US Economy Slows as First-Quarter GDP Growth Revised Down to 1.6% and Inflation Stays High

The U.S. economy grew at a slower pace than initially estimated in the first quarter of 2026 as weaker consumer spending and lower business investment weighed on growth, according to revised data from the U.S. Bureau of Economic Analysis. Real gross domestic product increased at an annual rate of 1.6%, down from the earlier 2.0% estimate but stronger than the 0.5% growth recorded in the fourth quarter of 2025. The downgrade mainly reflected weaker inventory investment and slower spending on services, particularly health care. Consumer spending, investment, exports and government spending supported growth, while imports increased and reduced overall GDP. Inflation pressures remained elevated during the quarter, with the PCE price index rising 4.5% and core PCE inflation, which excludes food and energy, increasing 4.4%. Real gross domestic income rose 0.9%, while the average of GDP and GDI increased 1.3%. Corporate profits also slowed sharply, rising by $40.4 billion compared with a $246.9 billion increase in the previous quarter, signaling softer momentum across the broader economy.