3.3%! US economic growth revised upward, initial jobless claims remain strong

The U.S. economy expanded at a slightly faster pace in the second quarter than initially estimated, thanks to a rebound in business investment and a significant boost from trade.

According to the Bureau of Economic Analysis' second estimate released on Thursday, inflation-adjusted gross domestic product (GDP)—a measure of the value of goods and services produced in the U.S.—grew at an annualized rate of 3.3%. By comparison, the initial report showed an increase of 3%.

Net exports contributed nearly 5 percentage points to GDP, setting a historical record, whereas in the first three months of this year, net exports had dragged down GDP. Goods and services not produced in the U.S. are deducted from the GDP calculation, but are included when consumed.

After experiencing the first quarterly contraction since 2022 (as businesses imported goods ahead of tariff hikes), GDP has rebounded. Looking ahead, as consumers and businesses adapt to President Trump's trade policies, the economy is expected to expand at a moderate pace.

Another major measure of economic activity—gross domestic income (GDI)—soared by 4.8% in the second quarter after an annualized increase of 0.2% in the first quarter. GDP measures spending on goods and services, while GDI measures the income and costs generated by producing those same goods and services.

GDI data includes corporate profits, which grew by 1.7% in the second quarter after posting the largest decline since 2020 in the first three months of this year. How U.S. companies respond to tariffs—whether by raising prices or absorbing costs—has become a key question for the U.S. economic outlook in 2025.

Another report released at the same time showed that the number of Americans filing for unemployment benefits last week fell slightly, indicating that employers are still retaining existing employees amid economic uncertainty.

For the week ending August 23, initial jobless claims fell by 5,000 to 229,000, below the expected 230,000;continuing claims also dropped to 1.95 million in the previous week.

Analyst Giuseppe Dellamotta noted that this data is strong, especially considering the downward revision in continuing claims. Unemployment claims data continues to confirm the resilience of the labor market. The market's focus will now shift to the employment component of the ISM Purchasing Managers Index, ADP private employment data, and the U.S. nonfarm payroll report.

So far, companies have been reluctant to implement large-scale layoffs, but they have already scaled back hiring. Meanwhile, the high level of continuing claims suggests that it is taking longer for the unemployed to find work.

Signs of a cooling job market have become a focus for Federal Reserve officials. Investors expect that after Federal Reserve Chair Powell said at the bank's annual Jackson Hole meeting last week that "downside risks to employment are rising" and opened the door to rate cuts, the Fed will lower interest rates at next month's policy meeting.