German nationalism had grown in the early 19th century due to Prussian ambition, the rise of liberal ideas and popular rebellion. However, the reassertion of Austrian power limited this growth.
Prussia emerged from the Napoleonic Wars as the second most important of the German states.
At the Congress of Vienna in 1815, Prussia gained important territories including the Rhineland:
this doubled the population
it increased access to raw materials - including coal and iron
this allowed growth of industry
Prussia's development as a successful, modern industrial state gave hope to German nationalists.
Economically, unification through the Zollverein economic alliance of 1834 had been a success.
However:
agriculture still dominated the economy
Prussia was ruled by the authoritarian Hohenzollern Royal family (on the death of King Frederick William III, Frederick William IV became the new monarch in 1840)
by 1850, the German states remained independent
the anti-nationalistic Austrian Empire was the dominant force in Central Europe
Attempts at a political union, mainly on the Prussian side, had failed. The Austrians were too strong both politically and militarily.