US economy grew 2% from January-March, recovering from federal shutdown; Iran war clouds outlook

The U.S. economy grew at a modest 2% annual pace in the first quarter of 2026, recovering from a weak 0.5% expansion in the previous quarter after the government shutdown. Growth was supported by a sharp rise in government spending and an 8.7% increase in business investment, partly driven by artificial intelligence, while consumer spending slowed to 1.6%.

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