U.S. Economy Slowed in First Half of 2025 as Tariffs Scrambled Data
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Version 0 of 1. Economic growth softened in the first half of the year, as tariffs and uncertainty upended business plans and scrambled consumers’ spending decisions. Gross domestic product, adjusted for inflation, increased at a 3 percent annual rate in the second quarter, the Commerce Department said on Wednesday. That topped forecasters’ expectations and appeared to represent a strong rebound from the first three months of the year, when output contracted at a 0.5 percent rate. But both those figures were skewed — in opposite directions — by big swings in trade and inventories caused by President Trump’s ever-shifting tariff policies. Taken as a whole, the data from the first six months of the year tell a more consistent story of anemic, though positive, economic growth. Many forecasters expect a further deterioration in the months ahead, as tariffs work their way through supply chains, federal job cuts filter through the economy and stricter immigration policies take a toll on industries that rely on foreign-born workers. “We don’t think we’ve seen the full effects from tariffs yet,” said Michael Gapen, chief U.S. economist for Morgan Stanley. “I don’t see how we power through without a soft patch at least for a little while.” |