U.S. GDP Rebounds as Durable Goods and Trade Data Surprise

Economic Data Update – September 25, 2025

Today’s economic releases delivered a mix of strength and caution, highlighting resilient GDP growth, an unexpected rebound in durable goods, and easing jobless claims—though persistent labor market pressures remain in the background.

GDP Growth Rebounds in Q2

The Bureau of Economic Analysis released the third and final estimate for second-quarter GDP, revising growth higher to 3.8 percent after a 0.6 percent contraction in the prior quarter. The upward revision reflects stronger consumer spending and higher imports than previously reported, though declines in business investment and exports tempered momentum.

The most significant positive contribution came from net exports, adding 4.83 percentage points to overall growth as the trade deficit narrowed sharply. Personal consumption expenditures added another 1.68 percentage points, with broad-based increases across durable goods, nondurables, and services. The largest drag came from inventories, which subtracted 3.44 percentage points as businesses drew down stockpiles after a surge in Q1.

Looking forward, early GDP tracking estimates for Q3 suggest growth closer to 2 percent, as tariff-related volatility and shifting trade patterns continue to skew the outlook.

Durable Goods Orders Surge in August

New orders for manufactured durable goods jumped 2.9 percent in August, sharply beating expectations for a decline. Transportation equipment (+7.9 percent) drove much of the increase, though core capital goods orders—a proxy for business investment—also rose 0.6 percent. While the rebound is encouraging, it follows back-to-back contractions of -2.7 percent in July and -9.4 percent in June.

Trade Gap Narrows Sharply

The goods trade deficit came in at $85.5 billion for August, well below the $94.4 billion consensus forecast. Imports fell 7.0 percent, completely reversing July’s increase, while exports slipped 1.3 percent. The narrower deficit will likely provide a positive boost to Q3 GDP estimates, though tariff volatility continues to cloud the longer-term trade outlook.

Jobless Claims Ease, But Continuing Claims Elevated

Initial jobless claims dropped by more than expected in the week ending September 20, falling to 218,000—the lowest level in two months—after a sharp 32,000 decline the prior week. The four-week moving average eased to 237,500, reflecting improved near-term stability in layoffs.

However, continuing claims remain persistently high at 1.926 million, marking 18 straight weeks above 1.9 million. This suggests underlying labor market slack, reinforcing the Federal Reserve’s recent decision to lower the federal funds target rate by 25 basis points to a 4.00–4.25 percent range.

Outlook

The latest data points to an economy still expanding but navigating crosscurrents. Stronger GDP growth and a rebound in manufacturing suggest resilience, while a narrower trade gap provides near-term support. Yet persistent weakness in inventories, uneven labor market conditions, and tariff volatility remain headwinds. Markets will closely watch upcoming inflation readings and business confidence surveys for confirmation on whether momentum can be sustained into Q4.