US economy expanded in second quarter of 2025

U.S. real gross domestic product (GDP) increased at an annual rate of 3.8% in the second quarter of 2025, according to the third estimate released by the U.S. Bureau of Economic Analysis (BEA) on Thursday morning.

The rise in real GDP in the second quarter of the year primarily reflected a decrease in imports, the BEA reported. The BEA had initially reported in its second estimate on Aug. 28 that the U.S. economy had grown at an annual rate of 3.3% in the second quarter of the year, beating expectations.

The news release comes after the U.S. economy shrank in the first quarter of 2025, with real GDP decreasing at an annual rate of 0.5%, according to the BEA. The decline in GDP in the first quarter of the year was largely driven by a surge in imports, according to the Associated Press.

Thursday’s GDP numbers come after the Paris-based Organisation for Economic Co-operation and Development (OECD) said in a report released Tuesday that it expects the U.S.’ real GDP growth to decline sharply from 2.8% in 2024 to 1.8% in 2025 due to factors such as higher tariffs and reductions in the federal workforce. Meanwhile, the OECD projected that U.S. GDP would increase by just 1.5% in 2026.

Moreover, the Federal Reserve Bank of Atlanta’s GDPNow, a running estimate of real GDP growth based on available economic data, projected on Sept. 17 a 3.3% GDP growth rate for the third quarter of 2025. The BEA’s advance estimate for real GDP in the third quarter of the year is set to be released on Oct. 30.

Additionally, wholesale inflation unexpectedly declined in August, with the producer price index decreasing by 0.1%, the Bureau of Labor Statistics (BLS) reported on Sept. 10. Moreover, U.S. employment growth slowed last month, with employers adding just 22,000 nonfarm payroll jobs, according to BLS data released Sept. 5.

The Federal Reserve announced its first interest rate cut of this year on Sept. 17, following months of President Donald Trump calling for the central bank to slash rates. On Tuesday, Fed Chairman Jerome Powell left the door open for future rate cuts, but warned that the Fed is currently grappling with a “challenging situation” due to factors such as higher inflation and lower employment.

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