U.S. economy returns to growth in second quarter

Data: U.S. Department of Commerce; Chart: Axios VisualsThe U.S. economy grew at an annualized 3% rate in the second quarter, the Commerce Department said on Wednesday.Why it matters: America's economy is growing again, as the import surge that depressed GDP in early 2025 reverses.Under the hood, consumer spending picked up — but business investment slowed notably, as President Trump's trade war weighs on the economy.Wednesday's report follows a weak first quarter, when the economy contracted at an annual rate of 0.5%, weighed down by historic importing activity as businesses sought to get ahead of tariffs.By the numbers: The Commerce Department said that the GDP rebound primarily reflected a decrease in imports.Imports are a subtraction in the calculation of GDP. When imports surge, it pulls down the headline figure. The opposite happens when they plunge.For instance, the reversal in imports contributed more than 5 percentage points to the headline growth in the second quarter, after subtracting roughly 4 percentage points from the prior quarter's report.Details: Personal consumption expenditures, a measure of consumer spending, rose at an annualized 1.4% rate — picking up from the 0.5% in the first quarter.But non-residential fixed investment — spending by businesses on buildings, equipment or technology — increased 1.9%, compared to the roughly 10% in the prior period.The intrigue: For a snapshot of underlying growth, economists look at a narrow GDP measure that sums up consumer and business spending — and strips out volatile categories like trade and inventories.Final sales to private domestic purchasers, adjusted for inflation, rose at a 1.2% annualized rate, slowing from the 1.9% pace in the first quarter. The bottom line: Look beyond the trade-distorted headline. The U.S. economy shows some signs of weakness in the second quarter as tariffs took effect.What to watch: In recent days, Trump has announced trade frameworks with a 15% tariff baseline, which economists warn might crimp economic growth in the months ahead.Editor's note: This story has been updated with additional data from the report.

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