Short Answer
In the first quarter of 2026, state-level economic performance diverged sharply even as the national economy accelerated. The U.S. Bureau of Economic Analysis (BEA) reported that real gross domestic product (GDP) increased at a 2.1 percent annualized rate nationally, up from 0.5 percent in the fourth quarter of 2025. Washington state led all states with 4.5 percent growth, while South Dakota posted the steepest contraction at -1.6 percent.
Key Numbers
- National real GDP growth, Q1 2026: 2.1% annualized
- National real GDP growth, Q4 2025: 0.5% annualized
- States with positive growth, Q1 2026: 47 of 50
- Fastest-growing state, Q1 2026: Washington, 4.5%
- Steepest contraction, Q1 2026: South Dakota, -1.6%
- Median state growth, Q1 2026: West Virginia, 1.4%
- States below the national average, Q1 2026: 33
- National real GDP growth, Q3 2025: 4.4% annualized
Explanation
Gross domestic product by state measures the value of goods and services produced within a state’s borders. The BEA releases quarterly state GDP data alongside the third estimate of U.S. GDP, and the figures are adjusted for inflation to show real growth. The growth rates are annualized, meaning they show what a full year of growth would look like if the quarterly pace continued for four quarters.
The first quarter of 2026 marked a rebound from a weak fourth quarter of 2025, when national real GDP grew only 0.5 percent. In the first quarter, growth accelerated to 2.1 percent, but the gains were not evenly distributed. While 47 states expanded, 33 states grew more slowly than the national average, and three states—South Dakota, Nebraska, and Iowa—contracted. The median state, West Virginia, grew at just 1.4 percent, well below the national pace.
This unevenness reflects differences in state industry mixes, trade exposure, and local economic conditions. The BEA’s data also show that the national acceleration was driven by investment, exports, and government spending, while consumer spending was revised down. Understanding these state-level patterns helps businesses, policymakers, and residents see where economic momentum is building and where it is lagging.
Definition
Real GDP by state is the inflation-adjusted value of all final goods and services produced within a state’s borders during a given period. It is the state-level counterpart to national GDP and is expressed in chained dollars to remove the effects of price changes. The quarterly growth rate is annualized to allow comparison across quarters and with annual figures.
When the BEA reports that Washington grew 4.5 percent in the first quarter of 2026, it means that if Washington’s economy continued growing at that quarterly pace for a full year, its real GDP would increase by 4.5 percent. This convention makes short-term changes easier to interpret but can also amplify volatility in small states.
How GDP Is Calculated
The BEA calculates state GDP using an industry-based approach. It sums the value added by each industry within a state, where value added equals output minus intermediate inputs. The estimates are built from data on wages, profits, taxes, and other income components, and they are adjusted for inflation using chained price indexes. Seasonal adjustments remove predictable quarterly patterns.
For the first quarter of 2026, the BEA revised national real GDP up by 0.5 percentage point from the second estimate. The revision primarily reflected a downward revision to imports, which are subtracted in GDP accounting, partly offset by a downward revision to consumer spending. State-level estimates are also subject to revision as more complete data become available.
National Comparison
National real GDP growth has been volatile across recent quarters. In the third quarter of 2025, the U.S. economy grew at a strong 4.4 percent annualized rate. Growth then slowed sharply to 0.5 percent in the fourth quarter of 2025 before rebounding to 2.1 percent in the first quarter of 2026.
| Quarter | U.S. real GDP growth | State range | Notes |
|---|---|---|---|
| Q3 2025 | 4.4% | 0.4% (North Dakota) to 6.5% (Kansas) | All 50 states and DC grew |
| Q4 2025 | 0.5% | Not specified in state detail | National slowdown |
| Q1 2026 | 2.1% | -1.6% (South Dakota) to 4.5% (Washington) | 47 of 50 states grew |
The first quarter of 2026 was notable because the median state grew at only 1.4 percent, below the national average. This indicates that a relatively small number of faster-growing states pulled the national figure upward, while many states experienced more modest expansion.
State Comparison
Washington’s 4.5 percent growth was the fastest in the nation, more than double the national average. At the other end, South Dakota contracted by 1.6 percent, the steepest decline. Nebraska and Iowa also contracted, though their exact rates were not highlighted in the BEA release. West Virginia, the median state, grew 1.4 percent.
| State | Q1 2026 growth | Comparison |
|---|---|---|
| Washington | 4.5% | More than double national average |
| West Virginia | 1.4% | Median; below national average |
| South Dakota | -1.6% | Steepest contraction |
| Nebraska | Negative | Contracted |
| Iowa | Negative | Contracted |
| United States | 2.1% | National average |
In the St. Louis Fed’s Eighth District, all states grew in the first quarter. Arkansas, Indiana, and Mississippi grew faster than the national average, while Illinois, Kentucky, Missouri, and Tennessee grew more slowly. This regional pattern illustrates how even neighboring states can experience different economic trajectories based on their industrial structures.
