U.S. economy grew 2% from January-March, but Iran war clouds outlook
Summary
The U.S. economy grew at a 2% rate from January to March 2026, improving after the federal government shutdown in late 2025. However, tensions related to the war in Iran create uncertainty about future economic growth.Key Facts
- The U.S. economy expanded 2% in the first quarter of 2026.
- This growth followed a slow 0.5% increase in the last quarter of 2025.
- The government shutdown in late 2025 lasted 43 days and impacted economic activity.
- Federal government spending and investment rose 9.3% annualized in early 2026, boosting growth by over half a percentage point.
- Consumer spending, which makes up 70% of the economy, grew more slowly at 1.6% compared to 1.9% in late 2025.
- Spending on goods like food and clothing declined slightly in early 2026.
- Spending on services also slowed down during this period.
- The war in Iran is causing higher gas prices and creating uncertainty for the economy’s future.
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