US GDP smashed expectations with a 3.0% annualized growth rate in the second quarter, silencing talk of recession.
However, global financial advisory giant deVere Group warns that the top-line figure conceals a slowdown beneath the surface, and that both the markets – which are likely to see this bullish – and the Federal Reserve would be wrong to treat it as a green light.
“This isn’t a recession,” says Nigel Green, CEO of deVere Group. “But it’s also not the kind of growth that justifies complacency.
“The headline is loud, but the fundamentals are getting quieter.”
The rebound was driven heavily by a sharp contraction in the trade deficit, with imports falling faster than exports. That distortion flattered the GDP figure, even as core domestic demand — the true engine of the US economy — showed signs of fatigue.
“Final sales to private domestic purchasers are the real story here, and they’re telling us that demand is softening. This is what the Fed will be watching closely behind closed doors.”
Consumer spending, still positive, decelerated from the previous quarter. The shift reflects more than just the impact of higher rates; it marks a turning point in household behaviour, as Americans grow more cautious.
“People aren’t pulling back entirely, but they’re thinking harder about every dollar. That’s a major signal for investors trying to assess which sectors still have room to run.”
For the Fed, the 3% figure gives room to wait, but not to relax.
While inflation continues to cool, the underlying slowdown in demand keeps pressure on policymakers to pivot sooner rather than later.
“This likely delays the first cut, but it doesn’t change the trajectory. The Fed now has more cover to sit tight today — but by September or November, the case to act will be stronger, not weaker.”
Markets are likely to rally on the headline, but Nigel Green warns that short-term optimism could give way to more selective positioning once the internals are absorbed.
“This kind of report creates knee-jerk bullishness. But when you drill down, it’s not a broad-based surge. It’s a technically impressive number that papers over an uneven real economy.”
The drop in imports, a key reason GDP jumped, may point not to efficiency or competitiveness, but to domestic weakness.
“A narrowing trade gap helped this print look good, but it’s not a sustainable engine of growth. You don’t build long-term strength on declining imports.”
deVere advises clients to remain disciplined and forward-looking, avoiding overexposure to the parts of the market most sensitive to fading consumer activity or delayed rate relief.
“This is a market that now demands greater selectivity. Investors need to favour globally diversified, cash-generating assets that don’t rely on blind optimism about the US consumer.”
The GDP figure shifts the conversation decisively: the US economy isn’t contracting — but it is recalibrating into a slower, thinner expansion.
“There’s no recession, and no justification for panic. But there’s also no reason to throw caution to the wind. Growth is intact — but fragile. That’s the truth behind the number.”
As the Fed prepares its rate decision, and investors react to the surface strength, the deVere CEO concludes: “Don’t mistake momentum for durability. The real signals are quieter, and yet more important.”
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