Ranking Table
The table below summarizes the most prominent state-level results from the first quarter of 2026. Because the BEA release highlights only the fastest, median, and slowest states, a full 50-state ranking is not available from the cited sources.
| Position | State | Q1 2026 real GDP growth | Status |
|---|---|---|---|
| Fastest | Washington | 4.5% | Strongest growth |
| Median | West Virginia | 1.4% | Middle of state distribution |
| Contraction | Nebraska | Negative | Declined |
| Contraction | Iowa | Negative | Declined |
| Slowest | South Dakota | -1.6% | Steepest contraction |
For the third quarter of 2025, Kansas was the fastest-growing state at 6.5 percent, while North Dakota was the slowest at 0.4 percent. That quarter was unusually broad-based, with all 50 states and the District of Columbia posting positive growth.
Historical Data
Recent quarterly state GDP data show a pattern of acceleration, slowdown, and partial recovery. The third quarter of 2025 was strong, with national growth of 4.4 percent and every state expanding. The fourth quarter of 2025 brought a sharp deceleration to 0.5 percent nationally. The first quarter of 2026 then improved to 2.1 percent, but the recovery was uneven, with three states contracting.
This volatility is not unusual for quarterly state GDP estimates. Annualized rates can swing significantly from quarter to quarter, especially in states with large energy, agricultural, or manufacturing sectors. The BEA cautions that these data are subject to revision as more complete source data become available.
Factors Behind the Trend
The first quarter of 2026 national acceleration was driven by several components. According to the BEA, investment, exports, and government spending contributed to the increase in real GDP. A downward revision to imports also supported the headline growth rate because imports are subtracted in GDP accounting. However, consumer spending was revised down, partly offsetting those gains.
In the third quarter of 2025, the leading contributors to national growth were information, finance and insurance, and professional, scientific, and technical services. These industries were also the leading contributors in nearly half of all states. Durable-goods manufacturing provided additional support. State-level differences in these industries help explain why some states grew much faster than others.
Why It Matters
State GDP growth is a key indicator of economic health. Faster-growing states tend to see stronger job creation, higher tax revenues, and greater business investment. Slower-growing or contracting states may face budget pressures, out-migration, and reduced consumer confidence. For businesses deciding where to expand, state GDP trends provide a useful signal of local demand and economic momentum.
Policymakers also use state GDP data to evaluate the effectiveness of economic development programs, tax policies, and infrastructure investments. Because growth is uneven, federal and state officials may target support to lagging regions or industries. Residents can use the data to understand how their state’s economy compares with the nation and with neighboring states.
Limitations of the Data
Quarterly state GDP estimates have several limitations. They are based on incomplete source data and are revised as more information becomes available. Annualized growth rates can exaggerate short-term movements, especially in small states where a single large project or industry shift can have an outsized effect. The BEA also notes that state-level industry detail is less complete than national detail.
Note: These data are subject to future revision by the BEA.
Users should treat quarterly state GDP figures as preliminary indicators rather than final measures. For more stable comparisons, annual state GDP data or multi-quarter averages may be more appropriate.
Source & Data Date
Primary source: U.S. Bureau of Economic Analysis, GDP by State, released June 25, 2026, covering the first quarter of 2026. Additional data from the BEA news release of January 23, 2026, covering the third quarter of 2025, and the Federal Reserve Bank of St. Louis FRED Blog, July 13, 2026.
FAQ
What was the fastest-growing state economy in the first quarter of 2026?
Washington had the fastest annualized real GDP growth at 4.5 percent, more than double the national average of 2.1 percent.
Which states had GDP contractions in the first quarter of 2026?
South Dakota, Nebraska, and Iowa contracted. South Dakota had the steepest decline at -1.6 percent annualized.
How does the BEA calculate state GDP growth?
The BEA sums the value added by each industry within a state, adjusts for inflation using chained dollars, and annualizes the quarterly change. The estimates are based on wages, profits, taxes, and other income data.
Why did national GDP growth accelerate in Q1 2026?
The acceleration was driven by investment, exports, and government spending. A downward revision to imports also supported GDP because imports are subtracted in the calculation, though consumer spending was revised down.
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