US economic system grows at 3% yearly, sooner than expectedThe US economic system grew sooner than anticipated within the second quarter of 2025, based on information which make much more distant the prospect of a Federal Reserve rate of interest lower any time quickly.US GDP grew at a 3% annualised charge, based on the US Bureau of Financial Evaluation.Economists polled by Reuters had predicted annualised GDP progress of two.4%, after a shock contraction of 0.5% within the first quarter as exporters rushed to get their merchandise into the nation forward of tariffs. Imports rely towards a rustic’s GDP.ShareKey eventsShow key occasions onlyPlease activate JavaScript to make use of this featureSarah ButlerThe Depop app on a cellphone in 2017. {Photograph}: Linda Nylind/The GuardianDepop, the London-based secondhand clothes market, is on monitor for $1bn of annual gross sales for the primary time, its proprietor Etsy has mentioned, after a 35% surge in gross sales to $250m within the three months to 30 June.The corporate mentioned progress was pushed by a 54% bounce in gross sales within the US because it signed up a file variety of new buyers.Development on the enterprise displays a surge in curiosity in ‘pre-loved’ clothes in recent times with rival Vinted reporting a 41% rise in gross sales to virtually €813m for 2024 with income virtually tripling to €95.4m after the corporate stepped out of the purple for the primary time in 2023.The sturdy gross sales at Depop have been revealed as its mother or father group reported a close to 5% drop in gross sales to $2.8bn within the quarter because it noticed a lower in energetic patrons at its essential Etsy market, which focuses on handmade and bespoke merchandise. Internet income for the group dived $24m to £29m, largely due to a loss on trade charges.The corporate didn’t say if it had been affected by adjustments within the US tax regime below which imported objects value lower than $800 being despatched direct to customers should now pay import tax.ShareWall Road shares are fairly flat initially of buying and selling on Wednesday in New York.Listed here are the opening snaps, by way of Reuters:
S&P 500 UP 4.84 POINTS, OR 0.08%, AT 6,375.70
NASDAQ UP 40.33 POINTS, OR 0.19%, AT 21,138.63
DOW JONES UP 14.09 POINTS, OR 0.03%, AT 44,647.08
ShareDonald Trump is exhibiting an… unorthodox method to financial coverage.In a submit on Fact Social, the social community he owns, Trump argued that the Federal Reserve ought to lower rates of interest due to faster-than-expected progress.That’s the precise reverse of how the overwhelming majority of economists take into consideration rate of interest adjustments: they normally take into account larger rates of interest when economies develop sooner, with the intention to forestall inflationary strain constructing.Trump posted:Donald Trump mentioned as soon as once more that the Federal Reserve ought to lower rates of interest. {Photograph}: Fact Social/@realDonaldTrump
2Q GDP JUST OUT: 3%, WAY BETTER THAN EXPECTED! “Too Late” MUST NOW LOWER THE RATE. No Inflation! Let individuals purchase, and refinance, their properties!
It isn’t the primary time a world chief has gone for unorthodox financial coverage theories: Turkey’s president, Recep Tayyip Erdogan, argued for a interval that larger rates of interest trigger inflation. That principle didn’t achieve a lot traction.ShareThe US economic system continues to be rising below Donald Trump’s presidency, however at a slower charge than final 12 months below Joe Biden. Atakan Bakiskan, US economist at Berenberg, an funding financial institution, mentioned:
Because the begin of the 12 months, US financial exercise has expanded by 1.2% annualised, a lot slower than final 12 months’s odds-defying first-half efficiency of two.3% annualised. This softer progress path will seemingly persist – courtesy of slower immigration, commerce wars and an unsure macro atmosphere.
However for future rate of interest selections the Federal Reserve is more likely to deprioritise the GDP figures in favour of the roles information on account of be launched on Friday. Bakiskan once more:
Given the lag and the noisy sign it sends, GDP will stay within the backseat. The Fed will keep centered on what sits within the entrance seat – the holy grail nonfarm payroll information – to evaluate the well being of the US economic system. That has up to now proved resilient up to now and will stay so on Friday. With just a few hours left till the Fed choice, which is all however assured to be a maintain, right now’s GDP report is not going to change the narrative of a slowing however not stalled US economic system.
ShareThere are indicators of weak point within the US economic system under the floor of the faster-than-expected second-quarter progress, based on Thomas Ryan, a North America economist at Capital Economics, a consultancy.He wrote:
The three.0% annualised achieve in second-quarter GDP overstates the economic system’s underlying power, because it was largely pushed by a 30% droop in imports as pre-tariff stockpiling unwound. The extra worrying improvement was that progress in gross sales to non-public home purchasers slowed to only 1.2%, its weakest since late 2022.
Internet commerce swung from a 4.6%-point drag on first-quarter GDP progress to offering a 5.0%-point enhance final quarter, pushed by a pointy drop in imports as corporations shifted from entrance working tariffs to working by way of present stockpiles.
Consumption progress did speed up – albeit to a slower tempo than earlier years. Ryan mentioned that the consumption progress “demonstrates that each one the tariff uncertainty final quarter didn’t result in customers retrenching totally”.
