U.S. Economic Growth Rises to Two Percent

(MENAFN) The U.S. economy grew at an annualized pace of 2% during the first quarter of 2026, marking a pickup from the 0.5% expansion recorded in the final quarter of the previous year. However, the result still fell short of what financial markets had anticipated, according to data released Thursday by the Commerce Department’s Bureau of Economic Analysis.

The preliminary estimate indicated that economic activity between January and March was driven by gains in investment, exports, household consumption, and government expenditures.

When compared with the fourth quarter of 2025, the stronger growth in real gross domestic product was largely the result of higher government spending, increased exports, and rising investment levels, although these improvements were partially counterbalanced by weaker consumer spending.

Imports also climbed during the period, which negatively affects GDP calculations since they are subtracted from the total output measure. Meanwhile, real final sales to private domestic purchasers—a key indicator of underlying domestic demand that includes both consumer outlays and private fixed investment—rose by 2.5% in the first quarter, up from a 1.8% increase in the prior quarter.

Inflationary pressures also strengthened over the same period. The personal consumption expenditures (PCE) price index increased by 4.5%, a notable rise from 2.9% in the fourth quarter of 2025. Similarly, the core PCE price index, which excludes food and energy costs, climbed by 4.3%, compared with a 2.7% gain in the previous quarter.

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