America’s economy is more resilient than initially thought.
On Thursday, the Commerce Department revised its April through June gross domestic product, or GDP, estimate to 3.8 percent in the green.
That’s a dramatic upgrade over initial estimates of just three percent growth.
US gross domestic product — the nation’s output of goods and services — is the most widely used measure of economic health.
‘This paints a somewhat reassuring picture of the US economy,’ Bret Kenwell, a US investment analyst at eToro told the Daily Mail.
‘Notably, personal consumption has been revised higher, giving more credence to the idea that consumers remain resilient.’
The surge in spending during the spring and early summer marked the fastest economic growth for the US in two years. From 2019 to 2024, the GDP increased by 2.4 percent.
But the growth also comes after GDP fell in the first quarter by 0.6 percent, the first time the important metric fell into the red in three years.
Americans swiped their credit cards on goods and services at a faster clip than expected from April through June, the federal government said
At the time, businesses and consumers were dealing with the fallout from President Donald Trump’s trade wars.
The decline was primarily due to a sharp increase in imports, which negatively impact GDP when businesses tried to stock up on foreign goods before Trump could enforce significant tariffs.
As anticipated, this pattern reversed in the second quarter with imports dropping at a rate of 29.3 percent, boosting growth between April and June by over 5 percentage points.
Consumer spending rose at a 2.5 percent rate, significantly higher than the 0.6 percent in the first quarter and exceeding the government’s previous estimate of 1.6 percent.
Economists believe the momentum will continue into the next quarter, too.
The Federal Reserve Bank of Atlanta estimates that GDP in the third quarter will stay around 3.3 percent.
Ryan Sweet, chief US economist at Oxford Economics, cautioned in the Daily Mail, “The economy is performing fairly well, but there are lingering cracks.”
‘Gross domestic income was revised lower by 0.1 percent, and it was concentrated in corporate profits.’
Since returning to the White House, Trump has overturned decades of US policy in support of freer trade.
He has implemented double-digit tariffs on imports from nearly every nation, targeting specific goods like steel, aluminum, and automobiles.
Trump sees tariffs as a way to protect American industry, lure factories back to the United States and to help pay for the massive tax cuts he signed into law July 4.
But mainstream economists — whose views Trump and his advisers reject — say that his tariffs will damage the economy, raising costs and making protected US companies less efficient.
They note that tariffs are paid by importers in the United States, who try to pass along the cost to their customers via higher prices.
Therefore, tariffs can be inflationary — though their impact on prices so far has been modest.
The unpredictable way that Trump has imposed the tariffs — announcing and suspending them, then coming up with new ones — has left businesses bewildered, contributing to a sharp deceleration in hiring.
From 2021 through 2023, the United States added an impressive 400,000 jobs a month as the economy bounded back from COVID-19 lockdowns.
Since then, hiring has stalled, partly because of trade policy uncertainty and partly because of the lingering effects of 11 interest rate hikes by the Federal Reserve’s inflation fighters in 2022 and 2023.
This week, the Fed’s Chair, Jerome Powell, suggested that job losses could be the way companies are paying for tariffs instead of passing higher prices on to consumers.
Labor Department revisions earlier this month showed that the economy created 911,000 fewer jobs than originally reported in the year that ended in March.
That meant that employers added an average of fewer than 71,000 new jobs a month over that period, not the 147,000 first reported.
Since March, job creation has slowed even more – to an average 53,000 a month.
On October 3, the Labor Department is expected to report that employers added just 43,000 jobs in September, though unemployment likely stayed at a low 4.3 percent, according to forecasters surveyed by the data firm FactSet.
Seeking to bolster the job market, the Fed last week cut its benchmark interest rate for the first time since December.
Thursday’s GDP report was Commerce Department’s third and final look at second-quarter economic growth.
It will release its initial estimate of July-September growth on Oct. 30.
Forecasters surveyed by the data firm FactSet currently expect the GDP growth to slow to an annual pace of just 1.5 percent in the third quarter.
