US Economy Grew Faster Than Expected in Q2, Revised to 3.3% Rate
Upward revision from the Bureau of Economic Analysis was driven by stronger business investment and consumer spending.
The U.S. economy demonstrated more robust growth in the second quarter of 2025 than initially reported, with the Bureau of Economic Analysis (BEA) revising the annualized Gross Domestic Product (GDP) growth rate up to 3.3%. This figure surpasses both the initial 3.0% estimate and economists' expectations.
The upward revision was primarily fueled by healthier-than-anticipated business investment and resilient consumer spending, which offset a downward revision in government expenditures. This growth marks a significant rebound from the first quarter, which saw the economy contract by 0.5%.
Despite the strong headline number, some economists urge caution. EY-Parthenon's chief economist, Gregory Daco, described the Q2 strength as 'largely a mirage,' attributing much of the growth to a sharp decline in imports rather than strong underlying domestic demand. He noted that the U.S. economy expanded at a more 'muted 1.4% average pace' in the first half of the year.
The solid second-quarter performance raises the bar for the coming months. 'Slowing job growth indicates the economy will not keep up with the above-trend growth from the previous quarter,' said LPL's chief economist, Jeffrey Roach, who anticipates economic growth will likely 'flatline' in the third quarter. He suggested that a softer Q3 could amplify calls for the Federal Reserve to consider interest rate cuts.
Financial markets are now looking ahead to key inflation and employment data, including the upcoming Personal Consumption Expenditures (PCE) index, which will be critical in shaping the Federal Reserve's next policy decision in mid-September.