US economic growth accelerated to an annualized 2% in the first quarter,
supported by solid consumer and business demand after a late-2025 government
shutdown. Consumer spending rose 1.6%, driven by services, while business
investment jumped 10.4%, led by AI-related outlays. The economy has remained
resilient despite higher oil prices and supply disruptions from the Iran war,
though risks persist if consumers turn cautious. Inflation pressures
intensified, with the Fed’s preferred PCE index rising 0.7% in March and 3.5%
year on year, partly due to surging gasoline prices. The Federal Reserve held
rates steady but signaled growing internal divisions.
