Trump's Economy Bounces On Consumer Spending Surge

The U.S. economy grew more quickly than economists projected during the second quarter thanks to an uptick in consumer spending, boosting President Donald Trump’s argument that the outlook remains strong.

The Commerce Department on Thursday revised up its estimate of annualized gross domestic product to 3.8 percent, a 0.5 percentage point increase from an earlier report. While the economy contracted during the first three months of the year, a sharp decline in imports — which boosts GDP — and solid spending buoyed growth in April, May and June.

“America’s economic resurgence under President Trump continues,” White House deputy press secretary Kush Desai said in a post on X. “And this is just the beginning.”

Commerce’s latest estimate included a notable surge in real final sales to private domestic purchasers, which combines consumer spending and business investment. That measure was revised up from 1.9 percent to 2.9 percent. The surge in overall economic output was driven largely by financial services, information and manufacturing industries.

Still, policymakers and economists have been skeptical that the economy will continue to grow at the same rate through the end of the year. Domestic importers have paid more than $164 billion in tariffs so far this year, almost $100 billion more than they paid during the same period last year, and there’s a broad expectation that companies will soon have to pass more of those costs along to consumers. Notably, sticker prices of new and used autos, which are highly sensitive to import duties — jumped last month as tariff effects began to sink in.

The labor market has also been much weaker than most economists had thought— includingTrump allies like acting Council of Economic Advisers Chair Pierre Yared. That could cause consumers to pull back in the coming months. The Federal Reserve’s Beige Book, which tracks economic conditions across the U.S., reported earlier this month that consumer-facing industries are resorting to sales and promotions in a bid to lure spending.

“Ultimately, the updated GDP figures suggest the U.S. economy was undeniably resilient in the first half of the year despite the on-again off-again approach to U.S. trade policy,” Wells Fargo economists Shannon Grein and Tim Quinlan wrote in a research note. “The latest batch of data certainly inject a bit of optimism to our assessment of current conditions, but the economy is still facing headwinds.”