US Economy Rebounds With 2 Percent Growth in 1st Quarter

The U.S. economy registered a solid rebound in the first quarter after a disappointing end to 2025, new government data released on April 30 show.

First-quarter gross domestic product (GDP) growth was 2 percent, up from the 0.5 percent reading in the fourth quarter, according to the Bureau of Economic Analysis.

Before the release, the Federal Reserve Bank of Atlanta’s GDPNow Model indicated that growth would be about 1 percent.

The consensus forecast suggested a 2.3 percent expansion.

Consumer spending, net exports, and private investments contributed to the January–March growth rate.

Consumers continued to open their wallets, with spending up by 1.6 percent. The public has contended with a series of headwinds, from higher gasoline prices to the severe winter storm, but this may have been offset by the 11 percent increase in tax refunds.

Exports rose by almost 13 percent, driven almost entirely by shipments of goods.

Government consumption jumped by more than 4 percent after declining by nearly 6 percent in the October–December span because of the record-breaking spending impasse that shut down the federal government.

Gross private domestic investment advanced by close to 9 percent, with the artificial intelligence buildout continuing to support economic growth.

On the inflation front, the GDP price index—a measure of prices for goods and services manufactured in the United States—rose by 4.5 percent, higher than expected.

The first-quarter GDP figures come after the bureau also reported that inflation in the Federal Reserve’s preferred personal consumption expenditures price index rose to 3.5 percent in March, in line with market estimates, from 2.8 percent in February.

Core personal consumption expenditures price index inflation, which omits volatile energy and food prices, ticked up to 3.2 percent from 3 percent in the previous month.

Headline inflation measures have picked up recently because of the war in Iran, driving up global energy prices.

The ‘Quite Resilient’ US Economy

Despite the war in Iran—now approaching its 10th week—and surging gasoline prices, the U.S. economy remains “quite resilient,” Federal Reserve Chairman Jerome Powell said.

Recent figures suggest that consumers continue to open their wallets, and business investment remains solid amid the AI buildout.

“Growth is really solid across our economy,” Powell said on April 29. “Some of that is that consumer spending is hanging in pretty well, the most recent data are good. And some of it is just the apparently insatiable demand for data centers all over the United States.”

March retail sales advanced at a better-than-expected pace of 1.7 percent, driven by transactions at gasoline stations. However, when stripping out gas, consumer spending still jumped by 0.6 percent.

Consumer sentiment also rebounded in April, topping market estimates.

The Conference Board’s consumer confidence index edged higher from February’s upwardly revised reading, despite growing concerns about the pain at the pump and higher war-driven oil prices.

“Consumer appraisals of current and expected business conditions declined moderately compared to [March],” Dana Peterson, the group’s chief economist, said in a statement.

“This was offset by modest improvements in consumers’ perceptions of the labor market, both current and expected, as well as income expectations, which were slightly more optimistic in April.”

Near-term consumer inflation forecasts have also risen.

The New York Fed’s Survey of Consumer Expectations showed the year-ahead outlook climbing to 3.4 percent in March, from 3 percent in February.

Echoing Powell’s comments, it is important to look past the oil price shock’s immediate impact on inflation, said Bill Adams, chief economist at Fifth Third Commercial Bank.

“Energy price shocks are usually short-lived, and their impact on inflation usually reverses once interruptions to energy supplies go away,” Adams said in a note emailed to The Epoch Times.

For now, second-quarter GDP appears intact, with the New York Fed’s Nowcast forecasting a 2.8 percent expansion.