The US economy expanded at a slower pace than initially estimated in the first quarter of 2026, with consumer spending and investment revised downward, government data showed on Thursday, as reported by AFP.
GDP Growth Revised Lower
Gross domestic product (GDP) in the world's largest economy grew at an annual rate of 1.6% during the January-March period, according to the US Commerce Department. This revised figure was lower than the advance estimate of 2% released last month.
Real GDP was revised down by 0.4 percentage point from the advance estimate, primarily reflecting downward revisions to investment and consumer spending, the Commerce Department said in a statement.
Comparison with Previous Quarter
Despite the downward revision, growth remained higher than the 0.5% annual rate recorded in the fourth quarter of 2025. The increase from the previous quarter reflected upturns in government spending and exports and an acceleration in investment, while consumer spending slowed.
Impact of Geopolitical Factors
The data comes amid rising energy prices following US-Israeli strikes targeting Iran on February 28 and subsequent disruptions around the Strait of Hormuz, a key transit route for oil and fertilisers. These events have contributed to economic uncertainty.
Role of AI Investment
Analysts have also pointed to the US economy's reliance on investment linked to the artificial intelligence sector to support growth. The AI boom has driven significant capital spending, but any slowdown in this area could weigh on future GDP figures.
The Commerce Department's report underscores the mixed signals in the US economy, with government spending and exports providing support while consumer spending and private investment face headwinds. Policymakers will be watching upcoming data closely for signs of sustained growth.
