U.S. Economy's Growth: The AI and Tariff Tug-of-War
The U.S. economy grew by 3.3% in the second quarter, fueled in part by AI-related investments. However, the tariffs on imports present a cloudy outlook, predicting a stall in growth in upcoming quarters. Despite a rebound in profits, tariffs still pose significant risks to businesses.
In a surprising twist, the U.S. economy expanded at a 3.3% annualized pace in the last quarter, surpassing initial forecasts, largely due to investments in artificial intelligence-related intellectual property. However, economists caution that this growth might be temporary as tariffs continue to strain economic prospects.
The Bureau of Economic Analysis's revised data also highlights increased consumer spending and business investments in equipment. Tariff policies under President Trump's administration have skewed import patterns, leading analysts to predict potential economic slowdowns ahead.
Despite a significant rebound in corporate profits last quarter, the highest tariff rates in a century are impacting key sectors such as manufacturing and retail. As the labor market shows signs of softening, the Federal Reserve might consider an interest rate cut in its coming meeting.
(With inputs from agencies.)
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