US Economic Growth Rebounds in Q2: What This Means for Investors and Businesses in Oman
WASHINGTON – US economic growth likely rebounded in the second quarter as the inflow of imports slowed, but moderate consumer spending and stalled business equipment investment suggest this improvement may overstate the economy’s true strength.
The Commerce Department’s advance report on gross domestic product (GDP) set for release Wednesday is expected to be heavily influenced by trade factors, similar to the January-March quarter when GDP contracted for the first time in three years. Economists attribute this distortion to President Donald Trump’s protectionist trade policies, including broad tariffs on imports and delays in imposing higher duties, which have complicated efforts to accurately gauge economic health.
Experts recommend focusing on final sales to private domestic purchasers, widely regarded by economists and policymakers as a more reliable indicator of underlying US economic growth. This measure is forecast to show a slowdown compared to the moderate pace seen in the first quarter.
Stephen Stanley, chief US economist at Santander US Capital Markets, emphasized that “for the second quarter in a row, the headline GDP figures will not provide an accurate view of the underlying economic picture.” He pointed to the “ripple effects” from the administration’s unpredictable tariff strategy, which has generated widespread caution among businesses.
A survey of economists predicted GDP growth at an annualized rate of 2.4% in the second quarter, up from a 0.5% contraction in the first. The economy’s size is also expected to surpass $30 trillion for the first time ever, before adjusting for inflation.
However, the survey concluded prior to Tuesday’s data revealing the goods trade deficit shrank to its smallest level in nearly two years in June, while inventories increased slightly. These developments led economists to raise their GDP growth forecasts by up to 0.8 percentage points, suggesting a possible growth rate as high as 3.3%.
Trade reduced GDP by a record 4.61 percentage points in the first quarter. Although a rebound is anticipated, gains may be partly offset by low inventories, stemming from reduced imports. Trade and inventories remain the most volatile GDP components; inventories alone contributed 2.59 percentage points to GDP in January-March.
Economists estimate the economy grew less than 1.5% in the first half of the year and predict a weak second half, potentially limiting full-year growth to around 1.5% or less—a sharp decline from the 2.8% growth recorded in 2024.
Despite several trade agreements announced by the White House, economists note that the nation’s effective tariff rate remains among the highest since the 1930s, with approximately 60% of imports still uncovered by any deal.
— Reuters
Special Analysis by Omanet | Navigate Oman’s Market
The cautious US economic rebound amid volatile trade policies signals uncertainty in global supply chains that Oman-based businesses relying on US trade must monitor closely. For investors and entrepreneurs, this highlights an opportunity to explore diversified markets and strengthen local supply resilience to hedge against fluctuating trade dynamics. Smart players should also consider the potential slowdown in US growth, adjusting strategies accordingly to mitigate risks from external economic shifts.
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