakness nor strength.

The measure of the GDP fell over the first three months of the year, largely due to a surge of imports as firms stockpiled inventory to avoid far-reaching tariffs. Conversely, a drop-off in imports over the second quarter may have inflated the second-quarter GDP figure.

The GDP growth “primarily reflected a decrease in imports, which are a subtraction in the calculation of GDP,” the U.S. Commerce Department said on Thursday.

The fresh data arrives at a wobbly moment for the nation’s economy.

A jobs report earlier this month showed a sharp decrease in hiring in August, extending a lackluster period for the labor market. Meanwhile, a revision of previous hiring estimates days later revealed the U.S. economy added far fewer jobs in 2024 and early 2025 than previously estimated, deepening concern about the health of the U.S. job market.

The weak jobs data has raised alarm among some analysts who told ABC News the U.S. economy may be slipping toward a recession, though the economy has largely averted the type of widespread job losses that often accompany a downturn.

The Federal Reserve cut interest rates last week in an effort to boost hiring. The Federal Open Market Committee (FOMC), a policymaking body at the Fed, projected two additional quarter-point rate cuts over the remainder of 2025.

Five meetings and nine months had elapsed since the Fed last cut interest rates.