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RBC Chief Economist Frances Donald discussed her April 2026 forecast for U.S. GDP and the risks around inflation, highlighting the health of the labor market and consumer spending patterns that are contributing to a “bifurcated” economy.
U.S. economic growth rebounded in the first quarter after a sluggish fourth quarter, according to the Commerce Department’s latest estimate. The Bureau of Economic Analysis (BEA) released its advance estimate on Thursday showing the economy grew at an annualized rate of 2% in the three-month period including January, February and March. Economists polled by LSEG had expected 2.3% growth.
The BEA said the main contributors to the rise in GDP in the first quarter were investment, exports, consumer spending and government spending, while imports increased over the quarter.
Government spending rose, led by federal employee compensation increasing after the end of the government shutdown in the fourth quarter, when compensation had declined as federal workers missed paychecks.
Consumer spending increased, with the BEA attributing the rise mainly to services led by healthcare, including hospital and nursing home services as well as outpatient services.
Real final sales to private domestic purchasers—defined as the sum of consumer spending and gross private fixed investment—rose 2.5% in the first quarter after a 1.8% increase in the fourth quarter.
Investment in AI data centers has helped support GDP. Analysts said the core of the economy remained solid in Q1, driven by the AI buildout and tax cuts beginning to feed through.
They expect these factors to continue supporting growth for the rest of the year, though higher energy prices could temper momentum. Some strength in consumer spending in March was linked to payback for poor weather earlier in the year.
Fiscal stimulus is continuing to outweigh the drag from higher energy prices for now, but the balance is likely to shift in coming months, particularly as gas prices climb.
Private sector demand showed firmer momentum than in Q4 2025, but it masks an uneven foundation—gains appear strong in some areas while underlying fragilities remain.
Premium gym chains are entering a “golden era” that is ending or already in decline, as rising operating costs collide with shifting consumer preferences toward more flexible, community-based ways to exercise. Long-term memberships are shrinking, margins are pressured by higher rents and facility expenses, and competition from smaller, more personalized…
