The U.S. economy expanded at a solid pace during the first three months of the year, although not quite as strong as economists expected to see.

Gross domestic product, adjusted for inflation, grew at an annualized rate of 2% during the first quarter of 2026, according to the first estimate released by the Bureau of Economic Analysis on Thursday.

The consensus forecast among economists surveyed by FactSet was for growth of 2.3% in the first quarter. During the fourth quarter, real GDP grew by 0.5%, dragged down by lower net exports and the 43-day government shutdown.

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The latest read on U.S. economic activity is shaping up to be solid, but far from the gangbusters rebound that economists initially believed would materialize.

The Bureau of Economic Analysis will release its first estimate of the inflation-adjusted gain in gross domestic product during the first quarter of 2026 at 8:30 a.m. Eastern on Thursday.

The consensus call among economists surveyed by FactSet is that real GDP grew at an annualized rate of 2.3% in the first three months of the year. Similarly, the Federal Reserve Bank of New York's Staff Nowcast has GDP growth up 2.36% in the first quarter.

That's a healthy pace of growth, but not quite as robust as the 3% or higher many economists expected at the start of the year. The slightly softer expectations are due to the fact that higher gasoline prices likely tempered consumer spending, offsetting the boost from larger average tax refunds. Trade and residential investment are also expected to be a bigger drag than initially forecast. And with additional funding lapses in play throughout the first quarter, the bounce back in government spending may not be as strong.

All of the cross-currents have created a wide range on growth estimates. The Atlanta Fed's GDPNow model, for example, is currently projecting first-quarter growth of just 1.2%. Still, all of the estimates expect a rebound from the 0.5% growth logged during the fourth quarter of 2025 when a 43-day government shutdown subtracted a percentage point from real GDP growth.

Resilient consumer spending and solid investment activity, particularly in the build-out of artificial intelligence capabilities, are expected to drive much of the pickup in first-quarter growth. Available economic data show that higher tax refunds provided households with more spending power, even in the face of rising gasoline prices. Bank of America economist expect the latest data will show consumer spending grew by 1.4% during the first quarter -- a solid pace, if a bit of a deceleration from the fourth quarter's 1.9%.

Capital spending, especially when it comes to equipment, will likely be a substantial boost to first-quarter GDP growth, according to Citi economist Veronica Clark. Data released Wednesday showed a 3.3% jump in core capital goods orders in March, the largest monthly increase since June 2020. That strength in business investment bodes well for overall growth. Some of the boost, however, could be offset by imports, which subtract from GDP.

It's also worth noting that the pickup in durable goods orders may also "increasingly reflect higher prices for these goods, suggesting real domestic activity is not necessarily as strong," Clark added.

The "swing factor" will be how much inventory accumulation companies did over the last three months, writes Joe Brusuelas, chief economist at RSM. Heftier front-loading could provide a notable boost to GDP.

Government spending is a bit less certain. While federal expenditures fell by 5.6% during the fourth quarter, economists are expecting a rebound in the first quarter -- though the size is difficult to judge given the partial government shutdowns that have plagued the economy during the first three months of the year.

Residential investment growth -- which includes new single-family and multifamily construction, renovations, manufactured-home production, and brokers' fees -- is expected to decline outright for the first quarter. Home construction activity jumped in March, but it likely isn't enough to offset the sluggish pace in the first two months of the year. Goldman Sachs economists estimate that the housing market slump at the start of the year likely sent residential investment growth down by 4.8%, compared with a 1.7% decline in the fourth quarter.

Trade is also expected to be more of a headwind for GDP growth in the first quarter. Higher rates of imports are expected to reduce net exports, which could weigh on GDP.