U.S. Economy Rebounds in Q1

- Other forecasts for first-quarter growth, while still positive, are more measured, with the Atlanta Fed's GDPNow model pointing to a 3.1% increase and the New York Fed's nowcast suggesting a 2.4% rise as of late February 2026. - The slowdown in the last quarter of 2025 was exacerbated by a federal government shutdown, which subtracted nearly a full percentage point from GDP growth. - A significant driver of the 2026 rebound is the expected boost from tax cuts, with households anticipated to receive approximately $80 billion in refunds in the first quarter, which is likely to spur consumer spending. - Business investment is another key factor, with annual technology capital expenditures now exceeding $700 billion, largely driven by advancements in artificial intelligence. - The January 2026 jobs report showed the addition of 130,000 nonfarm payrolls and the unemployment rate holding at 4.3%; however, job growth was concentrated in health care, social assistance, and construction, while federal government and financial activities lost jobs. - For Rhode Island, the most recent data through January 2026 shows that year-to-date general revenue collections are slightly ahead of projections, though January saw a shortfall driven by weaker personal income tax withholding. - Despite the positive national outlook, many Rhode Island economic indicators were weak heading into 2026, with a University of Rhode Island economist suggesting the state remained in a recession as of October 2025. - On a national level, while consumer spending remains resilient, it shows a "K-shaped" pattern where higher-income households are seeing more significant gains in spending compared to lower-income households.