High oil prices due to the Iran war weigh on everything from the gas pump to consumer goods<\/a>]<\/p>\nThe Commerce Department also reported Thursday that U.S. gross domestic product \u2014 the output of goods and services \u2014 grew at a steady 2% annual pace from January through March, slower than economists expected, but a rebound from lackluster 0.5% growth during the final three months of 2025. In the October-December quarter, the 43-day federal government shutdown had slashed more than a percentage point off growth.<\/p>\n
Business investment is surging because of the AI boom. Excluding housing, business investment surged 10.4% in the first quarter, biggest jump in nearly three years.<\/p>\n
From January through March, consumer spending \u2014 accounting for 70% of U.S. economic activity \u2014 expanded at a 1.6% annual pace. Americans were helped by big tax refunds, the result of President Donald Trump\u2019s 2025 tax cuts.<\/p>\n
But the boost might not last long. \u201cRising tax refunds were outpacing the increased burden of gasoline spending two to one in March and most of April,\u201d wrote Michael Pearce, the chief U.S. economist at Oxford Economics. \u201cWith tax refund season winding down and gas prices still climbing, the hit to consumer spending will become more evident from May.\u2019\u2019<\/p>\n
The average price for a gallon of regular gasoline jumped another 7 cents overnight to $4.30. The price on this date last year was $3.18. In each of the past three days, gasoline prices have set new multi-year highs.<\/p>\n
Forced to spend more on gasoline, consumers are likely to cut back their spending on other goods and services. Economists are already expecting GDP to take a hit as they do. Joe Brusuelas, chief economist at RSM, a tax and advisory firm, has downgraded his forecast for U.S. economic growth this year to 1.7% from the 2.4% he\u2019d expected earlier.<\/p>\n
\u201cA year that was set to benefit from tail winds associated with a large tax cut and boom in artificial intelligence-led investment has been partially derailed by the impact of what as of today is an adverse and growing supply shock caused by the war in Iran,\u201d Brusuelas said. \u201cUnfortunately, war and the supply shock that ensued has altered the probable growth path this year.\u201d<\/p>\n
The combination of rising prices \u2014 and the threat to economic growth \u2014 has put the Fed and other central banks in a bind. Should they cut interest rates to help their economies? Or hold off \u2014 or even consider raising rates \u2014 to combat the threat of inflation?<\/p>\n
So far, they are staying put. The Bank of England kept its main interest rate on hold at 3.75% Thursday and hinted of hikes to come as policymakers assess the war\u2019s economic impact. Likewise, the Fed, the Bank of Japan and the European Central Bank, with all opting for no change as they assess the economic fallout from the conflict.<\/p>\n
Still, U.S. workers enjoy considerable job security. The Labor Department reported Thursday that the number of Americans applying for unemployment benefits \u2014 a proxy for layoffs \u2014 tumbled last week to the lowest level in more than 50 years.<\/p>\n
Companies aren\u2019t letting workers go \u2014 but they aren\u2019t necessarily eager to hire much either. Job growth last year was the weakest outside a recession since 2002. And it\u2019s been up and down so far this year \u2014 strong in January (160,000 new jobs) and March (178,000) but weak in February when employers slashed 133,000 jobs.<\/p>\n
Economists describe \u201cno-hire, no-fire\u2019\u2019 scenario that locks young applicants out of the job market. At the same time, there are growing worries that AI is taking entry-level jobs.<\/p>\n
____<\/p>\n
AP Business Writer Matt Ott in Washington contributed to this story.<\/p>\n","protected":false},"excerpt":{"rendered":"A shopper looks at packages of meat at a grocery store in Dallas, Wednesday, April 15, 2026. (AP…\n","protected":false},"author":2,"featured_media":23903,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[24,25,1024,6460,16333,16177,16334],"class_list":{"0":"post-23902","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-ai","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-financial","11":"tag-food-prices","12":"tag-grocery","13":"tag-inflation","14":"tag-supermarket"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/23902","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/comments?post=23902"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/posts\/23902\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media\/23903"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/media?parent=23902"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/categories?post=23902"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ai\/wp-json\/wp\/v2\/tags?post=23902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"\"](\"https:\/\/www.europesays.com\/ai\/wp-content\/uploads\/2026\/05\/PEV7SPIMBYKZETBDOEYTNDS3QI.jpg\")
A shopper looks at packages of meat at a grocery store in Dallas, Wednesday, April 15, 2026. (AP Photo\/LM Otero) <\/p>\n