The U.S. economy expanded at a 1.5 percent annual rate in the second quarter, a slowdown from previous periods, according to the Bureau of Economic Analysis. This growth rate, while indicating continued activity, fell short of economists' expectations. Higher energy prices, influenced by international events, and a significant increase in imports, particularly semiconductors related to the artificial intelligence boom, contributed to the slower GDP growth.
Despite the headline figures, some underlying economic indicators suggest a more resilient domestic demand. Measures that filter out volatile import and export fluctuations, such as "real final sales to private domestic purchasers," showed stronger growth. Economists surveyed describe the economy as "doing okay," with low unemployment and wage growth that has outpaced inflation in the past year.
However, a significant portion of economic analysis suggests that the current economic performance could have been considerably stronger without the impact of certain administration policies. Specifically, economists point to the extensive use of tariffs as a drag on inflation and overall economic potential.
Tariffs imposed on goods from trading partners have led to increased costs for businesses, which are often passed on to consumers. Data from the Dallas Federal Reserve indicated that the core inflation rate would have been substantially lower without these tariffs. Furthermore, estimates from Yale's Budget Lab suggest that these tariffs have added an average of $1,100 annually to household expenses. These factors, economists argue, have dampened what could have been a more robust economic expansion.