Economic growth increased during the first quarter of 2026, rising 2%, which is up from 0.5% in the fourth quarter of 2025, according to The Associated Press. Economists had been expecting growth of 2.3%.
The federal government’s spending and investment grew at a 9.3% annual rate during the first quarter, adding more than half a percentage point to growth.
Consumer spending, which accounts for 70% of U.S. GDP, fell to 1.6% during the first quarter, which is down from 1.9% in the fourth quarter of 2025. Spending on goods such as food and clothing fell slightly, and spending on services slowed.
Business investment increased at an 8.7% pace, likely driven by spending in artificial intelligence. Although residential investment fell at an 8% annual pace, nonresidential investment rose 10.4%, which was the biggest jump in nearly three years.
According to the Associated Press, 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.”
