SEPTEMBER 2, 2025 – – Q2 GDP ADJUSTED HIGHER
The Commerce Department released updated GDP numbers for the second quarter which showed the US economy grew at 3.3 percent, rather than the 3 percent originally reported. Revisions to investment and consumer spending drove the increase. The US economy shrank by 0.5 percent in the first quarter as businesses stocked up on foreign goods before the new tariffs came into effect. For the first half of 2025, the economy is up 1.4 percent compared to 2.4 percent for the same period last year.
Revisions are always made, but this change is of note, as the Fed is seeking assurances as to the direction or the economy and whether they will feel comfortable adjusting monetary policy later this month. Americans have kept spending despite the tariffs and the uncertainty in the economy. The Labor Department showed a slight decline in people filing for unemployment benefits last week.
The Fed meets again on September 16-17, when there is a 86 percent probability of a 25 basis point reduction in interest rates. Continued inflation running above 2 percent is the argument to leave rates the same for a bit longer. At this time, second cut is expected for December.