U.S. second-quarter GDP rebound in doubt! Economists: Trade policy disruptions lead to data distortion

According to the Zhitong Finance APP, although the preliminary GDP for the second quarter to be released by the U.S. Department of Commerce may show an economic rebound, trade policy disruptions and structural weaknesses are obscuring the true growth momentum. A survey of economists indicates that after a 0.5% quarter-on-quarter contraction in the first quarter, the annualized GDP growth rate from April to June may reach 2.4%, but some institutions have raised their expectations to 3.3% after revising the latest trade and inventory data. However, this optimistic figure is technically supported by a narrowing trade deficit to a near two-year low and a slight rebound in inventory, rather than a substantial improvement in domestic demand.

The trade protectionist policies of the Trump administration continue to ferment, becoming the core factor distorting current economic data. The contribution rate of trade to GDP in the first quarter recorded a historic decline of 4.61 percentage points. Although there may be a partial reversal in the second quarter, the low inventory situation caused by declining import flows has partially offset the trade growth's positive effect on GDP.

Stanley, chief economist at Santander, pointed out that the GDP data for two consecutive quarters has failed to accurately reflect the economic fundamentals. The uncertainty of tariff policies has permeated corporate decision-making, triggering widespread cautious sentiment. Swiet, chief economist at Oxford Economics, analyzed that tariff costs will gradually be transmitted to inflation data, eroding residents' real disposable income and suppressing consumption willingness.

The performance of consumption and investment confirms the insufficient endogenous momentum of the economy. As consumption expenditure accounts for more than two-thirds of the economy, it is expected to only see a moderate rebound after nearly stagnating in the first quarter; corporate equipment investment is likely to continue its weak trend. Meanwhile, although the Inflation Reduction Act has eliminated some uncertainties in fiscal policy, its tax reduction and spending provisions are expected to increase U.S. federal debt by an additional $3.4 trillion, pushing the average annual real GDP growth over the next decade to only 0.5%, raising doubts about the policy's effectiveness.

The labor market has become a key observation point. Swiet emphasized that as long as the scale of layoffs does not significantly expand, the economy may barely maintain growth in the second half of the year, which also reduces the urgency for the Federal Reserve to cut interest rates in the short term. The market generally expects that after maintaining the interest rate range of 4.25%-4.50% in June, the Fed's next rate cut may be delayed until December.

Professor Sun Yuanwen of Loyola Marymount University pointed out that although technological advancements such as artificial intelligence may enhance productivity, the tightening of immigration policies has led to a slowdown in labor force growth, making it difficult for economic growth to rely solely on technological progress.

The current economic landscape presents contradictory characteristics: the second quarter GDP may show a technical rebound, but the annual growth rate is expected to plummet from 2.8% in 2024 to 1.5% or even lower; about 60% of imported goods remain uncovered by trade agreements, and the actual tariff level has reached its highest since the 1930s.

In this context, the growth rate of final sales to domestic private buyers is expected to be lower than the 1.9% in the first quarter, indicating weak growth in terminal demand. Balancing trade protection and economic growth has become a challenge faced jointly by policymakers and businesses