US economic growth revised up on strong consumer spending

The US economy grew faster than previously thought this spring, fuelled by robust consumer spending and falling imports, according to new government data.

Gross domestic product (GDP), which measures goods and services production, rose at an annualised rate of 3.8% in the period from April through June – up from the previous estimate of 3.3%.

The second quarter growth – the fastest pace in nearly two years – followed a contraction earlier this year.
“[It] reflected a decrease in imports, which are a subtraction in the calculation of GDP, and an increase in consumer spending,” the Commerce Department said.

Consumer spending rose by 2.5% in the year to the end of June, up from a previous estimate of 1.6%.

In the first three months of 2025, the US economy shrank at a rate of 0.6% as companies rushed in imports to get ahead of US President Donald Trump’s tariffs, which chipped away at GDP.

American consumers, the engine of the world’s largest economy, have remained resilient in the face of tariffs and economic uncertainty.

Retail sales rose 0.6% in August from the prior month, beating expectations, according to data from the Commerce Department released last week.

The continued strength in spending, which has defied worries about a slowdown, is in contrast to recent data showing a weakening labour market.

Employers added just 22,000 jobs in August, fewer than expected, while the unemployment rate ticked up from 4.2% to 4.3%, according to the Labor Department.

But initial claims for unemployment insurance fell last week to their lowest level since July, the Labor Market said on Thursday, in a sign that the jobs market might not be in as dire shape as other data have suggested.

“The latest economic data are considerably more upbeat than the droopy August jobs report,” said Bill Adams, chief economist for Comerica Bank.

“The latest GDP and jobless claims data should ease the bout of anxiety kicked off by the weak August jobs report.”

Economic momentum remained steady in the first half of the year despite mounting policy headwinds, said Lydia Boussour, senior economist at EY-Parthenon.

But she cautioned that “with the impact of tariffs and policy uncertainty becoming increasingly visible, slower US growth and higher inflation are still on the horizon.”

By BBC News