US GDP final Q1 2.1% versus 1.6% estimate

The final estimate for U.S. Q1 GDP came in at 2.1%, above the 1.6% consensus and unchanged from the prior estimate, indicating the economy expanded modestly despite softer consumer demand. The report showed mixed internal dynamics: consumer spending was revised down to 0.5%, while investment (1.35%) and government spending (0.74%) were the main growth drivers. Inflation remained sticky, with the GDP deflator at 3.6%, core PCE at 4.4%, and headline PCE at 4.6%, all still well above the Fed’s target. The data suggest underlying private demand slowed to 1.7%, but corporate profits improved and the economy avoided a sharper slowdown. For markets, the combination of firmer growth and elevated inflation is typically supportive for a higher-for-longer interest rate backdrop, which can pressure equities and rate-sensitive assets while supporting the U.S. dollar.