US economy returns to growth in second quarter on tariff turbulence

WASHINGTON: The US economy returned to growth in the second quarter, government data showed Wednesday, but analysts flagged distortions from swings in trade flows over President Donald Trump’s tariffs.

The world’s biggest economy expanded by an annual rate of 3.0 percent in the April to June period, beating economists’ expectations and reversing a 0.5 percent decline in the first three months of the year, said the Department of Commerce.

This swiftly prompted Trump to ramp up pressure for an interest rate cut, saying on social media that Federal Reserve Chair Jerome Powell “must now lower the rate.”

Trump’s comments come hours before the Fed announces its latest interest rate decision.

A consensus forecast by Briefing.com had expected a 2.5 percent GDP growth rate.

Second quarter growth “was bolstered by a sharp reversal in trade flows skewed by the tariffs,” said Nationwide chief economist Kathy Bostjancic.

An underlying GDP measure slowed to “slowed to a sluggish 1.2 percent from 1.9 percent in the first quarter,” painting a more accurate picture of economic activity, she added.

Real consumer and business spending advanced only moderately, after households brought forward purchases, she said. Businesses meanwhile held off spending on heightened policy uncertainty.