GDP grew faster in the second quarter than initially estimated
The latest data from the Commerce Department reveals that the U.S. economy experienced a faster expansion in the second quarter of 2025 than previously estimated. After a decline in the first quarter, growth rebounded with the country’s gross domestic product growing at a 3.3% annual pace, up from the initial estimate of 3%. This positive growth was driven by an upward revision in business investment and consumer spending, particularly in areas such as structures, equipment, and intellectual property.
Chief U.S. economist at Oxford Economics, Ryan Sweet, pointed out that investments related to artificial intelligence are playing a significant role in supporting the economy. Despite concerns about a slowdown in hiring and weaker-than-expected job growth in July, there is optimism that the support from AI-related investments will continue to bolster economic performance.
The first-quarter GDP contraction was primarily due to a surge in imports as businesses rushed to bring in foreign goods before new U.S. tariffs came into effect. However, this trend reversed in the second quarter with a significant decline in imports, contributing more than 5 percentage points to the growth. This turnaround in import activity is a positive indicator for the economy.
While the overall growth in the second quarter appears strong, some economists caution that it may not be as robust as it seems. EY-Parthenon Chief Economist Gregory Daco highlighted that the strength in GDP growth was largely driven by the decline in imports, rather than underlying economic strength. Private-sector demand outside of AI investments remains weak, with the economy growing at an average rate of 1.4% in the first half of the year.
Looking ahead, the Atlanta Federal Reserve Bank’s GDPNow forecasting tool predicts a growth rate of 2.2% for the year, indicating a more moderate pace of expansion. With expectations of a Federal Reserve interest rate cut in September to stimulate economic growth, the focus now shifts to how the economy will perform in the coming months.
