The U.S. economy outperformed expectations in the second quarter, a significant revision of the showed Thursday.
Colorado State University economist called it “quite a revision,” given the scope of jumps between the first and final estimates of economic growth for the quarter.
The Bureau of Economic Analysis said the economy grew at an annual rate of 3.8% in the second quarter, which spanned April through June.
Second-quarter GDP was revised upward from the and the second estimate of 3.3%, which was also the forecasted rate for the just-released third estimate.
“Those are pretty big jumps,” Weiler said.
And the second-quarter growth was a “very strong swing” after a first-quarter GDP drop of 0.6%, which had marked the first quarterly contraction since early 2022.
Consumer spending accounts for about 70% of GDP, which is the nation’s broadest barometer of economic health.
“I’m amazed by the American consumer. I’m amazed at the resilience. I’m particularly amazed given the is pretty sour,” Weiler said. “One interpretation could be that people are seeing prices going up. They keep hearing about tariffs, and they may be doing some advanced shopping. That’s one interpretation. People, I don’t think, quite understand what tariffs are doing yet.”
President Donald Trump’s the new GDP figure.
“America’s economic resurgence under President Trump continues: revised data show even stronger real GDP growth of 3.8 percent in Q2 2025 thanks to the Trump agenda of tax cuts, deregulation, tariffs, and energy abundance,” White House Deputy Press Secretary Kush Desai said in a news release. “And this is just the beginning: new data from today also shows core capital goods orders beat expectations, paving the way for robust investment growth in Q3. President Trump pledged to Make America Wealthy Again, and with Joe Biden’s inflation crisis tamed, we are now laying the groundwork for a long-term restoration of American Greatness.”
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, the Political Management program director at George Washington University, said some folks will cast a “jaundiced eye” on the big GDP figure after the controversy involving labor figures.
Trump fire the head of the Bureau of Labor Statistics this summer after a disappointing jobs report led the president to
“All presidents try to claim credit and deflect blame, especially when it comes to the economy. Because, of course, the economy is the No. 1 issue,” Belt said.
He said the interpretation of economic data could become partisan.
“We live in a time when revisions have become politicized, but this is part of the process of getting better looks at data over time,” Bankrate Senior Economic Analyst said.
Hamrick said the GDP figures from the last couple of quarters were really whipped around by the volatility of trade data.
Last quarter’s GDP showed better consumer spending, better business investment, but still weak residential investment, Hamrick said.
The Bureau of Economic Analysis said the improved second-quarter GDP results are credited to a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending.
Weiler took note of the “real final sales to private domestic purchasers,” which increased 2.9% in the second quarter and was revised up one percentage point from the previous estimate.
He said that captures the spending that consumers do and the investments that businesses do, and he said it was about double the original estimate.
Consumers spent more last quarter than originally thought, and investment went down less than expected.
Belt said it’s really too soon to tell how Trump’s tariffs are impacting the economy.
“There are many points to Trump’s tariffs. Some are leverage for negotiating other things, such as immigration and drug control. But the primary rationale for the tariffs is to increase domestic production of industrial goods. That doesn’t happen overnight, and it doesn’t happen in one quarter,” Belt said.
But Belt did say the robust second-quarter GDP can help the Trump administration brush off some concerns over “stagflation.”
Hamrick said stagflation concerns haven’t gone away. He also called it an “inelegant term” without clearly defined economic parameters.
But, in general, stagflation is slower growth coupled with relatively high unemployment and rising prices.
“The risks about slowing growth and higher prices are very much still with us,” Hamrick said.
U.S. employers added , and the unemployment rate ticked up to 4.3%.
Meanwhile, inflation, as measured by the consumer price index, is .
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Hamrick called Thursday’s GDP figures a “demonstration of the continued resilience of the U.S. economy.”
“But we know that consumer spending has been choppy and uneven, and a good part of that burden is really being shepherded by high-income individuals and households,” he said.
Hamrick said the average for the first two quarters of annualized GDP is below trend, but not by much.
“And the outlook is for the current quarter, the third quarter, if you look, for example, at the Federal Reserve Banks of and , their estimates range from 2.1 (percent) to 3.3%,” Hamrick said. “So, what I say is in 2025, so far, so ‘OK.’”
Weiler said there’s still a great deal of uncertainty in the economy.
Some of that stems from Trump’s tariffs.
And economists do expect the higher tariffs to lead to higher prices for American consumers.
The Yale Budget Lab said the has increased from 2.4% at the start of the year to 17.4% now.
It’s now the highest since 1935.
“I think the headwinds are still in the policy realm and the uncertainty that consumers are facing and businesses are facing,” Weiler said.
But he said interest rate cuts, which the Federal Reserve , could provide a tailwind for the economy.
“This may make them feel a little bit better, but it’ll be interesting to see how the markets interpret this,” Weiler said of the strong GDP figure’s impact on the Fed’s rate cut decisions. “It also could be a sign that maybe they won’t cut interest rates quite as quickly. But they tend not to look at GDP as much as they tend to look at the job market for those figures.”