U.S. GDP rebounds to 2% in Q1 2026 as government spending, exports rise
The U.S. economy regained momentum at the start of 2026, with gross domestic product expanding at a 2% annualized rate in the first quarter, according to the Commerce Department’s advance estimate released on April 30. The rebound was boosted in part by a recovery following the previous quarter’s government shutdown.
The figure will be revised as more data arrives. The reading topped the department’s latest estimate of 0.5% GDP growth in the fourth quarter of 2025 and contrasted with a 0.5% contraction in the first quarter of 2025. It fell short of the 2.3% annual increase consensus forecast reported by Trading Economics ahead of the release.
The Commerce Department said the 2% expansion reflected upturns in government spending and exports and an acceleration in investment, partly offset by a deceleration in consumer spending. Imports, which subtract from GDP, also increased. A day before the report, Federal Reserve Chair Jerome Powell described the economy as “quite resilient” despite inflationary shocks tied to the Iran war.
“Growth is really solid across our economy,” he told reporters on April 29, citing consumer spending that is “hanging in pretty well” and “the apparently insatiable demand for data centers.” He added he has “every reason” to believe business investment into data centers will continue.
“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 at Oxford Economics, said in a note on April 30.
“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.” Impacts of the Iran war began showing up in March data. The Labor Department’s consumer price index rose to 3.3% year over year in March, up from 2.4% in February, driven by a record 21.2% surge in gasoline prices that month.
“As long as the economy continues to grow and companies are able to grow earnings, we can see higher stock prices even in the face of higher energy prices and inflation,” said Chris Zaccarelli, chief investment officer for Northlight Asset Management.
“However, the longer the war drags on, the more investors will grow nervous and we could see some pullbacks as fears ebb and flow.” The Commerce Department’s second estimate of first-quarter GDP is scheduled for May 28.