WASHINGTON – The US economy expanded less than initially estimated in the first three months of 2026, government data showed on May 28, with investment and consumer spending revised lower amid fallout from the Middle East war.
Gross domestic product (GDP) in the world’s biggest economy rose at an annual rate of 1.6 per cent in the first quarter, the US Commerce Department said, down from 2 per cent in an advance estimate released in April.
Analysts have warned of the country’s reliance on an AI investment boom to fuel growth, alongside consumer fatigue as the energy shock from war on Iran lingers.
“Real GDP was revised down 0.4 percentage point from the advance estimate, primarily reflecting downward revisions to investment and consumer spending,” the Commerce Department said.
Still, growth accelerated from a 0.5 per cent rate in the fourth quarter of 2025.
The step up between the final months of 2025 and early 2026 was attributed to “upturns in government spending and exports and an acceleration in investment,” while consumer spending decelerated.
Energy costs have surged following US-Israeli strikes targeting Iran on Feb 28.
This triggered Tehran’s retaliation in virtually blocking off the Strait of Hormuz, a key route of transit for energy and fertilisers.
Global costs have soared, with prices at US gasoline stations also spiking – piling pressure on consumers as key midterm elections approach in 2026. AFP
