How Many States Had Strong Growth in the First Quarter? Too Few

By SBE Council at 26 June, 2026, 2:51 pm

by Raymond J. Keating -

The third estimate of gross domestic product (GDP) pointed to real growth in the first quarter 2026 at a lackluster 2.1 percent.

For what it's worth, the first estimate was 2.0 percent, the second 1.6 percent, and now the third estimate 2.1 percent.

As I've noted before, diminished expectations for the U.S. economy have many economists, talking heads and politicians claiming that two percent growth is solid, or even strong. Given the long history of robust economic growth in the U.S. - such as real annual GDP growth averaging 3.1 percent post-World War II, including recession years, by the way - the happy talk is alarming. It's the equivalent to the experts claiming in the late 1970s that high inflation in the U.S. was the new normal. So, no, 2.1 percent growth is not solid; instead, it's underperforming.

Given that reality, the latest GDP report includes estimates of real GDP growth by state.

It turns out that five states managed strong growth in the first quarter: Washington (+4.5 percent), California (+3.7 percent), North Carolina (+3.2 percent), South Carolina (+3.2 percent), and New Mexico (+3.1 percent).

Six states managed middling real growth: Louisiana (+2.9 percent), Nevada (+2.9 percent), Alaska (+2.8 percent), Utah (+2.6 percent), Georgia (+2.5 percent), and Mississippi (+2.5 percent).

Other than these 11 states, growth was poor.

The economies in three states contracted in the first quarter: Iowa (-0.1 percent), Nebraska (-0.9 percent), and South Dakota (-1.6 percent).

For good measure, Delaware real GDP was flat (0 percent).

The drivers of economic growth are not mysterious. Instead, the foundations for strong growth include low taxes, light regulation, free trade, restrained government spending, price stability, welcoming immigration, the rule of law, and strong private property rights.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .