Well, the “Trump tariffs will tank the economy” crowd just took one on the chin.
The Commerce Department dropped its latest GDP report for the second quarter, and the numbers were a whole lot better than the doom-and-gloom forecasts: the U.S. economy grew 3% from April through June, smashing the 2.3% estimate and erasing the 0.5% dip we saw in the first quarter. That’s not just a rebound — that’s a statement.
Consumer spending — the engine that keeps the whole thing running — climbed 1.4%, nearly triple what it did last quarter. Meanwhile, the much-maligned trade war maneuvering turned out to be a net boost: imports plunged 30.3% after spiking nearly 38% in Q1, helping swing the trade balance back toward growth. Yes, exports dropped 1.8%, but the math still worked in America’s favor.
🚨GDP UP 3% — “BETTER THAN EXPECTED!”
Tough news for the “experts.” pic.twitter.com/PWb4FodMJd
— Townhall.com (@townhallcom) July 30, 2025
In other words: the “liberation day” tariffs Trump announced back in April didn’t trigger the recession the critics predicted. They coincided with growth.
Kevin Hassett, Trump’s National Economic Council director, couldn’t resist twisting the knife: “The anti-Trump story has been that we’re going to have a recession or a depression because of the tariffs… In fact, every single thing about this GDP release has shown strength.”
Inflation? Cooling off. The Fed’s preferred metric, the personal consumption expenditures (PCE) index, came in at 2.1%, just above the Fed’s 2% target and way down from the 3.7% pace in Q1. Core PCE (excluding food and energy) also eased to 2.5%.
Housing? Still feeling the pinch. Residential investment dropped 4.6% as high mortgage rates kept buyers on the sidelines — a sore spot for Trump, who used the strong GDP print to demand the Fed finally start cutting rates:
“2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! … ‘Too Late’ MUST NOW LOWER THE RATE. No Inflation! Let people buy, and refinance, their homes!”
Government spending? No sugar rush here. Federal outlays actually fell 3.7%, while state and local governments ticked up a modest 3%.
There’s a catch: much of the Q2 growth came from the trade balance shift — meaning it could swing the other way next quarter. Final sales to private domestic purchasers, a demand measure the Fed watches closely, slowed to 1.2%, the weakest since late 2022.
