The U.S. Department of the Treasury published an economic update stating that the U.S. economy grew at a 2.0% annual rate in the first quarter of 2026, up from 0.5% in 4Q25, with business fixed investment making the largest contribution to growth. It also described a firmer labor market, with the unemployment rate averaging 4.3% and net private job creation averaging 79,000 per month in 1Q26, while inflation showed lower core readings but a higher headline rate as March core CPI slowed to 2.6% year on year and headline CPI rose to 3.3% on higher energy prices. Business equipment investment rose at a 17.2% annual rate in 1Q26, intellectual property products increased 13.0%, and data center structures rose by more than 22% annualized, while personal consumption contributed 1.1 percentage points to GDP and residential investment fell for a fifth consecutive quarter. Job openings averaged 7.1 million in January and February 2026, prime-age labor force participation averaged 83.9%, and average hourly earnings were up 3.5% year on year, or 0.3% in real terms. On prices, energy inflation reached 12.5% year on year through March, rent of housing inflation slowed to 3.0%, non-housing core services inflation was 3.1%, and headline PCE inflation was 3.5%. The update identifies energy prices and geopolitical uncertainty as upside risks to inflation, attributes over a third of 2025 GDP growth and roughly half of 1Q26 growth to AI-driven investment, and says private credit does not appear to be a significant financial stability risk although redemption requests have exceeded some firms’ internal limits.

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