US Economy Grew 2.1% in First Quarter of 2026

The United States Department of Commerce reported that the U.S. economy expanded at an annualized rate of 2.1% during the first quarter of 2026. This final estimate represents an upward revision from the previous 1.6% projection and exceeds economist expectations. The growth marks a recovery from the 0.5% expansion seen in the final quarter of 2025, which was hindered by a 43-day federal government shutdown.

Growth was primarily driven by a surge in business investment, particularly in information-processing equipment for artificial intelligence data centers, which increased by 39.9%. Additional support came from government spending, exports, and durable goods manufacturing. Corporate profits from current production also saw an upward revision of $34 billion, totaling an increase of $74.4 billion.

However, the report highlighted significant headwinds in consumer behavior. Consumer spending grew at a seasonally adjusted annual pace of only 0.5%, the weakest growth in four years, fueled by rising gasoline prices resulting from the war with Iran. Residential investment declined by 7.8% due to high interest rates. Inflation remained elevated, with the PCE price index rising 4.6% and core PCE increasing 4.4%. Despite these pressures, the labor market remained resilient, adding an average of 188,000 jobs per month between March and May.