After a brief pause in growth, the economy of the United States truly roared back to life during the second quarter of 2023. The specific charge was a red hot 10.5% annualized. In a notable upward revision, the Commerce Department added 243,000 to this number. It was up from the prior estimate of 3.3% and above the first report of 3%. This rebound comes on the heels of a long-awaited contraction felt earlier in the fiscal year, emphasizing the long-suffering resilience of the world’s largest economy.
At the start of 2023, confluences within the US economy stacked the odds against growth, resulting in a negative growth rate. Several factors weighed down the positive – chief among them President Donald Trump’s tariffs, which subtracted from GDP in the first quarter. During the months of April — June, consumer spending was the unsung hero that kept the economy moving. American consumers didn’t stop spending strong through this time, which was a big part of the success of igniting the U.S. economic recovery.
At least some of the positive growth in the second quarter can be explained by a drop-off in rising imports. Importers front-loaded inventories to avoid anticipated tariffs. Such a canny advance planning was clearly in the best interest of the nation’s balance of trade. Consumer spending — largely driven by stimulus payments — low imports and other factors were the building blocks of the economy’s return. This is a clear case of domestic demand winning out against external pressures.
Some economists believe that momentum might have carried over into the third quarter too. All signs point to an incredible performance coming up. Those official statistics won’t come until next month, when the federal government issues its advance estimate of third-quarter GDP.