The U.S. economy expanded at a surprising 3% annual pace from April through June, bouncing back at least temporarily from a first-quarter drop that reflected disruptions from President Donald Trump’s trade wars.
America’s gross domestic product—the nation’s output of goods and services—rebounded after falling at a 0.5% clip from January through March, the Commerce Department reported Wednesday. The first-quarter drop was mainly caused by a surge in imports—which are subtracted from GDP—as businesses scrambled to bring in foreign goods ahead of Trump’s tariffs.
The bounceback was expected but the size of it wasn’t: Economists had forecast 2% growth from April through June.
From April through June, a drop in imports—the biggest since the COVID-19 outbreak—added more than 5 percentage points to growth. Consumer spending registered lackluster growth of 1.4%, though it was an improvement over the first quarter’s 0.5%.
Private investment fell at a 15.6% annual pace, the biggest drop since COVID-19 slammed the economy. A drop in inventories—as businesses worked down goods they’d stockpiled in the first quarter—shaved 3.2 percentage points off second-quarter growth.
