US Economy: Mixed Signals Persist

The United States economy demonstrated varied performance in the first quarter of 2026, with a 2% annualized GDP growth despite inflationary pressures stemming from the ongoing U.S.-Iran conflict. This growth, reported by official statistics, follows a slowdown in late 2025 and is largely attributed to significant investment in artificial intelligence (AI) by technology companies, offsetting a cooling in consumer spending.

However, the conflict, now in its third month, has significantly impacted the cost of living for American consumers. Brent crude oil prices reached a four-year high of $126 per barrel, subsequently stabilizing at $111, compared to $73 before the conflict began in late February.

This surge contributed to U.S. gasoline prices rising to $4.30 per gallon by the end of April, up from under $3 in February, according to American Automobile Association data.

March's annual inflation rate increased to 3.3%, a near two-year high, from 2.4% in February.

In response to these inflationary trends, the Federal Reserve maintained its base interest rate at 3.5% to 3.75% on Wednesday, delaying anticipated rate cuts. The average interest rate for a 30-year mortgage has consequently risen from 5.98% to 6.3% since the conflict began, according to Freddie Mac data.

Despite these challenges, major U.S. stock indices, including the Nasdaq, S&P 500, and Dow Jones Industrial Average, have recovered early losses and continued their upward trajectory, with the Nasdaq gaining approximately 10% since the conflict's onset.