US economic growth rebounded in the second quarter after contracting for the first time in three years to start 2025.

Gross domestic product grew at annualized pace of 3% in the second quarter, according to the Bureau of Economic Analysis' advance estimate. Economists surveyed by Bloomberg had expected a 2.6% increase.

The reading comes after a large surge in imports ahead of President Trump's tariff whipsaw caused GDP to contract by 0.5% in the first quarter. Wednesday's GDP data covers the months of April through June, meaning it reflects activity during first three months that the widest swath of Trump's tariffs were in place.

It does not, however, reflect recent tariff updates from July.

Investors have been closely watching how the most aggressive US tariff stance in a century will impact economic growth. In April, Trump's initial "Liberation Day" tariffs spooked markets as recession fears rose.

But in recent months, economic data has largely been better-than-feared and recession concerns have eased. The probability investors were putting on a US recession in 2025, as tracked by popular online betting platform Polymarket, were just 17%, down from a peak of 66% on May 1.

Josh Schafer is a reporter for Yahoo Finance. Follow him on X @_joshschafer.

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