{"id":126512,"date":"2026-04-30T18:29:08","date_gmt":"2026-04-30T14:29:08","guid":{"rendered":"https:\/\/noortrends.ae\/en\/?p=126512"},"modified":"2026-04-30T18:47:56","modified_gmt":"2026-04-30T14:47:56","slug":"u-s-economy-roars-back-in-q1-growth-accelerates-but-iran-war-inflation-sounds-alarm-bells","status":"publish","type":"post","link":"https:\/\/noortrends.ae\/en\/u-s-economy-roars-back-in-q1-growth-accelerates-but-iran-war-inflation-sounds-alarm-bells\/04\/30\/economic-reports\/","title":{"rendered":"U.S. Economy Roars Back in Q1: Growth Accelerates but Iran War Inflation Sounds Alarm Bells"},"content":{"rendered":"\n<h1 class=\"wp-block-heading\"><\/h1>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Takeaways<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>GDP rebound:<\/strong> First-quarter GDP rose to 2%, up sharply from 0.5% in Q4 2026 \u2014 though just shy of the 2.2% forecast.<\/li>\n\n\n\n<li><strong>Shutdown distortion:<\/strong> Last year&#8217;s 43-day government shutdown caused the biggest federal spending drop since 1972, skewing prior comparisons.<\/li>\n\n\n\n<li><strong>AI data center boom:<\/strong> Rapid expansion to support artificial intelligence has been a key growth pillar, offsetting cooling consumer spending.<\/li>\n\n\n\n<li><strong>Gasoline pain:<\/strong> Pump prices have surged above $4 a gallon since the U.S.-Israel campaign against Iran began in late February.<\/li>\n\n\n\n<li><strong>Hormuz still closed:<\/strong> The waterway carrying a fifth of global oil flows remains effectively shut down, fueling the energy shock.<\/li>\n\n\n\n<li><strong>Core PCE runs hot:<\/strong> Q1 core PCE prices jumped to 4.3% \u2014 well above 2.7% in Q4 and the 4.1% expected \u2014 described by CIBC as &#8220;uncomfortably hot.&#8221;<\/li>\n\n\n\n<li><strong>March PCE accelerates:<\/strong> Headline PCE hit 3.5% year-on-year, with core PCE rising to 3.2% from 3.0% in February.<\/li>\n\n\n\n<li><strong>Dollar as safe haven:<\/strong> America&#8217;s status as a major energy exporter has bolstered the greenback during the crisis.<\/li>\n\n\n\n<li><strong>Consumer headwinds:<\/strong> CIBC analysts warn of a &#8220;further slowdown ahead&#8221; as households grapple with elevated gasoline prices.<\/li>\n<\/ul>\n\n\n\n<p>The pace of U.S. economic growth accelerated in the first quarter, rebounding from tepid activity in the prior three-month period when output was depressed by a government shutdown, while inflation climbed in March amid a sharp rise in energy prices stemming from the war in Iran.<\/p>\n\n\n\n<p>Gross domestic product in the January to March period came in at 2%, up from 0.5% in the final quarter of 2026 but slightly below economists&#8217; projections of 2.2%, according to an advance estimate from the Bureau of Economic Analysis released on Thursday.<\/p>\n\n\n\n<p>Analysts have noted that the GDP data was likely skewed by the fourth quarter, when growth slowed dramatically because of last year&#8217;s 43-day government shutdown \u2014 which triggered the steepest drop in federal spending since 1972.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Government Spending Bounces Back, But Patterns Remain Distorted<\/h2>\n\n\n\n<p>In the first quarter, government spending was lifted by an uptick in nondefense outlays \u2014 primarily federal employee compensation \u2014 although the BEA flagged that &#8220;the pattern of spending&#8221; was affected by the shutdown.<\/p>\n\n\n\n<p>The rapid expansion of data centers to support artificial intelligence has helped underpin growth and offset a slowdown in consumer spending, which has been fading since the outbreak of the Iran war in late February.<\/p>\n\n\n\n<p>Gasoline pump prices have rocketed to above $4 a gallon, reflecting the surge in energy costs since the United States and Israel launched their joint assault on Iran in late February. The critical Strait of Hormuz \u2014 a vital waterway south of Iran through which one-fifth of the world&#8217;s oil flows \u2014 has been effectively closed for weeks.<\/p>\n\n\n\n<p>&#8220;[W]e expect a further slowdown [in consumption] ahead as consumers grapple with higher gasoline prices,&#8221; analysts at CIBC noted in a research piece.<\/p>\n\n\n\n<p>However, some investors have come to view the U.S. economy \u2014 as a major energy exporter \u2014 as potentially insulated from the energy shock, fueling a flight to the U.S. dollar as a safe haven during the crisis.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Inflation Heats Up<\/h2>\n\n\n\n<p>Meanwhile, the personal consumption expenditures price index for March came in at 3.5% year-on-year and 0.9% month-on-month, with both readings accelerating from the previous month and matching estimates. The metric is one of the Federal Reserve&#8217;s preferred gauges of inflation.<\/p>\n\n\n\n<p>Stripping out food and fuel, so-called &#8220;core&#8221; PCE rose to 3.2% in the twelve months to March, up from 3.0% in February.<\/p>\n\n\n\n<p>Core PCE prices for the first quarter jumped to 4.3% \u2014 compared with 2.7% in the previous quarter and expectations of 4.1%. The CIBC analysts described this reading as &#8220;uncomfortably hot.&#8221;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways GDP rebound: First-quarter GDP rose to 2%, up sharply from 0.5% in Q4 2026 \u2014 though just shy of the 2.2% forecast. Shutdown distortion: Last year&#8217;s 43-day government shutdown caused the biggest federal spending drop since 1972, skewing prior comparisons. AI data center boom: Rapid expansion to support artificial intelligence has been a &hellip;<\/p>\n","protected":false},"author":9,"featured_media":61166,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[6827,49],"tags":[8821,7587,6862],"class_list":["post-126512","post","type-post","status-publish","format-standard","has-post-thumbnail","","category-daily-economic-reports","category-economic-reports","tag-fed-policymakers","tag-us-stocks","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126512","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/comments?post=126512"}],"version-history":[{"count":1,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126512\/revisions"}],"predecessor-version":[{"id":126513,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/posts\/126512\/revisions\/126513"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media\/61166"}],"wp:attachment":[{"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/media?parent=126512"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/categories?post=126512"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/noortrends.ae\/en\/wp-json\/wp\/v2\/tags?post=126512"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}