Argus

•

May 01, 2026

Market Outlook

Bullish

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Short

Summary

According to the advance estimate released by the Bureau of Economic Analysis (BEA), U.S. Gross Domestic Product (GDP) rose in the first quarter at an annualized rate of 2.0%. That's an acceleration from 0.5% growth in the fourth quarter and matched our estimate. The takeaway is that strong business investment in Artificial Intelligence for computers, software, and research and development added about 1.3 points to GDP growth, while personal consumption added 1.08 points. Excluding healthcare, consumer spending added just 0.57 points to growth. For those who wonder why the stock market has been performing so well when there is so much uncertainty, strong business investment with the potential to raise productivity across the economy offers a good fact-based reason. Spending by consumers rose 1.6% in 1Q, a slight slowdown from the 1.9% increase in 4Q. Spending on goods declined 0.1%. Within goods, nondurables were down 0.2%, which was weaker than we expected. Durables were flat, better than we expected. Motor vehicles and parts grew 5.2% following an 8.1% decline in 4Q. The huge services category grew 2.4%, a slight deceleration from 2.7% in 4Q. The category added about 1.1 points of growth, with 0.51 points coming from healthcare. Food services (restaurants) and accommodations (hotels) were a slightly bigger drag than in 4Q. Private investment grew 8.7%. Equipment grew 17.2%, with computer gear up 67%. Intellectual property products grew 13%, with software up 23%. Nonresidential construction declined 6.7% and residential construction (housing) declined 8.0%. Real final

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