The Bureau of Economic Analysis (BEA), part of the U.S. Department of Commerce, released its third and final growth estimate, showing the economy expanded at an annualized rate of 2.1% in the first three months of the year. This marks an upward revision of 0.5 percentage points from the second estimate of 1.6% growth announced earlier. In the final quarter of 2025, the U.S. economy had recorded 0.5% growth.
According to BEA data, key factors supporting economic growth in the first quarter were investment spending, exports, government spending, and consumer spending. The increase in investments and strengthening foreign demand particularly contributed to economic activity. The decline in imports also played a role in the upward revision of the growth figure.
In national income accounting, imports are considered a factor that drags down growth, so the decline in imports supported the growth rate.
The personal consumption expenditures (PCE) price index, which plays a key role in the U.S. Federal Reserve's monetary policy decisions, rose 0.4% month-over-month and 4.1% year-over-year in May. While the annual increase was in line with market expectations, the monthly increase came in below expectations. In April, the index had risen 0.4% month-over-month and 3.8% year-over-year.
The core PCE price index, which excludes food and energy prices, rose 0.3% month-over-month and 3.4% year-over-year in May. The core inflation measure also aligned with market expectations, after standing at 3.3% year-over-year in April.
Personal income and consumption data for May, released by the U.S. Department of Commerce, also showed that domestic demand remained strong in the economy. Personal income rose 0.7% in May compared to the previous month, surpassing the market expectation of a 0.4% increase. In April, personal income had shown no change.
Personal consumption expenditures also rose 0.7% month-over-month in May, exceeding the market expectation of 0.6%. This data had increased by 0.4% in April.
The data indicates that the U.S. economy remains resilient despite the high-interest-rate environment, while also pointing to inflation still running above target levels. Particularly, core PCE remaining at the elevated level of 4.4% supports expectations that the Fed may act cautiously regarding interest rate cuts.
These figures show that while the U.S. economy maintains strong growth performance, inflationary pressures have not fully dissipated.
