U.S. GDP Revised Up to 3.3% in Q2, Showing Unexpected Economic Strength

The U.S. economy continues to show resilience in the face of trade tensions and elevated interest rates, with second-quarter GDP growth revised upward to an annualized rate of 3.3%, according to updated data released Thursday by the Bureau of Economic Analysis (BEA).

This marks an improvement from the initial estimate of 3% and a strong rebound from the 0.5% contraction recorded in the first quarter. One more revision is expected before the figure is finalized.

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The latest GDP data offers a mixed but generally positive picture. Much of the first-quarter weakness was due to a spike in imports, as businesses rushed to buy goods ahead of anticipated tariffs. In contrast, the second-quarter saw a notable drop in imports, which, because imports subtract from GDP calculations, gave a boost to the overall figure.

Still, the upward revision suggests the economy is more robust than previously assumed. A key gauge of domestic demand—real final sales to private domestic purchasers—grew at a 1.9% rate in Q2, up significantly from the earlier 0.7% estimate. This figure reflects consumer spending and private investment, offering a clearer view of the economy’s underlying strength.

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“Following the initial GDP release, there were real concerns about a sharp domestic slowdown,” noted Richard Flax, Chief Investment Officer at Moneyfarm. “But the revised numbers point to a more stable economic picture than many had feared.”

With trade tensions and the Federal Reserve’s high interest rates under scrutiny, analysts and policymakers have been closely monitoring growth and employment trends for signs of stress. A slowdown in job creation earlier this summer had increased pressure on the Fed to consider cutting interest rates at its upcoming September meeting.

However, the improved GDP numbers may ease that pressure. As BMO Capital Markets Senior Economist Jennifer Lee put it: “There’s no sense of urgency for policymakers—at least not based on this data alone.”