US economy registers 3.0% growth in Q2

Data: In the second quarter, the US economy expanded by 3.0% (this and all subsequent growth rates are annualized quarter-on-quarter changes). Advance trade and inventory data for June published yesterday had already signaled that previous estimates of around 2½% were too cautious.

Details: The strongest growth driver was the turnaround in foreign trade. In the first quarter, the US trade deficit had increased significantly because imports rose much more sharply than exports (due to purchases that were pulled forward to avoid the foreseeable tariffs). In the second quarter, the situation reversed, with imports slumping by 30%. The improvement in the foreign trade balance alone boosted GDP growth by 5 percentage points in the second quarter (in the first quarter, net foreign trade had subtracted 4.6 percentage points from GDP growth). This was not offset by the reduction in inventories, which made a negative contribution to growth of 3.2 percentage points.

Private consumption and investment were moderately dynamic. Private consumption, which was the most important growth driver last year, grew by only 1.4%. Private business invested more in intellectual property such as software (+6.4%) and in equipment (+4.8%), but less in structures (-10.3%). Residential construction contracted by 4.6% as affordability remains an issue due to high interest rates and prices. Government spending largely stagnated, similar to the first quarter.

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