The U.S. economy expanded at a surprising 3% annual pace from April through June, bouncing back at least temporarily from a first-quarter drop that reflected disruptions from President Donald Trump’s trade wars. America gross domestic product — the nation’s output of goods and services — rebounded after falling at a 0.5% clip from January through March, the Commerce Department reported Wednesday.
Why was there a drop in the first quarter?
The first-quarter drop was mainly caused by a surge in imports — which are subtracted from GDP — as businesses scrambled to bring in foreign goods ahead of Trump’s tariffs.The bounceback was expected but the size of it wasn’t: Economists had forecast 2% growth from April through June.
Factors leading to growth in 2nd Q2
From April through June, a drop in imports — the biggest since the COVID-19 outbreak — added more than 5 percentage points to growth. Consumer spending registered lackluster growth of 1.4%, though it was an improvement over the first quarter’s 0.5%. Private investment fell at a 15.6% annual pace, biggest drop since COVID-19 slammed the economy. A drop in inventories — as businesses worked down goods they’d stockpiled in the first quarter — shaved 3.2 percentage points off second-quarter growth.
In a recent development:
President Donald Trump said Tuesday that the U.S. will partner with Israel to run new food centers in Gaza to address the worsening humanitarian crisis there, but few details have been offered amid a growing outcry at home and abroad to do more to address starvation in Gaza. Trump said during his return from golfing in Scotland that Israel must “make sure the distribution is proper.”Meanwhile Trump’s Environmental Protection Agency has proposed revoking the scientific “endangerment finding” that underpins U.S. regulations to fight climate change.