The Dallas Fed's "Weekly Economic Index" has climbed from an annualized monthly growth rate of approximately 2.20% in the second half of 2025 to over 2.80% today. This indicator relies on several high-frequency sub-indicators from both official and unofficial sources, providing a much faster snapshot of economic health than GDP. It is also potentially more reliable, as most underlying indicators are based on hard data, such as retail sales, rail traffic, and federal payroll taxes. Consequently, these data points are not subject to revision, unlike GDP figures.
This "2.8% growth" represents the fastest pace since October 2022, nearly four years ago. Coupled with the stabilization of the unemployment rate, improving job creation, and the deceleration of "sticky" core inflation in recent months, these signals collectively suggest that the US economy has entered a new phase of acceleration.
Q1 GDP data showed that this reacceleration was largely driven by massive investments in data centers. While spending on "computers and peripheral equipment" and "software" accounts for less than 4% of GDP, compared to 68% for consumption, these sectors contributed as much to growth as consumption did in Q1. It is highly likely that these data center investments will continue to serve as a growth engine for the US economy in Q2.
The American economic reacceleration may not be over. Should a peace agreement be reached between Washington and Tehran, leading to the full reopening of the Strait of Hormuz, falling oil prices would likely bolster consumption, while a retreat in bond yields should revive the residential real estate market. Consequently, the Fed could find itself forced to raise rates, even in the event of the Strait of Hormuz reopening and a decline in crude prices.
