U.S. economy rebounded in first quarter, driven by sizzling-hot business investment

**Consumer spending cooled slightly in the first three months of the year.**

The U.S. economy rebounded to a solid 2% annual growth rate in the first quarter after a tepid 0.5% growth rate in the prior quarter, as the artificial-intelligence spending boom appears to be gathering steam.

Gross domestic product, the official scorecard of the economy, was also aided by the federal government returning to normal operations after a six-week shutdown in the fall.

Economists were expecting a 2.2% growth rate in the first quarter.

**Key details:** Consumer spending, the chief engine of the economy, rose at a 1.6% annual rate in the first quarter, down slightly from a 1.9% rate in the prior three months.

Business spending on equipment, particularly artificial intelligence, jumped 17.2% in the first quarter.

Government spending rebounded to expand at a 4.4% rate after a 5.6% decline in the prior quarter.

**Big picture:** The war with Iran hasn’t slowed the economy, at least not yet.