By Harriet Torry
Updated May 28, 2026 10:09 am ET
Economy grew at a 1.6% annual rate, below earlier estimates, though corporate profits saw their largest year-over-year increase since 2021
Quick Summary
- The U.S. economy grew at a 1.6% annual rate in the first quarter, revised down from 2%, the Commerce Department said Thursday.
- The GDP downgrade was largely due to a lower estimate for inventory investment and revised lower consumer spending.
- U.S. business earnings, after tax, increased 3.3% from the prior quarter and 17% from a year ago.
The U.S. economy grew more slowly during the first three months of the year, updated government data showed Thursday.
Gross domestic product, a broad measure of the goods and services produced across the U.S., rose at a 1.6% seasonally and inflation-adjusted annual rate in January through March, the Commerce Department said Thursday.
The department previously estimated first-quarter GDP rose at a 2% rate. And economists surveyed by The Wall Street Journal had expected the pace to stay at 2%.
The downgrade to the GDP reading was largely due to a lower estimate for inventory investment, a volatile category that is often subject to large revisions.
Even so, consumer spending on services like healthcare was revised lower for the quarter. Overall consumer spending rose at a 1.4% rate, compared with a previous estimate for 1.6%.
A key measure of U.S. business earnings, profits after tax without inventory valuation and capital consumption adjustments, increased 3.3% from the prior quarter and was up 17% from a year ago. That was the largest year-over-year change in corporate profits since the final quarter of 2021.