US economy grows at fastest pace in nearly two years
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Durrant Pate/Contributor
The US economy grew in the second quarter at the fastest pace in nearly two years, thanks to the government revising up its previous estimate of consumer spending.
Data released today by the US Bureau of Economic Analysis (BEA) shows inflation-adjusted gross domestic product (GDP), which measures the value of goods and services produced in America, increased at a revised 3.8% annualised pace. This was stronger than the previously reported 3.3% advance and followed an outright contraction in the first quarter.
Growth in the last quarter was also supported by businesses, boosting investment in intellectual property products, mostly artificial intelligence. The government revised the national accounts data from the first quarter of 2020 through the first quarter of 2025.
BEA annual update
The BEA also issued its annual update of the national economic accounts, which covers GDP and related series in the past five years. While it incorporated newer, more complete source data, the agency said it was “unable to purchase” certain statistics related to tax returns for corporations and sole proprietorships.
The annual revisions were relatively minor as real GDP still increased at an average annual pace of 2.4% from 2019 to 2024. They paint a picture of an economy that quickly rebounded from the initial shock of the pandemic and has since transitioned to a period of steadier, trend growth with lingering inflation.
Separate data for the month of August, today showed orders for business equipment increased at a solid clip, while the merchandise trade deficit narrowed by more than forecast. Initial applications for unemployment benefits fell to the lowest since mid-July.
The latest quarterly GDP data confirm the economy rebounded in the second quarter after a monumental surge in imports at the start of the year, when companies were racing to stock up ahead of President Donald Trump’s tariffs, which boosted the nation’s average tariff rate to its highest level in a century, depressed GDP in the January-March quarter. GDP snapped back last quarter as the flow of foreign goods eased.
The third-quarter economy is also looking solid, with recent reports illustrating resilient consumer spending and business outlays for equipment.
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