Economy grows at fastest pace in more than a year, GDP shows, and shows little sign of slowing.

The U.S. economy expanded at its fastest pace in more than a year, according to the latest GDP reading, and showed little sign of slowing. The acceleration was driven by two forces: a boom in artificial intelligence and strong spending by wealthier households.

For markets, the composition of growth matters as much as the headline number. AI-related investment suggests capital spending is becoming a more meaningful growth engine, which could shape expectations for technology and industrial sectors. Meanwhile, the reliance on spending by higher-income consumers raises a question about how broad-based the expansion is, given that less affluent households may be more sensitive to prices and credit conditions.

What to watch: whether AI-driven investment persists in coming quarters, whether consumer spending holds up beyond wealthier households, and how the data influence expectations for interest rates. A fast-growing economy can support corporate earnings, but it can also complicate the inflation outlook — a balance investors will likely monitor closely.