The economy was accelerating before the worm.

From Marketplace, I'm Sabrina Bennisier in New York.

The U.S. economy grew faster in the first three months of this year.

2% annualized rate, a big bump from the 1.5% growth rate at the end of last year.

Jeffrey Cleveland is here to talk about it.

He's chief economist at Paden and Regal. Hi, Jeffrey here to talk about it. He's chief economist at

Payton and Regal. Hi, Jeffrey. Good morning. U.S. economic growth bounced back in the first

quarter. What's that telling us? Well, it's pretty amazing. We've got the highest gas prices in

four years, you know, here in California, over $6 per gallon. The U.S. consumer continues to spend.

But the other big, big part of the story, in my opinion, is the AI boom, business investment

in that area, which is contributing a lot to growth in the first quarter.

So now factor in the war. What does that portend for future economic growth

this year? Well, I would just say that the war broke out and the rise in gas prices really happened

in the last month of the quarter. So I don't think we've yet to see the full effect. So perhaps that will show up

in the second quarter. Now, one part of GDP is, of course, trade. The trade deficit actually

grew. And, you know, tariffs were supposed to solve the trade deficit, bring down the trade

deficit. They have not. Why? Well, I mean, that was one of the purported reasons for the tariffs, among others.

My short version of that story would just be that it, that's difficult to close a trade deficit.

The reason we have a trade deficit is because we are importing more than we are exporting.

Really, in order to close the trade deficit, you would have to see consumption slow,

which is not something we really want to see.

So to me, it's not surprising that even though it's a bit more expensive to import goods,

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