U.S. GDP Rises 2.0%, Trailing 2.4% Estimate as Rebound Cools

The U.S. economy expanded at a 2.0% annualized rate in the first quarter of 2026, according to the Bureau of Economic Analysis, below the roughly 2.4% pace many economists had expected. The result still marked a clear improvement from the 0.5% growth recorded in the fourth quarter of 2025. For markets, the miss matters because it suggests the rebound from last year’s slowdown was real but less forceful than forecast.

Forecasts Ran Too Hot

Economists had looked for a stronger restart to the year after a weak finish to 2025. FactSet’s survey pointed to growth around 2.3%, while the New York Fed’s nowcast was near 2.36%, according to Barron’s. The Atlanta Fed’s GDPNow model was more cautious, showing how divided forecasters were before the release.

The first-quarter figure follows a volatile stretch for U.S. growth. BEA’s latest fourth-quarter reading showed real GDP rose only 0.5%, after a much stronger 4.4% pace in the third quarter of 2025. That makes the Q1 number less a boom than a partial normalization from a disrupted late-year economy.

Consumers Still Carry Weight

The main question now is whether households can keep supporting the expansion. Pre-release analysis pointed to consumer spending and business investment as likely sources of strength, helped in part by tax refunds and capital spending tied to artificial-intelligence infrastructure. But higher gasoline prices and softer housing activity threatened to limit the upside.

Trade likely remained a pressure point because imports subtract from GDP calculations. Residential investment was also expected to weaken, with Barron’s citing forecasts for a 4.8% decline. That mix matters because it points to an economy where demand is still present, but not broad enough to erase sector-level weakness.

Global Growth Backdrop

The U.S. figure lands against a global economy that is still expanding but facing policy and trade risks. The IMF projected global growth of 3.3% for 2026 and 3.2% for 2027, helped by technology investment and easier financial conditions. A softer U.S. GDP print could temper confidence in that outlook if domestic demand fades later in the year.

Revisions May Shift Story

This is an advance estimate, meaning the number can change as BEA receives fuller data. The risk for investors and policymakers is that a 2.0% pace is strong enough to avoid recession fears but weak enough to complicate rate-cut expectations. The next key test is whether consumer spending, business investment and inventories confirm momentum in the revised GDP reports.