The U.S. economy grew at a robust 3% annual rate in Q2 2025, surpassing the 2.3% forecast despite trade tensions from new tariffs, the Commerce Department reported on July 30. This marked a rebound from Q1’s 0.5% decline, driven by stronger consumer spending and an improved trade balance.

Consumer spending rose 1.4%, up from 0.5% in Q1, while imports fell 30.3% after a 37.9% surge, with exports dipping 1.8%. The shift followed companies rushing imports before April’s tariff announcement. Inflation eased slightly, with the PCE price index at 2.1%, above the Fed’s 2% target, and core PCE at 2.5%, down from 3.5%.

The Federal Reserve is expected to hold rates at 4.25%-4.5% on July 30, amid calls for cuts to ease housing market strains, where residential investment fell 4.6%. Final sales to private domestic purchasers grew 1.2%, the slowest since Q4 2022, and federal spending dropped 3.7%.

The economy’s resilience amid tariff talks highlights its adaptability. As the Fed weighs policy and trade negotiations continue, consumer strength and trade dynamics will shape future growth. Markets showed little reaction, with focus now on upcoming decisions that could influence the economic path ahead.