Q2 2026 GDP Revised Up 0.7 Point to 2.2% in Third Estimate

The U.S. economy grew faster in the spring than the first two readings suggested. Real GDP increased at an annual rate of 2.2% in the second quarter of 2026, according to the Bureau of Economic Analysis's third estimate, an upward revision of 0.7 percentage point from the second estimate. The upgrade primarily reflected upward revisions to investment, consumer spending and government spending, and it landed alongside the 2026 annual update of the national accounts, which lifted first-quarter growth to a revised 2.5%. Consumer spending, investment and exports were the contributors to the second-quarter gain, while a rise in imports, which subtract from GDP, partly offset them.

The Revision Path From Advance to Third Estimate

Both the advance and second estimates had put second-quarter growth at 1.5%. The third estimate of 2.2% changes the character of the quarter: rather than the sharper slowdown the earlier estimates implied, growth now looks like a modest step down of 0.3 percentage points from the revised 2.5% pace. The upgrade showed up in both the headline and the underlying measures:

• Real GDP: 1.5% advance, 1.5% second, 2.2% third
• Real final sales to private domestic purchasers: 3.9% advance, 4.2% second, 4.6% third
• Current-dollar GDP: 7.9% advance, 8.0% second, 8.5% third

Real final sales to private domestic purchasers, the sum of consumer spending and private fixed investment, rose 4.6%, revised up 0.4 percentage point from the previous estimate. That measure climbed with every estimate, which says the underlying strength of private demand was understated from the start. Because current-dollar GDP was also revised up, to 8.5% from 8.0%, the real upgrade was not simply a by-product of lower price measures.

What Changed in the Third Estimate

The third estimate folded in fresh source data across nearly every major spending category. The investment revision covered both inventories and fixed investment:

• Private inventory investment: nonfarm inventories were revised up, led by wholesale trade, other industries, and mining, utilities and construction, based on new and revised Census Bureau inventory data; farm inventories of both crops and livestock were revised up on Department of Agriculture data.
• Nonresidential structures: one of the two leading contributors to the fixed-investment revision, alongside residential investment, led by commercial and health care structures, mainly data centers, based on revised Census construction spending data for May and June.
• Residential investment: revised up, led by improvements, based on revised June remodelers' payroll data from the BLS Current Employment Statistics.

Consumer spending was revised up in both services and goods. Within services, the gain was led by recreation services, mainly admissions to spectator amusements, and by other services such as social services and religious activities, drawing on newly available data from the Census Bureau's Quarterly Services Survey. A downward revision to transportation services, mainly air transportation, based on new Bureau of Transportation Statistics data, partly offset those gains. Within goods, the upward revision was led by recreational goods and vehicles, mainly information processing equipment, reflecting revised Monthly Retail Trade Survey data and an updated deflation price index. Government spending was revised up mainly in federal defense, led by purchased intermediate goods and services, on updated BEA seasonal adjustment factors for defense spending.

Income, Output and Prices

The income side of the accounts moved in the same direction, and the price measures came down:

• Real gross domestic income: 2.6%, revised up 0.4 percentage point
• Average of real GDP and real GDI: 2.4%, revised up 0.6 percentage point
• Real gross output: 5.0%
• Gross domestic purchases price index: 5.6%, revised down 0.2 percentage point
• PCE price index: 5.0%, revised down 0.3 percentage point
• Core PCE price index (excluding food and energy): 3.3%, revised down 0.3 percentage point

With real GDI at 2.6% running slightly ahead of real GDP, the income and expenditure views now tell a consistent story of solid growth. Inflation remained elevated at an annualized 5.0% for headline PCE prices in the quarter, and the gap to the 3.3% core rate shows food and energy prices rising faster than the rest of the basket.

Corporate Profits

Profits from current production, corporate profits with inventory valuation and capital consumption adjustments, increased $384.0 billion in the second quarter, revised down $16.9 billion from the second estimate. The downward revision trims the gain without changing its direction. First-quarter profits from current production are now estimated to have increased $63.4 billion, a downward revision of $11.0 billion.

On an after-tax basis without those adjustments, corporate profits rose 8.4% from the first quarter to $4.3 trillion, the largest quarterly increase since January 2023, and stood 26.6% above their level a year earlier. Strong nominal growth is showing up in corporate earnings even as the profits-from-current-production gain was trimmed.

Industries and States

By industry, growth in real value added was broad across the private sector:

• Private services-producing industries: up 2.5%
• Private goods-producing industries: up 2.3%
• Government: up less than 0.1%

Real estate and rental and leasing, information, durable goods manufacturing, and finance and insurance led the gain, while transportation and warehousing, retail trade and nondurable goods manufacturing were the leading offsets. Regionally, real GDP increased in 44 states and the District of Columbia, ranging from 4.0% in New York to -2.3% in West Virginia. Finance and insurance led in New York, and mining led the decline in West Virginia. Personal income across the states rose $314.3 billion, or 4.7% at an annual rate.

The Annual Update Reshapes the First Quarter

Today's release also carried the 2026 annual update, covering the first quarter of 2021 through the first quarter of 2026, with the reference year remaining 2017. The first-quarter figures moved materially:

• Real GDP: 2.5%, revised up 0.4 percentage point from 2.1%
• Real GDI: 2.5%, 1.3 percentage points higher than previously estimated
• Average of real GDP and real GDI: 2.5%, 0.8 percentage point higher
• Core PCE price index: 3.9%, revised down 0.5 percentage point

The first-quarter GDP upgrade reflected exports of services and consumer spending on both goods and services. The GDI upgrade was led by compensation, based on new wage and salary data from the BLS Quarterly Census of Employment and Wages.

The Quarter in Context

With the third estimate in hand, the second quarter sits in the middle of a choppy year. Real GDP grew 4.0% in the second quarter of 2025 and 3.9% in the third before nearly stalling at 0.2% in the fourth quarter, then rebounded to 2.5% in the first quarter of 2026. The 2.2% pace is 1.8 percentage points slower than a year earlier, and above the 0.2% pace of the fourth quarter of 2025. Monthly price data since the quarter ended show continued pressure: the PCE price index rose 0.3% in August and 3.4% from a year earlier, while core PCE rose 0.2% on the month and 3% over the year.

What to Watch Next

BEA publishes the advance estimate of third-quarter GDP on October 29, 2026. The figure that will confirm or challenge the story of this revision is real final sales to private domestic purchasers: holding near the 4.6% pace would show that private demand, not inventories or defense spending, is carrying growth. Because part of the second-quarter upgrade came from inventory investment, watch for a payback there that could weigh on the headline even if private demand stays firm.