According to a report from the Associated Press, an uptick in consumer spending helped the U.S. economy expand at a surprising 3.8% from April through June, the government reported in a dramatic upgrade of its previous estimate of second-quarter growth.
U.S. gross domestic product — the nation’s output of goods and services — rebounded in the spring from a 0.6% first-quarter drop caused by fallout from President Donald Trump’s trade wars, the Commerce Department said Thursday. The department had previously estimated second-quarter growth at 3.3%, and forecasters had expected a repeat of that figure.
The first-quarter GDP drop, the first retreat of the U.S. economy in three years, was mainly caused by a surge in imports — which are subtracted from GDP — as businesses hurried to bring in foreign goods before Trump could impose sweeping taxes on them. That trend reversed as expected in the second quarter: Imports fell at a 29.3% pace, boosting April-June growth by more than 5 percentage points.
Consumer spending rose at a 2.5% pace, up from 0.6% in the first quarter and well above the 1.6% the government previously estimated. Spending on services advanced at a 2.6% annual pace, more than double the government’s previous estimate of 1.2%.
“The U.S. consumer remained a lot stronger than many thought, even in the midst of a stock market sell-off and a lot of trade uncertainty,” Heather Long, chief economist at Navy Federal Credit Union, posted on social media.
A category within the GDP data that measures the economy’s underlying strength came in stronger than previously reported as well, growing 2.9% from April-June, up from 1.9% in the first quarter and in the government’s previous estimate. This category includes consumer spending and private investment, but excludes volatile items like exports, inventories and government spending.
But private investment fell, including a 5.1% drop in residential investment. Declining business inventories took more than 3.4 percentage points off second-quarter growth.
Spending and investment by the federal government fell at a 5.3% annual pace on top of a 5.6% drop in the first quarter.
Stephen Stanley, chief U.S. economist at Santander, noted that GDP growth averaged 1.6% in the first half of 2025 and consumer spending 1.5% — “not great but much better than initially thought.’’
Click here to read the full report from the Associated Press.
