The latest info shows that the sharp drop in imports caused by President Donald Trump’s tariff policy helped speed up US economic growth in the second quarter, from April to June.
The Department of Commerce reported that the world’s largest economy grew by 3% year-on-year, offsetting the decline recorded in the first three months of the year.
This unexpected upturn is largely due to fluctuations in international trade, with companies rushing to import goods into the country before the new tariffs came into force. However, these figures do not necessarily indicate the overall state of the economy.
Nevertheless, President Trump used these statistics to criticize Federal Reserve Chairman Jerome Powell ahead of Wednesday’s key interest rate decision.
On social media, Trump again called Powell “Mr. Too Late” and said that economic indicators “far exceeded expectations.” He called for a rate cut, noting, “There is no inflation! People need to be able to buy and refinance their homes!”
Analysts, in turn, believe that economic growth could strengthen the case for keeping rates on hold.
According to Bernard Yaros, senior US economist at Oxford Economics, the steady momentum allows the Federal Reserve to take a wait-and-see approach and assess the impact of tariffs on consumer prices before possibly cutting rates in December.
The Department of Commerce also reported that the indicator reflecting consumer spending and investment fell from 1.9% to 1.2%.
A number of economists consider this indicator to be more accurate in conditions of trade instability.
“Although overall growth is slowing, the economy is simply shifting to a lower speed, not moving backward,” Yaros noted.
