The U.S. economy expanded by 3 percent in the second quarter of 2025, following a contraction in the first quarter, according to an analysis by the Competitive Enterprise Institute (CEI). The growth marks a rebound after the economy shrank at a rate of 0.5 percent earlier in the year.
Ryan Young, CEI senior economist, commented on the development and its implications for monetary policy. “Second quarter GDP grew at better-than-expected 3.0 percent annual pace, after shrinking at a 0.5 percent pace in the first quarter. That averages out to 1.2 percent. Average annual GDP growth is around 2 percent. Both the volatility and the slow overall pace are consistent with the Trump administration’s haphazard tariff policy,” Young said.
He also addressed how this economic data could influence decisions by central bankers: “The return to growth also takes pressure off the Federal Reserve to lower interest rates later today. It was already likely to avoid a rate cut since inflation remains above target. Today’s GDP numbers take off some economic pressure to lower interest rates, but likely not presidential pressure.”
The Federal Reserve is scheduled to meet later today to discuss potential changes to interest rates.
