Summary

• U.S. Q1 2026 GDP grew 2.0%, below expectations, and the economy was heavily reliant on AI-driven capex and federal spending.
• Nonresidential fixed investment, fueled by hyperscaler data center construction, contributed 1.38% to GDP, highlighting AI as the economy's core growth engine.
• Consumer spending rose 1.6% but was outpaced by inflation and stagnant income, pushing the savings rate to a three-and-a-half-year low.
• Housing investment declined 8% year-over-year, and rising federal debt service costs outstrip GDP growth, raising sustainability concerns.
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Initial first quarter GDP estimates came out on Thursday. Initial projections have Q1 seeing 2% annual growth in the opening stanza of 2026. While that is a big improvement from the 0.5% annual growth in Q4, it is still far below the GDP growth levels

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