With consumption posting a average achieve, non-public gross sales to home purchasers, typically seen as one of the best indicator of underlying financial power, rose by 1.2% regardless of the weak point in funding.
ShareStock market futures point out that US share indices are more likely to rise on the opening bell.S&P 500 futures costs are up by 0.1%, whereas futures for the tech-focused Nasdaq are up 0.2%.ShareThe US financial information will certainly play into the Fed’s choice for later: even with commerce distortions, they buttress the argument that the US economic system doesn’t want additional assist – regardless of the ideas of Donald Trump on the matter.Neil Birrell, chief funding officer at Premier Miton Buyers, a fund supervisor, mentioned:
As anticipated, the US economic system bounced again strongly within the second quarter, far more than anticipated, after contracting within the first quarter forward of the imposition of tariffs. With inflation above goal, tariffs about to kick in and the economic system trying in affordable form, there may be just about no probability of the Fed performing on charges earlier than September, it doesn’t matter what the President would really like them to do.
ShareLauren ArataniUS President Donald Trump factors to a doc as Federal Reserve chair Jerome Powell fact-checks the numbers on it throughout a tour of the Federal Reserve Board constructing final week. {Photograph}: Kent Nishimura/ReutersThe US Federal Reserve is anticipated to depart rates of interest unchanged in an announcement later right now, regardless of an onslaught of assaults from the White Home towards the central financial institution.The Fed’s federal open market committee (FOMC) has eight alternatives a 12 months to vary rates of interest throughout its scheduled two-day conferences. Whereas the FOMC decreased charges thrice within the fall, bringing charges down a full proportion level, it left charges unchanged after its final 4 conferences. Rates of interest at present sit at a spread of 4.25% to 4.5%.Trump is partly responsible for the pause in charge cuts. Fed officers say that the economic system has turn out to be too unstable to vary charges. The Fed has to strike a fragile steadiness between its “twin mandate”, preserving each unemployment and inflation low. Although the economic system was sturdy originally of the 12 months, Trump’s lengthy slate of tariffs have began to creep into costs, bringing inflation up from 2.3% in April to 2.7% in June.On Wednesday, executives on the shopper items big Procter & Gamble mentioned tariffs have been “inherently inflationary” and that US customers have been “below some stage of stress” and that the corporate, lengthy a bellwether of shopper sentiment, was experiencing slowing gross sales within the US and Europe.You possibly can learn the total report right here:ShareThere is a giant caveat to the US economic system’s quick headline progress: it’s nonetheless being distorted by the large swings in American commerce – exemplified by Donald Trump’s announcement a couple of minutes earlier than to impose steep 25% tariffs on India.Imports surged within the first quarter, after which fell sharply within the second quarter. And imports rely towards GDP (to keep away from double counting between completely different nations – even when imports are helpful to that nation). The US Bureau of Financial Evaluation mentioned:
The rise in actual GDP within the second quarter primarily mirrored a lower in imports, that are a subtraction within the calculation of GDP, and a rise in shopper spending.
ShareUS economic system grows at 3% yearly, sooner than expectedThe US economic system grew sooner than anticipated within the second quarter of 2025, based on information which make much more distant the prospect of a Federal Reserve rate of interest lower any time quickly.US GDP grew at a 3% annualised charge, based on the US Bureau of Financial Evaluation.Economists polled by Reuters had predicted annualised GDP progress of two.4%, after a shock contraction of 0.5% within the first quarter as exporters rushed to get their merchandise into the nation forward of tariffs. Imports rely towards a rustic’s GDP.ShareUS to impose 25% tariffs on India says TrumpThe US will impose tariff of 25% on India, with Donald Trump criticising the world’s fifth-biggest economic system for “obnoxious” commerce limitations.Trump wrote in a submit on Fact Social, the social community he owns:
Whereas India is our good friend, now we have, over time, executed comparatively little enterprise with them as a result of their Tariffs are far too excessive, among the many highest within the World, and so they have probably the most strenuous and obnoxious non-monetary Commerce Boundaries of any Nation.
ShareA Eurofighter Hurricane throughout a low-level sortie within the Lake District, Cumbria, UK. {Photograph}: Mark Wright/BAE SystemsThe share value of BAE Methods, Britain’s dominant weapons maker, is down 3.6% right now, regardless of upgrading its gross sales and revenue forecasts for the 12 months due to the massive will increase in navy spending deliberate by the UK and its allies.BAE Methods is not going to be worrying vastly in regards to the share value dip: its shares are nonetheless up by 52% throughout 2025.BAE Methods’s share value has virtually tripled since Russia’s full-scale invasion of Ukraine in early 2022. {Photograph}: LSEGBAE has benefited from authorities spending on the next-generation Tempest fighter jet, on account of fly by 2030. The corporate has additionally mentioned that it’s near securing additional orders for the Hurricane fighter jets that it already builds.On the Hurricane orders, Charles Woodburn, BAE’s chief government, mentioned:
There’s undoubtedly curiosity. Nevertheless it’s onerous to place a timeframe on when these potential subsequent buys would possibly come by way of.
