U.S. economy picks up in Q2 after contracting earlier this year

The U.S. economy grew at a rate of 3% between April and June, marking a shift after it shrank during the first quarter for the first time in three years.

Gross Domestic Product came in higher than expected after Dow Jones estimated the jump to be closer to 2.3% for the second quarter. The economy’s surge was powered by a drop in imports resulting from President Donald Trump’s new trade policies.

GDP is the broadest measure of an economy’s health, and its mid-year upswing is a good sign for U.S. markets.

After Trump announced plans for widespread tariffs earlier in the year, businesses front-loaded imports to get ahead of extra costs. This led the economy to shrink by 0.5% in the first three months of 2025.

Now that trade policies have begun to settle, imports dipped in Q2, a shift that ultimately led the economy to grow by a healthy 3%.

Despite these sunnier prospects, the combined 1.2% annual rate over the first six months of 2025 came in lower than last year’s 2.5%. This lower rate was driven by businesses and consumers acting cautiously in response to ongoing trade wars and back-and-forth tariff policies.