US economic growth rebounds 2% as consumer spending slows amid Iran war
Summary
US economic growth rose 2% in the first quarter of 2026 after slowing in late 2025. Consumer spending slowed down, partly because higher energy prices from the war with Iran have made people cautious about spending.Key Facts
- US GDP grew 2% from January to March 2026, up from 0.5% growth in the last quarter of 2025.
- Government spending increased 10% in early 2026, reversing a previous decrease caused by federal worker layoffs.
- The US federal workforce has shrunk by about 355,000 workers since October 2024.
- Consumer spending growth slowed by 0.3% due to worries about inflation and the war with Iran.
- Inflation expectations jumped from 3.8% to 4.7% in one month amid rising energy costs.
- Oil prices reached $126 per barrel after stalled peace talks between the US and Iran.
- The US defense department says the war in Iran has cost $25 billion and is seeking $1.5 trillion more in military funds.
- The Federal Reserve is keeping interest rates steady to watch how the war and new tariffs affect the economy, despite pressure from President Trump’s administration.
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