The US economy grew at a 3.3% annualized rate in Q2 2025, up from the initial 3% estimate, according to the Commerce Department.

The revised figures were driven by higher business investment in intellectual property, including areas like AI, and stronger spending on equipment and consumer services.

Economists noted that ongoing tariffs on imports, which have caused fluctuations in trade, continue to affect the accuracy of GDP readings.

The economy had contracted 0.5% in Q1 2025, pulled down by front-loaded imports as businesses tried to avoid new tariffs.

For the full year, economists expect growth to slow to about 1.5%, down from 2.8% in 2024.

Corporate profits rebounded by US$65.5 billion in Q2, after a US$90.6 billion drop in Q1, despite tariffs raising costs for companies.

Initial jobless claims fell by 5,000 to 229,000 for the week ending August 23, while continuing claims fell by 7,000 to 1.954 million for the week ending August 16.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ AI investment surge mirrors historic technology bubbles with massive economic impact

The dramatic revision of business investment in intellectual property—from 6.4% to 12.8% growth—reflects an AI spending boom that has reached unprecedented levels.

Capital expenditures on AI infrastructure have reportedly surpassed those during the dot-com boom, with AI spending contributing significantly to economic growth in recent quarters2.

This pattern of technology-driven investment acting as a “private sector stimulus program” historically precedes both major economic transformations and potential market corrections2.

The scale becomes evident when considering that companies like Microsoft have reached $4 trillion valuations, driven in part by AI-related cloud services, demonstrating how concentrated this investment has become in specific sectors2.

2️⃣ Tariff costs create widespread business disruption despite GDP growth masking effects

While the GDP revision appears positive, the underlying tariff impacts are creating substantial cost pressures across multiple industries that may not yet be fully reflected in economic data.