GDP just came in at 2% annualized growth for Q1, which is actually a pretty solid number considering everything going on. For context, last quarter was basically flat at 0.5%, partly because of that six-week government shutdown dragging everything down.
The rebound is being driven by a few things. Government spending bounced back hard -- up 4.4% in Q1. Consumers kept spending too, which honestly surprised a lot of analysts, given that gas is now over $4 a gallon nationally. Part of that might be tax refunds, which are running about $330 higher on average than last year. Mark Zandi at Moody's specifically called out March refunds as a big factor.
That said, the energy situation is still ugly. Brent crude is sitting above $105/barrel, up roughly 44% since before the conflict started. The Strait of Hormuz disruption is the core issue -- about 20% of global oil supply normally flows through there, and that's been severely disrupted since late February. Gas was $2.98 before the war and it's now $4.06 on average.
The inflation picture is what's keeping economists nervous. CPI already hit 3.3% in March, highest since mid-2024. Some forecasts have PCE hitting 4% by year's end, which would be double the Fed's target. Rate cuts that were expected this year are likely off the table.
So yeah, the economy is holding up a bit better than feared, but the pain at the pump is real and probably isn't going away anytime soon, as it will take time for things to recover.
Story with more details [here](https://www.verity.news/story/2026/us-economy-rebounds-amid-iran-oil-shock?p=re4528)