U.S. economic growth rebounded at the beginning of 2026, according to the BEA’s latest estimate. Real GDP rose at 1.6% annual rate in Q1, falling short of the 2.0% forecast but marking an acceleration from the 0.5% final estimate seen in Q4 of last year.
Here is the opening text from the Bureau of Economic Analysis news release:
Real gross domestic product (GDP) increased at an annual rate of 1.6 percent in the first quarter of 2026 (January, February, and March), according to the second estimate released today by the U.S. Bureau of Economic Analysis. In the fourth quarter of 2025, real GDP increased 0.5 percent. The contributors to the increase in real GDP in the first quarter were exports, investment, consumer spending, and government spending. Imports, which are a subtraction in the calculation of GDP, increased.
Gross Domestic Product (GDP)
Real gross domestic product (GDP) measures how fast or slowly the economy is growing and measures the inflation-adjusted value of all goods and services produced by the economy. It is considered the broadest measure of economic activity and the primary indicator of an economy's health. The Bureaus of Economic Analysis (BEA) releases real GDP data on a monthly basis. There are three versions released a month apart, advance, second, and final, each incorporating data that was previously unavailable. Economists can use GDP to determine whether an economy is growing or experiencing a recession.
This chart illustrates the annualized, inflation-adjusted change in U.S. gross domestic product (GDP) from the preceding quarter, with data beginning in Q2 1947. (Prior to Q2 1947, GDP was calculated annually.) For context, the chart also highlights recessions (as determined by the National Bureau of Economic Research, NBER), the historical GDP growth average of 3.19%, and the current 10-year moving average of 2.70%.
A key trend is evident: the 10-year moving average of GDP growth fell below the historical average in 2007 and has remained there, signaling a significant deceleration in U.S. economic expansion since the Great Recession. Current growth is below both the long-term series average and the 10-year moving average, indicating a slower pace of growth than experienced historically.
The chart above has many interesting data points but can be quite overwhelming to look at. This next chart provides a simplified look over the past few years.
Here is a log-scale chart of real GDP with an exponential regression, which helps us understand growth cycles since the 1947 inception of quarterly GDP. The regression illustrates the fact that the current trend, since the Great Recession, has a visibly lower slope than the long-term trend. In fact, the current GDP is 12.8% below the pre-recession trend (2008).
A particularly telling representation of slowing growth in the US economy is the year-over-year rate of change. Beginning in 1947, the average year-over-year rate at the start of recessions is 3.2% with a range of 1.28% to 6.78%. The current year-over-year rate for real GDP is at 2.57%, which is at or below 6 of the 12 recession starts during this time frame.
GDP: A Look Ahead
In the chart below, we use the Conference Board's Economic Forecast for the U.S. Economy to visualize GDP forecast over the next few years.
May 14, 2026
U.S. Outlook: Rising Risk of War Spillovers into H2 2026
The war in the Middle East unleashed an oil-driven inflationary shock that is now spreading through the U.S. economy, eroding purchasing power and compressing growth. As the conflict drags on with no easy exit and rising risks of a prolonged stalemate pertaining to reopening the Strait of Hormuz, the Fed will likely remain on an extended pause navigating risks of a potential tradeoff between containing inflation and supporting the labor market.
Before the start of the war, consumers were already under pressure as 2025 tariffs continued to pass into retail prices and wage growth continued to normalize from the Covid-19-era spike. An additional tax in the form of higher prices at the pump will likely dent consumer spending elsewhere. The recent surge in policy uncertainty due to the war may prevent companies from raising headcounts. This would nudge the unemployment rate higher in the coming months, even as companies abstain from laying off workers. This in turn could further cap personal income growth and restrain economic performance in 2026.
Even if diplomacy prevails, the negative shock to the economy is already set in motion. Spillovers are likely to extend into the second half of the year—even if a peace agreement is reached in the coming weeks.
For a closer look at each of the subcomponents of GDP, check out our commentary An Inside Look at GDP.
For another perspective on GDP, check out our commentary Real GDP Per Capita.
Read more updates by Jen Nash
