Get 100% ad-free experienceQ2 GDP Rebounds to 3.0% as Imports Drop—But Is Growth Built on Sand?View all comments (0)0The Bureau of Economic Analysis announced today that seasonally adjusted U.S. real GDP grew at a 3.0% annual rate in the second quarter. I have some concerns, but it looks better than many economists had been anticipating.Quarterly real GDP growth at an annual rate, 1947:Q2-2025:Q2, with the historical average since 1947 (3.1%) in blue. Calculated as 400 times the difference in the natural log of real GDP from the previous quarter.With the new numbers the Econbrowser recession indicator index is up to 11.7%. This primarily reflects the drop in GDP that we observed in the first quarter. The index offers an assessment of where the economy was as of 2025:Q1. Since we started reporting this measure in 2005, Econbrowser reports the index with a one-quarter lag to allow for data revisions and to aid the algorithm in pattern recognition. Though up slightly, the latest value of 11.7% is not alarming.GDP-based recession indicator index. The plotted value for each date is based solely on the GDP numbers that were publicly available as of one quarter after the indicated date, with 2025:Q1 the last date shown on the graph. Shaded regions represent the NBER’s dates for recessions, which dates were not used in any way in constructing the index.The story in the second-quarter GDP report was the flip of the first quarter. In Q1 there was a surge in imports (which other things equal means lower GDP) as businesses built up inventories of imported goods in anticipation of tariffs. In Q2, imports fell dramatically (which accounts for much of the strength in GDP in Q2) with firms drawing down those inventories. Both residential and nonresidential fixed investment were weak in the second quarter.Inventories are also the wild card in watching the effects of the tariffs on inflation. Some businesses may still be setting prices based on the historical cost of goods, meaning some of the inflationary effects are yet to come. Still, let us count our blessings that the actual current average effective tariff rate is lower than originally threatened.Original PostQ2 GDP Rebounds to 3.0% as Imports Drop—But Is Growth Built on Sand?View all comments (0)0Latest commentsInstall Our AppScan QR code to install appRisk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.© 2007-2025 - Fusion Media Limited. All Rights Reserved.