United States: Economic Growth Rebounds to 2% at the Start of 2026

US economic growth regained some momentum at the beginning of 2026. While the increase was clearly weaker than what was observed in mid‑2025 and came in slightly below consensus expectations (2.3% according to Bloomberg), it nonetheless compares favourably with the softness recorded last autumn.

Notably, the main source of weakness at the end of 2025 became one of the primary drivers of growth in the first quarter. The shutdown that prevailed in October and November led federal government spending to drop by 16.6% at an annualized rate, but this component has now rebounded by 9.3%. As a result, it contributed 0.56 percentage points to the 2.0% increase in real GDP.

Non‑residential business investment was also a major contributor to growth in the first quarter, adding 1.39  percentage points to real GDP growth. Once again, this performance was almost entirely driven by momentum related to artificial intelligence, as illustrated by the annualized quarterly increases of 43.4% in I.T. equipment investment, 22.6% in software and 22.1% in data centre construction. At the same time, investment growth in other categories remained relatively weak. Residential investment posted a fifth consecutive quarterly decline, while business inventories fell for a fourth straight quarter. Net exports made a negative contribution, as real imports grew more rapidly than real exports.

With a gain of 1.6%, real consumption slowed relative to previous quarters. This weakness largely reflects the beginning of the period, when goods consumption (particularly automobiles) declined in January. Total real consumption performed better thereafter, with monthly increases of 0.3% in February and March. For the latter month, consumption growth was supported by a decline in savings, as real disposable income fell due to higher energy prices.

What can be expected going forward? Clearly, the war in Iran and the resulting increase in gasoline prices will continue to affect the US economy. So far, the economy has remained resilient, and the momentum driven by artificial intelligence could persist for some time, although it cannot last indefinitely. Investment could also benefit further from renewed strength in the oil sector. However, a prolonged conflict could increasingly weigh on households, undermining confidence and dampening their willingness to spend.

Real GDP growth in the first quarter of 2026 came in slightly below consensus expectations, but nonetheless represents a meaningful improvement compared with late 2025. The contribution from artificial intelligence–related investment remains solid. Attention will now turn to the extent to which the conflict in Iran weighs on economic growth this spring. For the time being, somewhat slower real GDP growth is anticipated in the second quarter.