The U.S. Bureau of Economic Analysis (BEA) has released its final estimate of real GDP for Q2 2025, revising growth upward to 3.84% from the previous 3.29%. Here are three key takeaways:

1. Consumers Are Still Spending

Fears that households were pulling back proved overdone. Consumer spending grew 2.5% in Q2, much better than earlier estimates. Retail sales this summer are also running at about 4% annualized growth, showing that shoppers are still in good shape.

2. AI Isn’t the Only Growth Driver

AI investment is making headlines, but this report shows a broader story. Business spending rose not just in tech, but also in buildings, equipment, and research & development. AI helps, but the economy isn’t running on AI alone.

3. Tariffs Are Hitting Profits, Not Prices (Yet)

Many expected tariffs to push consumer prices much higher. Instead, companies have been absorbing those costs in their profit margins. Profits fell slightly in the first half of the year as a result. If this trend continues, companies may need to either accept lower margins—or eventually pass more costs on to consumers.

The Bottom Line

The economy is showing more balance and strength than feared:

  • Consumers are spending,

  • Investment is broad-based,

  • And inflation from tariffs has been muted so far.

That said, the pressure on company profits bears watching, since it could change how businesses set prices going forward and adversely impact consumer spending. Both are key drivers to US economic growth and stock market returns.