There may be little signal of a slowdown in gross sales demand, and a menace to its work on the US-made F-35 fighter jet programme was lifted after activists failed in a problem to UK involvement. The federal government efficiently argued that exports took priority over the necessity to adjust to UK legal guidelines on arms export controls, or any UK obligation to stop an alleged genocide in Israel.Woodburn mentioned it was a “sturdy operational and monetary efficiency within the first half of the 12 months, giving us the arrogance to improve our steering”.Reuters reported that Woodburn declined to touch upon whether or not BAE was in talks with Boeing and Sweden’s Saab about teaming up on a future alternative for Britain’s Hawk coach jet, after an earlier report.ShareUpdated at 08.26 EDTToyota halts operations amid tsunami precautions after reporting file salesThe tsunami warnings have fortunately been downgraded in Japan and Hawaii – though different warnings are nonetheless in place across the Pacific.Japan’s Toyota has mentioned that it halted operations at 14 strains in eight vegetation in Japan, though it should resolve whether or not to restart work as quickly as Wednesday night, based on Nikkei.Toyota Yaris Cross and Yaris 4 automobiles are pictured on the meeting line on the Toyota Motor Manufacturing France (TMMF) plant in France. {Photograph}: Benoît Tessier/ReutersIt got here after the corporate bucked the worldwide pattern of carmakers reporting falling gross sales: its output and gross sales reached a brand new file within the first half of 2025 – thanks partially to its give attention to hybrid automobiles that mix a battery with a petroleum or diesel engine.The corporate didn’t reveal any monetary figures, though it has beforehand mentioned that it’s much less uncovered to the US tariff turmoil than some rivals as a result of it goals to provide its automobiles within the markets the place it sells – together with throughout the US.Reuters reported:
The world’s greatest automaker’s international gross sales for January-June grew 5.5% 12 months on 12 months to greater than 5.1m automobiles, supported by demand for hybrid automobiles, which accounted for about 43% of its worldwide gross sales over the interval.
Toyota has remained dedicated to hybrids far more than rivals, which has left it in a superb place financially as pure electrical gross sales have hit one thing of a plateau in progress. On the similar time, some analysts argue that the corporate will likely be left behind within the race to provide one of the best electrical automobiles.ShareUpdated at 08.31 EDTAdidas has had a knock-on impact throughout the trainers world: within the UK, FTSE 100 retailer JD Sports activities is down 2.5% right now after the German shoemaker missed its gross sales estimates.Nevertheless, David Hughes, an analyst at Shore Capital, an funding financial institution, mentioned JD Sports activities buyers ought to take coronary heart from the Adidas progress in revenues within the quarter – regardless of the hit from tariffs.He wrote that decrease ranges of discounting and better full-price sell-through by Adidas have been “one other signal of power within the ath-leisure market”. He added:
The expansion delivered within the first half provides us extra confidence within the power of the ath-leisure market and in JD’s prospects for a income turnaround.
ShareAdidas warns of €200m further manufacturing prices from Trump tariffsSarah ButlerAdidas merchandise are displayed on the firm headquarters in Herzogenaurach, Germany, in March. {Photograph}: Helen Reid/ReutersTrump’s US import tariffs are anticipated to price Adidas as much as €200m extra on manufacturing prices in the remainder of this 12 months because it warned the brand new tax regime might hit demand if it prompted “main inflation”.The German footwear model, recognized for its three-stripe emblem, makes most of its product in China and the far east which have focused by the brand new US tariff regime and has already warned that costs are more likely to must rise within the US.On Wednesday Bjørn Gulden, the chief government of Adidas, mentioned the group was holding its revenue forecast of between €1.7bn and €1.8bn, up from €1.3bn final 12 months, however indicated that was below strain. He mentioned:
We at present really feel assured to ship it, however after all this would possibly change – additionally upwards ought to headwinds be lower than we at present assume.
The 12 months has began nice for us and usually we might now be very bullish in our outlook for the total 12 months. We really feel the volatility and uncertainty on the earth doesn’t make this prudent.
The corporate mentioned that the imposition of tariffs had already price it greater than €10m in further manufacturing prices and this determine would proceed to rise.“We nonetheless have no idea what the ultimate tariffs within the US will likely be” he mentioned, including “We do additionally not know what the oblique influence on shopper demand will likely be ought to all these tariffs trigger main inflation.”Gulden made the feedback as Adidas revealed gross sales of the model enhance 12% within the second quarter of the 12 months to €6bn. Working revenue rose 58% to €546m as the corporate, which is bouncing again after being pressured to close down its lucratrive Yeezy collaboration with with Kanye West in 2022, mentioned it had lowered discounting.Gulden mentioned the tempo of progress had risen in direction of the top of the interval. The model is at present outperforming its main rival Nike with each new variations of its classic footwear types – comparable to an animal print Samba that proved significantly well-liked with girls – and its trainers in demand.Share
