Second-Quarter Economic Growth Revised Higher as Consumer Spending Strengthens

03:49 PM EDT, 09/25/2025 (MT Newswires) -- The US economy grew in the second quarter at a faster pace than previously projected amid an upward revision to consumer spending, a third estimate by the Bureau of Economic Analysis showed Thursday.

Real gross domestic product in the world's largest economy increased at an annualized rate of 3.8% in the June quarter, stronger than a 3.3% pace pegged in the second estimate. The consensus was for the growth rate to be left unrevised, according to a survey compiled by Bloomberg.

Growth in consumer spending -- as measured by personal consumption expenditures -- was upgraded to 2.5% from a 1.6% rate projected previously. Wall Street was looking for a 1.7% increase.

"An even stronger growth profile in (the second quarter) led by additional strength in consumption and investment reiterates the storyline of a solid economy despite fiscal policy uncertainty, relatively elevated price pressures and a reduced pace of hiring," Stifel Chief Economist Lindsey Piegza said in a note to clients.

In the first quarter, the US economy shrank 0.6%, representing the first quarterly decline in three years and slightly worse than the 0.5% contraction previously reported for the period, official data showed Thursday.

Earlier this week, Federal Reserve Chair Jerome Powell said the central bank faces a "challenging situation," with near-term risks to inflation tilted to the upside and those to employment leaning downside. The economy is showing "resilience" amid ongoing policy and macro changes, he added. Fed Vice Chair for Supervision Michelle Bowman said recent data indicate that policymakers are at a "serious risk of already being behind the curve" in addressing a weakening labor market.

"While at least some Fed officials appear increasingly concerned regarding additional potential weakness in the labor market and willing to ease policy further, the latest slew of data supports the call from the more hawkish members of the (Federal Open Market Committee) to cease additional rate cuts from here and continue to focus on reinstating price stability," Piegza said Thursday.

Last week, the FOMC lowered its benchmark lending rate by 25 basis points, noting increased downside risks to employment and signaling further monetary policy easing later in 2025.

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