US Second-Quarter GDP Growth Revised Higher Amid Stronger Consumer Spending

01:59 PM EDT, 08/28/2025 (MT Newswires) -- The US economy expanded in the second quarter at the fastest pace in nearly two years amid stronger consumer spending and business investment than previously expected, according to the Bureau of Economic Analysis' second estimate released Thursday.

Real gross domestic product in the world's largest economy grew at a 3.3% annualized rate in the June quarter, faster than the initial estimate of 3%. The consensus was for a revision to 3.1% in a survey compiled by Bloomberg.

The latest GDP growth figure marks the fastest expansion since the third quarter of 2023, according to the BEA. The US economy shrank 0.5% in the first three months of 2025, representing the first quarterly decline in three years.

Growth in consumer spending -- as measured by personal consumption expenditures -- was upwardly revised to 1.6% from the previous 1.4% estimate, marking the biggest gain since the final quarter of 2024. The latest consumer spending print matched Wall Street's estimates.

Nonresidential fixed investment grew by 5.7%, compared with the prior projection of 1.9% growth.

"While the headline figure was inflated by a massive swing in trade -- stemming from an unwinding of (the first quarter's) tariff front-running -- the upward revisions to consumer spending and business investment suggest that the domestic side of the economy is holding up a bit better than previously reported," Thomas Feltmate, senior economist at TD Economics, said in a note.

"This is further corroborated by the solid reading on (gross domestic income)," Feltmate said.

Federal Reserve Chair Jerome Powell struck a more dovish tone than expected during his recent Jackson Hole speech, indicating a possible policy pivot to lower rates. At the time, Powell highlighted downside risks to employment and suggested that tariff-driven inflation pressures may prove transitory.

Official data due out on Friday are expected to show that consumer spending growth likely accelerated to 0.5% in July from 0.3% in June, according to a Bloomberg-polled consensus.

Headline PCE inflation in the second quarter was revised to 2% from 2.1%, BEA data showed Thursday. Core PCE inflation, which is the Fed's preferred inflation metric and excludes food and energy, was unchanged at 2.5%.

"With measures of consumer confidence having turned lower and the labor market showing signs of weakness, we suspect households will remain fiscally cautious in the months ahead," Feltmate said.

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