In the second quarter of 2025, the US economy experienced a robust annualized growth of 3.8%, surpassing the previous estimate of 3.3% and achieving the most substantial expansion since the third quarter of 2023. This stronger-than-expected performance was largely driven by revised consumer spending figures. The Personal Consumption Expenditures (PCE) increased by 2.5%, compared to the earlier estimate of 1.6%, with a significant upward revision in services (2.6% versus 1.2%), while goods spending remained resilient (2.2% compared to 2.4%).
Fixed investment also underwent an upward revision, rising by 4.4% as opposed to the initial estimate of 3.3%. This included notable increases in equipment investment (8.5% vs. 7.4%), intellectual property products (15% vs. 12.8%), and a smaller contraction in structures (-7.5% vs. -8.9%). In contrast, residential investment declined more significantly than previously thought (-5.1% vs. -4.7%). Government consumption, however, decreased marginally less than initially reported (-0.1% vs. -0.2%).
Conversely, the contribution from net trade was revised downward, with exports decreasing more rapidly (-1.8% vs. -1.3%) and imports declining by 29.3%, slightly revised from -29.8%. Additionally, the negative impact from private inventory changes intensified (-3.44 percentage points vs. -3.29 percentage points).
