The following is MBA SVP and Chief Economist Mike Fratantoni’s reaction to this morning’s U.S. Commerce Department report on Q1 GDP:

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“The U.S. economy grew at a 2 percent rate in the first quarter of 2026, up from a 0.5 percent rate at the end of last year. This first estimate for the quarter showed faster growth in business spending, particularly for IT equipment and software, which together contributed more than 1.3 percent of the quarter’s growth.

“Consumer spending increased at just a 1 percent rate during the quarter, with growth in spending on services, particularly health care, while spending on goods was flat. The personal savings rate dropped to 3.6 percent in March 2026, down from 5.1 percent a year ago, indicating that more consumers are stretching to maintain their spending.

“Inflation jumped higher during the quarter, with the PCE index increasing at a 4.5 percent annualized rate, up from 2.9 percent in the fourth quarter. Looking just at March data, the PCE index was up 3.5 percent compared to last year, with core PCE up 3.2 percent. This re-acceleration in inflation, driven by the jump in energy prices, will be enough to keep the Fed on hold for the foreseeable future.”