Federal data shows economic growth strengthened early in 2026, though energy disruptions tied to conflict abroad are creating new risks.
By yourNEWS Media Newsroom
The U.S. economy grew at an annual rate of 2% during the first quarter of 2026, rebounding from slower growth at the end of the previous year, according to new figures released by the U.S. Department of Commerce.
The increase marks a significant acceleration from the 0.5% growth recorded in the final quarter of 2025, a period affected by a prolonged federal government shutdown that lasted 43 days.
Government spending played a major role in the rebound. Federal expenditures and investment rose at a 9.3% annual rate during the first three months of the year, contributing more than half a percentage point to overall growth after reducing output in the prior quarter.
Consumer spending, which represents roughly 70% of U.S. economic activity, expanded at a slower pace of 1.6%, down from 1.9% in late 2025. Meanwhile, business investment increased at an 8.7% rate, with analysts pointing to continued spending on technologies such as artificial intelligence as a contributing factor.
Despite the stronger growth, economic outlooks remain uncertain due to international developments. Tensions involving Iran have disrupted global energy markets, with the Strait of Hormuz—a key route for oil and liquefied natural gas shipments—reportedly blocked. The waterway typically handles a significant share of global energy transport, and the disruption has contributed to rising energy prices.
Higher fuel costs have added to inflation pressures and raised concerns about consumer spending power in the months ahead.
The Federal Reserve, which announced this week that it would hold interest rates steady, cited “a high level of uncertainty” tied to the geopolitical situation.
Economists have acknowledged the difficulty of forecasting under these conditions. Carl Weinberg, chief economist at High Frequency Economics, said in a recent commentary that current indicators offer limited guidance.
“The truth is that we do not have any defensible basis for trying to project how these indicators will print,” Weinberg wrote, noting that the blockade presents an unprecedented challenge for economic modeling.
He added that the conflict involving President Donald Trump and Iran has introduced variables not previously encountered in modern economic forecasting.
Thursday’s report represents the first of three estimates that the Commerce Department will release for first-quarter economic performance, with revisions expected as additional data becomes available.