The first quarter’s gross domestic product came in at an annualized rate of 2%, which was less than expected due to softer consumer spending. But the Commerce Department report showed that private investment and overall government and consumer spending was healthy before the start of the Iran war in late February, continuing into March.

The Commerce Department reported that consumer spending – which drives nearly two-thirds of domestic economic activity – slowed slightly, falling from 1.9% at the end of 2025 to 1.6% for Q1. Private data shows that most growth in March consumer spending was driven by higher-income households. At the same time, the Commerce Department said annualized business spending on artificial intelligence and closely related categories increased by 8.7%, which analysts believe underscores how much AI has become an engine in the economy.

The Commerce Department also reported that the core personal consumption expenditures price index, which excludes food and energy, grew at a seasonally adjusted 0.3% for March, pushing the 12-month inflation rate to 3.2%.  READ MORE >

The national labor picture brightened in March with 178,000 new jobs added, the most since late 2024. The Bureau of Labor Statistics also reported that the unemployment rate ticked lower to 4.3%, which was attributed to the reduction in the size of the U.S. labor force.

Unemployment is up slightly for U.S.-born workers, and wage growth has slowed. Wage growth has also slowed in the blue-collar industries that tend to employ low-skilled migrants, a sign that widely feared labor shortages haven’t materialized, according to Labor Department data.

The strong March report has fueled reappraisals of the effects of newly toughened immigration policies along with assertions that the economy needs fewer jobs to keep overall employment stable. The St. Louis Federal Reserve estimated recently that payroll growth of as little as 15,000 could keep the unemployment rate steady.

Speaking recently on labor and reduced immigration, Fed Governor Christopher Waller said: “Over the course of last year, we got the details of how reduced net immigration has lowered population growth and, hence, the growth of the labor force.  Combined with the continued aging of the population, very little or no net job creation is needed to absorb new workers,” Waller told a University of Alabama audience. READ MORE >

Policymakers at the Federal Reserve left interest rates unchanged amid uncertainty over when the Middle East conflict will be resolved and whether oil prices will return to pre-war levels.

Officials held their benchmark federal-funds rate steady in a range of 3.5% to 3.75%. Additionally, in their policy statement committee members continued to signal the next move in rates is more likely to be down than up. But that language drew objections of an “easing bias” by three Fed presidents, an unusually sizable dissent that shows the division among voting members.

The late-April meeting of the Federal Open Market Committee was the last as Fed chair for Jerome Powell, who is due to be succeeded by Kevin Warsh.

In remarks after the meeting, Powell announced his intention to remain on the Fed board for an “indefinite period” while a federal probe into the renovation of the central bank’s headquarters is pending. Powell’s 14-year elected term as a governor ends Jan. 31, 2028.  READ MORE >