Q1 2026 Wealth Management Insights

The economy continued to show resilience in the 1st quarter. Although we will not receive the first official estimate of US Gross Domestic Product (GDP) growth until the end of the month, current forecasts are varied.

 

Economists surveyed by Bloomberg are the most optimistic as the median forecast is for 3.1% growth. The New York Federal Reserve’s model forecasts 2.6% and the Atlanta Federal Reserve’s model forecasts 1.6%.

 

The labor market continues to be characterized as a “low hire, low fire” environment. On the “low hire“ side, total jobs created from 3/31/25 to 3/31/26 was only 260,000. The potentially encouraging news is that the 1st quarter accounted for 79% of the 12-month growth.

 

We will have to wait to see what the next two months of revisions bring to see if the final result is close to the preliminary result. On the job loss side, even though headlines highlight layoffs that are being announced, the initial jobless claims data from the Department of Labor does not show a growing trend of people filing for unemployment insurance. 

The data is still delayed for consumer spending. The most recent personal spending data from the Census Bureau is as of January. Personal spending rose 4.4% year-over-year as of January. If we look at the discretionary spending picture via the retail sales data as of February, we learn that discretionary consumer spending increased 3.7% year-over-year. This was a faster pace than the 3.2% pace in January and the 3.1% pace in December.

Businesses remained focused on productivity whether through upgraded software or hardware. Business spending on AI-related infrastructure continues to be the driver of growth for business spending. This has offset the slowdown in spending in manufacturing and residential construction.

The official inflation rate that the Federal Reserve monitors continue to remain stubbornly closer to 3% than 2%. For most consumers, their core expenses remain above 3%. The result is the Federal Reserve remains on hold with regards to its interest rate policy. That means consumers are finding no relief via lower interest rates on their debt.

Despite volatility on the political and headline news front, the economy continued to grow in the first quarter. Given the advent of the war with Iran late in the quarter, future growth has become more uncertain.