GDP rose at 2% annual rate in first quarter as U.S. economy rebounds
Summary
The U.S. economy grew at a 2% annual rate in the first quarter of 2026, showing improvement from the previous quarter but slightly below expectations. Growth was supported by investment in artificial intelligence and tax cuts, while rising energy prices linked to the Iran war created challenges.Key Facts
- The U.S. GDP grew at 2% in the first quarter of 2026, less than the 2.2% forecast.
- The previous quarter’s growth was only 0.5%, affected by a government shutdown.
- Business investments, mainly in AI, increased by 8.7% annually.
- Consumer spending grew more slowly, at 1.6%, down from 1.9% in the last quarter of 2025.
- Higher-income households contributed most to the March growth.
- The Iran war caused oil prices to rise, with gasoline reaching $4.30 per gallon and Brent crude topping $126 per barrel.
- Inflation rose at a 3.2% annual rate, above the Federal Reserve’s 2% target.
- Economists predict 2026 GDP growth of 1.8%, slower than 2.1% growth in 2025, partly due to the war’s impact.
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