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The US economy grew at an annualized rate of 2.0% in Q1 2026, accelerating from 0.5% in the previous quarter but falling short of market expectations of 2.3%, according to a preliminary estimate. Government spending rebounded by 4.4% after contracting 5.6% in Q4 2025, as activity normalized following the end of the government shutdown. Gross private domestic investment rose 8.7%, up from 2.3% in the prior quarter, with business investment in equipment and structures surging 10.4%—the fastest pace in nearly three years—partly driven by rapid outlays on artificial intelligence technologies. Consumer spending, which makes up roughly two-thirds of overall economic activity, increased at a more moderate 1.6% in Q1, compared with a 1.9% gain in Q4, supported primarily by demand for services. Net trade weighed on GDP growth, as exports expanded 12.9% but were outpaced by a 21.4% jump in imports.
