July 31, 2025

US economic growth is poised for a rebound in the second quarter of the year, with analysts suggesting an annual growth rate of 2.5% for the April to June 2023 period. This prediction comes after a decline of 0.5% observed in the first quarter, marking a significant turnaround according to consensus forecasts from Briefing.com. The anticipated bounce back highlights how businesses have shifted their trade strategies in response to President Donald Trump’s tariffs. As companies sought to mitigate the effects of these tariffs, they rushed to stock up on inventory earlier this year. However, this buildup is currently unwinding, leading to a temporary surge in imports that weighed heavily on GDP growth during the first quarter. Goldman Sachs analysts have noted that the early surge in imports was the largest drag on GDP growth from net exports to date, but expect a rebound as import levels stabilize. While the expected growth in Q2 is a positive sign, experts caution that this acceleration may not be sustainable. Nationwide’s chief economist, Kathy Bostjancic, remarked that the growth has been distorted by changes in trade flows and inventory levels. The trend is a reflection of the ongoing impact of Trump’s trade policies, which have introduced increased tariffs on a wide variety of products from numerous countries, including a significant escalation in the tit-for-tat tariff battle with China. The recent talks in Stockholm between US and Chinese negotiators suggested a possible extension of the truce but ultimately depend on decisions made by Trump. Eyewitnesses to the economic landscape express concerns over a 'clear deceleration' as inflationary pressures are resurging. EY chief economist Gregory Daco pointed out several factors contributing to this deceleration, including tariff-induced cost pressures and elevated interest rates, which could dampen employment and consumer spending—both vital components of economic health. Economists are monitoring the implications of tariffs closely, anticipating that they may lead to increased consumer prices. The overall sentiment among analysts suggests that business investment is likely to lessen as companies become more cautious in navigating Trump's policy uncertainties. As stated by Samuel Tombs, chief US economist at Pantheon Macroeconomics, the average growth of 1.5% across the first two quarters signifies a notable reduction from the previous two years' average of around 3%. With further challenges projected in the third quarter, especially related to increased consumer prices for imported goods, the outlook remains cautious, with expectations set for an average GDP growth of just around 1% in the latter half of the year.

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Tags: Us economy, Gdp growth, Tariffs, Donald trump, Inflation, Import, Trade,