U.S. Economic Growth Picks Up in Early 2026

(MENAFN) The U.S. economy grew at an annualized pace of 2% in the first quarter of 2026, marking an improvement from the 0.5% expansion recorded in the final quarter of the previous year.

However, the result still came in below what financial markets had anticipated, according to the Commerce Department’s Bureau of Economic Analysis, which released its advance estimate on Thursday.

Economic activity during the January–March period was driven by gains in several key areas, including business investment, exports, household consumption, and public sector spending. These components collectively contributed to the overall expansion in real gross domestic product.

When compared with the fourth quarter of 2025, the faster growth in real GDP was mainly attributed to stronger government expenditure, higher exports, and increased investment.

These gains were partially offset by a slowdown in consumer spending. At the same time, imports rose, which typically reduces the GDP calculation.

A closely watched indicator of domestic demand, real final sales to private domestic purchasers—which includes consumer spending along with private fixed investment—rose by 2.5% in the first quarter, up from a 1.8% increase in the previous quarter, signaling somewhat firmer underlying demand within the economy.

Meanwhile, inflationary pressures strengthened over the same period. The personal consumption expenditures (PCE) price index climbed to 4.5%, up from 2.9% in the fourth quarter, indicating a noticeable acceleration in price growth during the early months of the year.

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