U.S. First-Quarter GDP Growth Revised Down to 2.5% from 3.0%

The U.S. economy grew at an annualized 2.5% rate in the first quarter of 2026, the Commerce Department reported Thursday, sharply below the 3.0% initial estimate and missing the 2.7% consensus. The downward revision stemmed from weaker consumer spending and a larger trade deficit, the agency said. Consumer spending, which powers about 70% of GDP, rose just 2.1%, down from the 2.5% prior reading. Residential investment slumped 4.3% as elevated mortgage rates continued to choke housing demand. Inventories subtracted 0.5 percentage point from the headline number, while business investment added a slim 0.3%. Government spending also contracted. The data indicate the economy lost momentum entering the second quarter and support the Federal Reserve’s patient stance on rates. With inflation still above target, the weak growth print likely cements a hold at the June 17–18 policy meeting. Traders pared bets on a July rate cut, with futures now implying a 35% probability, down from 50% a week ago.