• Real GDP rose at an annualized rate of 2% in the first quarter of 2026, just short of the expected 2.2%.
• That’s higher than the 0.5% rise in the fourth quarter of 2025.
• Other reports showed that the Iran war affected inflation in March, and that unemployment remained around 4%.

The US started 2026 with a comeback.

US real gross domestic product rose at an annualized rate of 2% in the first quarter, short of the 2.2% expected but above the 0.5% rise in the fourth quarter of 2025.

Other data releases show how the economy was shaping up at the start of the year. The job market continued to fluctuate between job growth and job loss. The US added 178,000 jobs in March, largely driven by healthcare and leisure and hospitality. That comes after a 133,000 loss in February due to weather and a healthcare strike. Unemployment is still hovering around 4%.

The effects of the Iran war showed up in the recent consumer price index report, with CPI rising 3.3% over the year, the largest increase since May 2024, due to a surge in energy prices. The effects haven’t really shown up in core prices yet, which excludes volatile food and energy prices.

Atsi Sheth, the chief credit officer at Moody’s Ratings, described the economy ahead of the GDP report as “fragile resilience” because the US isn’t in a recession, and both business and consumers are still holding up. The economy has also been fairly resistant to trade shocks, she added. However, she said the pillars holding up the economy are increasingly thinning as more shocks emerge.

“On the employment side, for instance, there’s just now a narrower range of sectors that are actually adding jobs, healthcare being a big one among them, not that many other sectors are adding jobs,” she said.

Jason Draho, the head of asset allocation for the Americas for UBS Global Wealth Management, told Business Insider before the new GDP release that the figure was expected to be noisy, as it has been because of the effect of trade policies. “What I would focus on is the private sector final demand in the US economy, because that kind of ignores inventory effects and ignores net exports, which can be volatile,” he said.

“Once you strip out some of the volatility and noise from some of these factors that are still being buffeted by the tariffs and then later in the quarter by the Iran conflict, that mechanically, again, can distort import prices, export prices, and the value of it based on moving commodity prices,” Draho added.

The new GDP report comes one day after the Fed’s decision to keep interest rates steady. That was the last meeting with Jerome Powell as Fed Chair.

“He’s had to deal with just what is seemingly never-ending string of massive shocks to the economy, from the pandemic to the Russian war and Ukraine, to the tariffs, to the immigration policy, and now to the Iran war,” said Mark Zandi, the chief economist at Moody’s Analytics.

This is a developing story. Please check back for updates.