U.S. Economy Grew 2 Percent as Business Investment Surged Following Tax Cuts

The U.S. economy accelerated at the start of the year, lifted by a sharp increase in business investment in equipment and intellectual property.

Gross domestic product, adjusted for inflation, expanded at a 2.0 percent annual rate in the first quarter, the Commerce Department said Thursday. That was a rebound from the 0.5 percent pace recorded in the final three months of 2025, when the record-long government shutdown weighed on federal spending and disrupted parts of the economy.

A closely watched measure of underlying private demand, real final sales to private domestic purchasers, rose at a 2.5 percent annual rate, up from 1.8 percent in the prior quarter. The measure strips out trade, inventories and government spending, making it a cleaner gauge of the private economy’s momentum.

That strength came despite a slowdown in consumer spending, which rose at a 1.6 percent pace after increasing 1.9 percent in the