U.S. Q1 GDP Grew 2.1%

Net exports improved sharply after imports were revised lower, lifting their contribution to GDP from -1.3% to -0.4%. Consumer spending, however, was marked down to a 0.5% annualized pace from the prior 1.4% estimate.

Fixed investment overall added 1.11 percentage points to growth. Residential construction subtracted 0.3 points and has now declined in five straight quarters and seven of the past eight. Nonresidential fixed investment rose 8% and supplied the entire 1.42-point net boost from the fixed-investment category.

Within that segment, information-processing equipment expanded 14% and accounted for virtually all of the 0.81-point contribution from equipment spending. Intellectual-property products grew 5.3% and added 0.74 points, driven mainly by software outlays.

Combined, spending on data-center hardware and AI-related software contributed just over 1.5 percentage points, or roughly 74% of the 2.1% headline growth rate. Real personal consumption expenditures posted a modest 0.3% gain in May after April was revised to flat.

The two-month average pace of 1.6% annualized remains below the level many analysts had projected following tax-refund distributions.