At the start of 2025, most analysts foresaw a gentle slowdown for the US economy. Fast forward to Q2, and reality has upended those expectations—US GDP jumped by an annualized 3.8%, making it the strongest showing since Q3 2023. The surge mainly reflects robust consumer spending, particularly on services, and a notable rebound in business investments like equipment and intellectual property.

Nevertheless, some headwinds remain. Exports have declined, residential investment weakened further, and the headline boost from shrinking imports isn’t expected to last long. Inflation, while slightly lower than expected, is projected to average around 2.9% for 2025, possibly nudging above 3% in 2026. Despite the recent upbeat numbers, most forecasts see US growth moderating over the next year, with around a 30% chance of recession by 2026.

What about a real re-acceleration? The key drivers will stay the same—consumer confidence, steady job gains, and business investment—but they’ll be tested by policy changes, global economic shifts, and ongoing inflation. As always, keeping an eye on key indicators each quarter will be critical to understanding what’s next for the US economy.