U.S. GDP rebounds from lackluster end to 2025, grows at 2% rate in first quarter
The U.S. economy grew at a 2% annual rate in the first quarter of 2026, rebounding from a sluggish 0.5% expansion in late 2025, as increased federal spending and strong business investment offset declines in housing and a surge in imports. Consumer spending slowed to 1.6%, weighed down by high energy prices and economic uncertainty linked to the ongoing conflict in Iran, which has disrupted global oil flows through the Strait of Hormuz. Despite solid underlying growth of 2.5% in a key core measure, the economic outlook remains uncertain due to geopolitical tensions and persistent weakness in residential investment.
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The U.S. economy accelerated at the start of 2026, expanding at a modest 2% pace from January through March after recovering from last fall’s 43-day federal government shutdown. But the outlook is clouded by the Iran war.Recommended Video The Commerce Department reported Thursday that gross domestic product — the nation’s output of goods and services — rebounded from a lackluster 0.5% expansion the last three months of 2025. The federal government’s spending and investment grew at a 9.3% annual rate in the first quarter, adding more than half a percentage point to growth after lopping off 1.16 percentage points in fourth-quarter 2025. Growth in consumer spending, which accounts for 70% of U.S. economic activity, slowed to 1.6% in the first quarter from 1.9% at the end of 2025.
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