Wall Street and currency markets remained cautious on Thursday after revised government data showed the US economy expanded more slowly than previously estimated during the first quarter of 2026.
The US Commerce Department said gross domestic product (GDP) grew at an annualized rate of 1.6% in the January-to-March period, down from the earlier estimate of 2% and below market expectations for the figure to remain unchanged.
The revised reading also marked a slowdown from stronger growth levels seen in previous quarters and reflected weaker-than-expected consumer spending and investment activity.
“The contributors to the increase in real GDP in the first quarter were exports, investment, consumer spending, and government spending. Imports, which are a subtraction in the calculation of GDP, increased,” the US Bureau of Economic Analysis (BEA) said in its release.
The agency added: “Real GDP was revised down 0.4 percentage point from the advance estimate, primarily reflecting downward revisions to investment and consumer spending.”
Consumer spending and investment revised lower
According to the updated figures, businesses added to inventories at a slower pace than previously estimated, while household spending on services such as healthcare also came in weaker than earlier projections.
The Commerce Department said the downward revision was largely tied to softer consumer demand and weaker investment data.
Gross domestic product measures the total value of goods and services produced across the US economy and remains one of the most closely watched indicators of economic performance.
The weaker GDP revision reinforced concerns that elevated borrowing costs and persistent inflation pressures may be weighing on broader economic activity.
Despite the softer first-quarter growth figure, separate data released Thursday showed consumer spending remained stable in April.
Consumer spending rose 0.5% during the month, matching economist forecasts, according to the Commerce Department.
Personal income, however, was flat in April, missing expectations for a 0.4% increase.
Markets react cautiously to weaker GDP data
Financial markets showed a relatively muted reaction following the release of the revised GDP figures.
US stock index futures remained negative after the data, though they recovered somewhat from earlier session lows.
Treasury yields edged lower, particularly across longer-duration maturities, reflecting modest investor caution about the growth outlook.
The US dollar also weakened slightly in early trading.
The US Dollar Index was down about 0.1% at 99.12 during the American session following the release.
Economists and investors are continuing to monitor incoming data closely for signs of whether economic growth is slowing more materially under the weight of high interest rates and tighter financial conditions.
The revised GDP reading also comes as markets remain focused on the Federal Reserve’s future interest rate path and broader expectations for inflation and consumer demand through the remainder of the year.
While exports, government spending, and investment still contributed positively to first-quarter growth, the weaker revision highlighted signs that parts of the US economy may be losing momentum after a stronger expansionary period.
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