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Economy Expanded at 2.1% Pace in Q1 Estimate Upgrade
GDP Rebounds From 0.5% in Q4 2025
Key Takeaways:
- The U.S. economy grew at a 2.1% annual rate in the first quarter, a June 25 upward revision from 1.6% and a rebound from 0.5% late 2025.
- Growth was driven by a 10.6% surge in business investment, likely tied to artificial intelligence, while consumer spending weakened amid higher gasoline prices from the Iran conflict.
- Economists will look to second-quarter GDP due July 30 to assess whether consumer spending rebounds and if growth momentum continues despite inflation and energy-related pressures.
WASHINGTON — The U.S. economy expanded at a solid and unexpected 2.1% annual pace from January through March, the Commerce Department reported June 25 in its final estimate of first-quarter growth.
The growth in gross domestic product — the nation’s output of goods and services — marked a rebound from a sluggish 0.5% in the last three months of 2025 when a 43-day federal government shutdown weighed on the economy.
The June 25 numbers were an upgrade from of Commerce’s previous first-quarter estimate of 1.6% growth.
Business investment surged, probably reflecting an investment boom in artificial intelligence.
But consumer spending, which accounts for around 70% of U.S. economic activity, fell sharply from fourth-quarter 2025 and from Commerce’s previous estimate in a sign that consumers may be cutting back in the face of higher gasoline prices caused by the war with Iran.
Excluding housing, private investment jumped 10.6%, up from 2.4% in fourth-quarter 2025. But residential investment, weighed down by high interest rates, dropped 7.8% from January through March, biggest fall since late 2022 and the fifth straight quarterly decline.
JUST IN: Q1 GDP was revised up to 2.1%.
But check out the reason...it happened due to far less imports than originally thought.
Consumer spending -- the backbone of the US economy -- was anemic in Q1. It should rebound in Q2, but it's worth watching closely. pic.twitter.com/kO9LCZEPuh — Heather Long (@byHeatherLong) June 25, 2026
The federal government's spending and investment rose at a 9.4% clip in the first quarter after dropping 16.6% in October-December 2025 largely because of the government shutdown.
The U.S. economy — the world’s biggest — has continued to chug along despite the Iran energy shock. The American job market has proven especially resilient. Employers added an average 188,000 jobs a month from March through May after adding fewer than 10,000 a month in 2025 amid uncertainty over President Donald Trump’s trade and immigration policies.
The June 25 report was the Commerce Department’s third and final estimate of first-quarter GDP growth. The first look at second-quarter economic growth is due July 30.
