By Hugh Cameron
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Nearly every state saw its economy grow at the start of the year, according to newly released data from the Commerce Department.
Figures released Thursday by the department's Bureau of Economic Analysis show that gross domestic product (GDP) increased in 46 states and Washington, D.C., in the first quarter of 2026. The BEA said that annualized growth reached as high as 4.5 percent in Washington state—though it contracted in a handful of states—and that nearly every state also saw personal income and earnings increase during the quarter.
This data was released alongside the third and final estimates for U.S. GDP growth in the first quarter of 2026. The agency said that the economy expanded by 2.1 percent, up from its previous estimate of 1.6 percent and marking an improvement from 0.5 percent growth in the fourth quarter of 2025.
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Which States Have Seen the Fastest Growth?
Among the 46 states that saw real GDP grow in the first quarter, Washington led with 4.5 percent growth, rebounding from a 0.4 percent contraction at the end of 2025. The BEA said that this was largely thanks to growth in its information sector, comprising tech firms, telecom providers, media groups and publishers.
California, New Mexico, Nevada and Utah also experienced growth well above the nationwide rate, and the BEA found that the Far West region saw by far the strongest growth in the first quarter, with an average growth rate of 3.6 percent.
However, three states—South Dakota, Nebraska and Iowa—saw real GDP decline in the first quarter, while Delaware's stayed flat.
According to the BEA, the first-quarter improvements were due to increased investment and exports, only partly offset by higher imports, and greater government and consumer spending. The latter has maintained strength in recent months despite an expected drag from the war in Iran and rising fuel costs.
And the agency attributed the 0.5 percent jump from its previous estimate to a downward revision in imports, only “partly offset by a downward revision to consumer spending.”
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What’s Next for the Economy?
America’s economic output has proven erratic under President Donald Trump, entering contractionary territory at the beginning of 2025 before bouncing back and then slowing over the last two quarters.
This week, however, Treasury Secretary Scott Bessent expressed optimism that the economy was on track for 3 percent annualized growth by the end of the year, in part due to the winding down of hostilities between the U.S. and Iran.
“We can have something with a three in front of it this year,” Bessent said in an interview with CNBC’s “Squawk Box” on Wednesday. “The underlying economy has been strong.”
And some private sector groups are nearly as upbeat, citing the significant and enduring contributions of artificial intelligence.
In a note released Wednesday, Vanguard economists said they were sticking by a forecast of 3 percent growth in 2027, reflecting what they called “a structural transformation rather than a cyclical acceleration.”
AI investment, they said, “suggests we are in the early stages of a profound economic shift that could reshape productivity over the coming decade,” while citing data showing AI-related capital expenditures are expected to exceed 2025 levels this year.
Estimates from Goldman Sachs put AI-related spending at $765 billion this year—forecast to reach $1.6 trillion by 2031—equivalent to over 2 percent of the entire economy.
“This wave of investment resembles historic periods of large-scale capital expansion, such as the railroad buildout in the 19th century and the late-1990s technology boom,” Vanguard economists wrote. “The AI investment cycle is ramping up faster than expected.”
Contact Newsweek editors on this story: Daniel Orton and Sam Wilson.
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