U.S. Q1 2026 Real GDP Growth Revised Down; Corporate Profits Slowed

Real GDP growth was revised down to 1.6% q/q saar in the second estimate from 2.0% in the advance report. The Action Economics Forecast Survey looked for a slight upward revision to 2.1%. There was little revision to the major components with almost all of the total revision accounted for by a larger decline in inventory investment than previously estimated, which lowered the inventory contribution to total GDP growth to 0.1%-point from 0.4%-point previously.

Growth of personal consumption expenditures was revised down slightly to 1.4% q/q saar from 1.6% previously. Nonresidential fixed investment growth was revised down to 10.1% from 10.4%, mostly reflecting slightly slower growth in spending on intellectual property products, while the decline in residential investment was revised to -6.2% from -8.0%. Government spending growth was unrevised at 4.4%. However, the Q1 rebound still fell well short of reversing the 5.6% quarterly plunge in government spending in Q4 that reflected the more than one-month shutdown of the federal government. Export growth was revised up marginally while import growth was revised slower marginally. The result was a slightly smaller trade deficit than previously estimated but the revision was too small to change the contribution to overall growth from net exports.

Private domestic demand growth (final sales to private domestic purchasers, a favored gauge of demand by the Federal Reserve) was revised down to 2.4% q/q saar from 2.5% in the advance report. However, this pace is still solid and meaningfully above the economy’s potential growth rate.

This report contained the first look at Q1 corporate profits. Their growth slowed to 0.9% q/q not annualized, but this was on top of a 6.0% quarterly jump in Q4 2025 and a 4.5% quarterly rise in Q3. Profits of domestic industries climbed 2.7% q/q in Q1 following outsized increases of 4.0% in Q4 and 3.6% in Q3. Rest of world profits slumped in Q1, falling 9.8% q/q, but this was after a 20.2% surge in Q4 and a 10.7% jump in Q3. Strong profit growth continues to underpin solid gains in equity prices.

With the release of corporate profits for Q1, it was possible to construct gross domestic income. Total production in the economy can be calculated either by adding up the expenditures across the economy and adjusting for imports and changes in inventories or by summing up the income generated by production. The former is GDP; the latter is gross domestic income (GDI). GDI rose 0.9% q/q saar in Q1, somewhat slower than GDP. Over the past year, GDP has risen 2.6% y/y while GDI is up 2.2%.

The GDP data can be found in Haver’s USECON and USNA databases. USNA contains virtually all of the Bureau of Economic Analysis detail in the national accounts. The Action Economics consensus estimates can be found in AS1REPNA.