The US economy expanded at a stronger-than-expected annual rate of 2.1% in the January-March quarter, buoyed by a surge in business investment linked to artificial intelligence even as consumer spending slowed amid higher fuel prices, according to the Commerce Department’s final estimate reported by AP.The revised figure marks an upgrade from the previous estimate of 1.6% growth and a rebound from the 0.5% expansion recorded in the final quarter of 2025, when a 43-day federal government shutdown weighed on economic activity.Gross domestic product (GDP), the broadest measure of the nation’s economic output, was supported by a sharp rise in business investment, though household spending, which accounts for about 70% of the US economy, weakened from both the previous quarter and the Commerce Department’s earlier estimate.The slowdown in consumer spending suggests households may be pulling back as higher gasoline prices linked to the Iran war raise living costs.Excluding housing, private investment jumped 10.6% in the first quarter, compared with 2.4% in the October-December 2025 period, reflecting what economists believe is an investment boom driven by artificial intelligence.Residential investment, however, fell 7.8%, marking its biggest decline since late 2022 and the fifth consecutive quarterly contraction as elevated interest rates continued to weigh on the housing market.Federal government spending and investment rose at an annual rate of 9.4% during the quarter after contracting 16.6% in the previous three months, when the prolonged government shutdown disrupted activity.Despite the Iran-related energy shock, the US economy has continued to show resilience, AP reported.The labour market has remained particularly strong, with employers adding an average 188,000 jobs a month between March and May after creating fewer than 10,000 jobs a month during 2025 amid uncertainty over President Donald Trump’s trade and immigration policies.Thursday’s report is the Commerce Department’s third and final estimate of first-quarter GDP growth. The first estimate of second-quarter economic growth is scheduled to be released on July 30.