Q2's GDP Bounceback Is Better Than Expected

The US 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 Trump's trade wars. The AP reports American 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. 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. More:

• The bounceback was expected but the size of it wasn't: Economists had forecast 2% growth from April through June. 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.
• CNBC reports the markets were largely unmoved by the report, with stock index futures mixed and Treasury yields higher.
• The New York Times holds off on the optimism as well. When viewed in a half-year chunk, it writes the data tells "a more consistent story of anemic, though positive, economic growth. Many forecasters expect a further deterioration in the months ahead, as tariffs work their way through supply chains, federal job cuts filter through the economy, and stricter immigration policies take a toll on industries that rely on foreign-born workers."