US growth likely picked up in first quarter, but consumer spending probably cooled
U.S. economic growth likely accelerated in the first quarter due to a rebound in government spending and strong business investment in equipment, particularly tied to artificial intelligence, but the gains may be short-lived. Consumer spending is expected to have cooled further, weighed down by higher inflation, rising gasoline prices, and flat real wages. The Federal Reserve is anticipated to keep interest rates steady through 2026 and into 2027, pending developments in the labor market and geopolitical conditions.
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By Lucia Mutikani WASHINGTON, April 30 (Reuters) - U.S. economic growth likely accelerated in the first quarter on a rebound in government spending after a crippling government shutdown, but the pickup is expected to be short-lived as the war with Iran drives up gasoline prices and squeezes household budgets. The anticipated increase in gross domestic product last quarter also would reflect robust growth in business investment in equipment, fueled by an artificial intelligence spending boom and the building of data centers underpinning the technology. The Commerce Department’s advance estimate of first-quarter gross domestic product on Thursday is, however, expected to show consumer spending losing further momentum even before the U.S.-Israeli war with Iran raised the average U.S.
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