U.S. Gross Domestic Product (GDP) jumped in the first quarter of 2026, compared to the previous quarter’s growth, the Commerce Department reported Thursday – a sign that the nation’s economy remains solid.
Real (inflation-adjusted) GDP increased at an annual rate of 2.0% in the first quarter after rising just 0.5% in the last three months of 2025, according to the report providing an advanced estimate of GDP. A second, updated estimate will be published May 28, to eventually be followed by the third (and final) estimate.
"The core of the economy remained solid in Q1, driven by the AI buildout and the tax cuts beginning to feed through," Michael Pearce, chief U.S. economist with Oxford Economics, said in a note to investors reported by CBS News:
"Those factors will continue to drive growth over the rest of the year, but the jump in energy prices will take some of the shine off what would otherwise have been a strong year for the economy."
An article published Thursday by U.S. News & World Report likewise deemed first quarter GDP growth a positive sign for the economy – and also credited Republicans’ success in cutting taxes:
“The GDP report, meanwhile, shows the economy is expanding at a pace that is enough to drive investment and consumer spending. The 2% increase was slightly below estimates, but Americans are also enjoying higher tax refunds this year, providing a source of strength to consumer spending.”
And, as Fortune explains, a measure of GDP that excludes volatile components grew at an even faster pace last quarter:
“[A] category within the GDP data that measures the economy’s underlying strength grew at a solid 2.5% clip, accelerating from 1.8% in fourth-quarter 2025. This category includes consumer spending and private investment, but excludes volatile items like exports, inventories and government spending.”
"Yesterday, we saw new orders of core capital goods — which are the industrial machinery, the things you need to make manufacturing facilities and factories — those orders actually exceeded expectations by over six-fold," White House Deputy Press Secretary Kush Desai said in an interview Thursday, reacting to the GDP numbers:
“We’re seeing that the American economy remains at a very sold trajectory and we’re focused on continuing to implement President Trump’s pro-growth agenda.”
"Growth is really solid across our economy,” Federal Reserve Chairman Jerome Powell said at a press conference Wednesday, a day before the GDP report’s release. “Some of that is that consumer spending is hanging in pretty well.”
Powell also cited “apparently insatiable demand for data centers all over the United States," which he expects to continue.
The 2.0% increase in Real GDP in the first quarter of this year was driven by increases in investment, exports, consumer spending, and government spending.
Imports, which are a subtraction in the calculation of GDP also increased. The increase in both exports and imports primarily reflected an increase in goods (led by computers, peripherals, and parts).
The increase in investment reflected increases in equipment, intellectual property products, and private inventory investment.
The increase in consumer spending primarily reflected an increase in services, led by health care.
The increase in government spending was fueled by higher federal government nondefense spending, mainly federal employee compensation, which increased after decreasing in the fourth quarter of 2025. The pattern of spending was impacted by the government shutdown that occurred in the fourth quarter.
The effects of the government shutdowns cannot be accurately quantified, the Commerce Department explains:
“For the most part, the effects of a federal government shutdown on components of GDP and the national income and product accounts (NIPAs), such as personal consumption expenditures or private wages and salaries, cannot be quantified because they are embedded in the regular source data that underlie the estimates and cannot be separately identified.”
.@KushDesai47: "Yesterday, we saw new orders of core capital goods — which are the industrial machinery, the things you need to make manufacturing facilities and factories — those orders actually exceeded expectations by over sixfold." pic.twitter.com/HUbUSLjKNg
— Rapid Response 47 (@RapidResponse47) April 30, 2026
