U.S. Economic Growth Is Losing Steam

The latest data on U.S. economic growth tells a similarly disquieting story.

America’s gross domestic product (GDP) officially grew at a 3% annual rate in the second quarter, after decreasing by 0.5% in the first quarter.

America’s gross domestic product (GDP) officially grew at a 3% annual rate in the second quarter, after decreasing by 0.5% in the first quarter.

But both figures are misleading, Eric Levitz reported for Vox. To get a clearer picture of the economy’s growth rate, it’s best to look at GDP trends over the first two quarters combined.

Over the first half of this year, U.S. GDP expanded at a 1.2% annualized pace—a much slower rate than both its 2024 growth (2.8%) and forecasters’ expectations for 2025 GDP growth when Trump was elected last November (2.1%).

As with employment gains, America’s GDP growth is highly imbalanced: an explosion in artificial intelligence (AI) infrastructure spending is playing an outsized role in sustaining economic expansion.

Over the past six months, the AI buildout has contributed more to U.S. economic growth than consumer spending. Trump’s trade and immigration policies explain much of the slowdown.

Through ramped-up internal enforcement and restrictions on legal immigration, the president has succeeded in shrinking the U.S. foreign-born labor force while deterring the arrival of new migrants. Since March, America has shed 1.7 million immigrant workers.

Earlier this month, the Federal Reserve Bank of Dallas estimated that Trump’s immigration policies will lower annual GDP growth by about 0.8%.

As of last Wednesday, Yale’s Budget Lab estimated that Trump’s tariffs would reduce real GDP growth annually by 0.5%. The president’s most recent batch of duties will almost certainly weigh on growth even further.