GDP grew by three percent in the second quarter of 2025: CEI analysis

The GDP grew by three percent in the second quarter of 2025, marking a return to growth after first quarter shrinkage. CEI senior economist Ryan Young says this news will likely affect the Federal Reserve’s interest rate meeting later today.

“Second quarter GDP grew at better-than-expected 3.0 percent annual pace, after shrinking at a 0.5 percent pace in the first quarter. That averages out to 1.2 percent. Average annual GDP growth is around 2 percent. Both the volatility and the slow overall pace are consistent with the Trump administration’s haphazard tariff policy.

“The return to growth also takes pressure off the Federal Reserve to lower interest rates later today. It was already likely to avoid a rate cut since inflation remains above target. Today’s GDP numbers take off some economic pressure to lower interest rates, but likely not presidential pressure.”