U.S. Economy Struggles Amid Trade and Investment Headwinds
The U.S. economy showed a rebound in the second quarter, driven by declining imports, but underlying weaknesses persisted. Consumer and business spending slowed, reflecting the impacts of protectionist trade policies and high tariffs. Economists forecast tepid growth for the year, with moderate consumer spending and sluggish investment contributing to the slowdown.
The U.S. economy witnessed an unexpected rebound in the second quarter, largely due to a decline in imports. However, this masked deeper issues as domestic demand reached its lowest in over two years. The Commerce Department's GDP report highlighted uncertainty stemming from President Trump's trade policies.
Amidst sweeping tariffs and trade deal negotiations, consumer spending only grew moderately after near stagnation earlier this year. Business investment in equipment saw a significant dip, while residential investment contracted for a second consecutive quarter, signaling a broader economic slowdown.
Though some trade deals have been announced, economists anticipate lackluster growth ahead. The Federal Reserve acknowledged the slowdown, maintaining interest rates unchanged, with expectations of future rate cuts. Consumer spending, driven by higher-income households, is threatened by rising tariffs and inflationary pressures.
(With inputs from agencies.)
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