US growth likely picked up in first quarter, but consumer spending probably cooled
The US economy likely grew at a 2.3% annualized rate in the first quarter, driven by government spending and business investment, but consumer spending is expected to have slowed. The Commerce Department's advance estimate of first-quarter GDP is expected to show a loss of momentum in consumer spending before the US-Iran conflict raised gasoline prices.
The US economy likely accelerated in the first quarter due to a rebound in government spending and robust business investment in equipment, driven by an artificial intelligence spending boom. GDP growth is estimated to have increased at a 2.3% annualized rate. Consumer spending, however, is expected to have lost momentum, growing at a slower rate than the 1.9% pace in the fourth quarter. The Commerce Department's advance estimate of first-quarter GDP is due on Thursday. Economists believe the moderate growth pace will allow the Federal Reserve to hold interest rates steady into 2027, as long as the labor market doesn't deteriorate. Employment growth averaged 68,000 jobs per month in the first quarter, and the labor market has slowed significantly compared to 2023 and 2024.
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