US GDP Grew 2.1% in Q1 2026, Third Estimate Confirms

2026-06-26 · Economics · QuoteReporter

US GDP Grew 2.1% in Q1 2026, Third Estimate Confirms

The U.S. economy expanded at an annual rate of 2.1 percent in the first quarter of 2026, according to the third estimate released by the Bureau of Economic Analysis (BEA). This marks a significant improvement from the 0.5 percent growth recorded in the fourth quarter of 2025, highlighting a robust start to the year driven by investments, exports, and government spending.

Headline Figures

The BEA's third estimate for the first quarter of 2026 shows that the U.S. economy grew at an annual rate of 2.1 percent. This is an upward revision from the second estimate, which pegged growth at 1.6 percent. The revision was primarily due to a downward adjustment in imports, which are subtracted in GDP calculations, partially offset by a downward revision in consumer spending.

Components & Breakdown

Investment, exports, government spending, and consumer spending were the main contributors to the GDP growth in the first quarter. From an industry perspective, government activities saw a substantial increase in real value added by 7.5 percent, private goods-producing industries by 4.5 percent, and private services-producing industries by 0.8 percent. Key industry contributors included information, federal government activities, professional, scientific, and technical services, and durable goods manufacturing. Conversely, retail trade, wholesale trade, and finance and insurance sectors experienced declines.

Revisions

The third estimate revised the real GDP growth rate up by 0.5 percentage points from the second estimate. This adjustment was largely due to a downward revision in imports, which positively impacts GDP calculations. The revision also included updated data from the BEA’s International Transactions Accounts and the U.S. Census Bureau’s Quarterly Services Survey.

Inflation / Prices

The price index for gross domestic purchases increased by 3.6 percent in the first quarter, slightly revised up from the previous estimate. The personal consumption expenditures (PCE) price index rose by 4.6 percent, with the core PCE price index, excluding food and energy, remaining steady at 4.4 percent.

State-Level Insights

Real GDP increased in 46 states and the District of Columbia during the first quarter. Washington state led with a growth rate of 4.5 percent, driven by the information sector, while South Dakota saw a decline of 1.6 percent, primarily due to a downturn in agriculture, forestry, fishing, and hunting.

Personal Income by State

Current-dollar personal income rose by $222.6 billion, or 3.4 percent at an annual rate, in the first quarter. Personal income increased in 49 states and the District of Columbia, with North Dakota experiencing the highest increase at 22.4 percent, while Hawaii saw a decrease of 23.9 percent due to a significant drop in personal current transfer receipts following a settlement related to the 2023 Maui wildfire.

What Comes Next

The next release from the BEA will be the advance estimate for the second quarter of 2026, scheduled for July 30, 2026. This will provide further insights into the economic trajectory as the year progresses.