Washington (United States) (AFP) - The United States economy grew less than expected in the first quarter due to a slowdown in consumer spending, while inflation rose sharply due to the effects of the war in the Middle East, according to official data released on Thursday.

First modification: 04/30/2026 - 16:17

Even as the world's largest economy appears resilient, analysts warn of its dependence on the AI ​​investment boom, and consumers are beginning to show signs of fatigue, something that could worsen as the impact of the war spreads.

The Gross Domestic Product (GDP) advanced 2% at an annualized rate in the January-March period, according to an estimate from the Department of Commerce.

This was significantly higher than the 0.5% in the final quarter of 2025, but is below the 2.2% growth that analysts had forecast.

White House spokesman Kush Desai praised the level of growth, saying it was "driven by a surprising rebound in business investment." The spokesperson highlighted President Donald Trump's policies of tax cuts and deregulation.

But Heather Long, chief economist at Navy Federal Credit Union, describes it as "a dual reality economy," in which AI-related businesses and investors prosper while middle-income households struggle with inflation.

Rising prices are expected to overburden American households in an election year, when Donald Trump's administration faces midterm elections.

"Warning signal"

A rebound in public spending and investment boosted GDP, but this was "partially offset by a slowdown in consumer spending", the department added.

Long estimates that "nearly half of the increased tax refunds have already gone to pay for rising gas prices for many families," although it remains encouraging that there have been few layoffs.

"But it is a big warning sign that consumption has slowed to 1.6% in the first quarter," he warned in a note.

Also this Thursday, another report from the Department of Commerce showed that inflation soared in March due to the increase in fuel costs as a result of the war.

The Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve's preferred inflation indicator, rose 3.5% year-over-year, a notable increase from 2.8% the previous month.

Excluding food and energy, the PCE price index rose 3.2%.

Energy costs have skyrocketed since joint US-Israeli attacks on Iran on February 28 caused Tehran to blockade the strategic Strait of Hormuz.

This sea route is a key route for the transport of oil, gas and fertilizers, which has driven up prices globally.

At American gas stations, the average price per gallon (3.78 liters) of regular gasoline reached $4.30, according to data from the AAA automobile club.

Weak growth, except AI

"Overall, growth was already weak before the energy shock, with underlying momentum in the economy very weak, save for the continued boom in AI-related capital investment," said Oliver Allen, senior economist at Pantheon Macroeconomics.

Although there was a jump in public spending that boosted GDP growth, this was "entirely due to a strong rebound in federal government spending following the fourth quarter shutdown," he noted.

Allen added that consumer spending in the first three months of this year was also weaker than its average pace over the past four quarters.

"The dull labor market, depressed confidence, weak real income growth and the depletion of excess savings accumulated during the pandemic are beginning to weigh on households," he warned.

Chris Zaccarelli, chief investment officer at Northlight Asset Management, hopes the U.S. economy can withstand short-term global economic shocks.

"But we are increasingly concerned that the global economy is going to have a much harder time weathering the coming storm," he added.

© 2026 AFP

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