The US economy is clearly growing but at a slower pace as shown below in the two charts. Gross Domestic Product which measures the value of goods and services produced in the US, increased at 3% in the second quarter of 2025 according to the advanced estimate from BEA. Net exports added 5 percentage points to GDP after subtracting the most on record in the first three months of the years. Consumer spending which accounts for 2/3 of GDP advanced 1.4% the lowest growth in consecutive quarters since the pandemic.
Source U.S. Bureau of Economic Analysis
Core GDP shown below decelerated for the 3rd straight quarter. Core GDP measures the economic performance by excluding items like food and energy prices, which are volatile. It provides a clearer view of long term economic trends and underlying growth.
Source U.S. Bureau of Economic Analysis
Finding a job is also much more difficult. Below are two charts showing the weakness in job growth and correspondingly an increase in unemployment. Nonfarm payrolls increased 73,000 in July, lagging the consensus expected 104,000. Worse, payroll gains for prior months were revised down by 258,000, meaning the net loss for the month was 185,000. Meanwhile, civilian employment, an alternative measure of jobs that includes small-business start-ups, declined 260,000 in July, helping push up the unemployment rate a tick to 4.2% (4.248%, unrounded).
Source Department of Labor
Source Department of Labor
However, despite the concerns on both Core GDP and jobs, the S&P 500 continues to make new highs. As of August 8, 2025, the SPX stood at 6385 up 9.4% Year to Date. As shown below the large reason is that 2nd quarter earnings are coming in much better than expected. Tariffs, inflation and other concerns prompted analysts to lower the earnings but to their surprise and the market, earnings are beating and improving.
Source Bloomberg