Chronicling 100 Years of the U.S. Economy

November 2021
Volume 101, Number 11

GDP and the Economy

Advance Estimates for the Third Quarter of 2021

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Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the third quarter of 2021, according to the “advance” estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 In the second quarter of 2021, real GDP increased 6.7 percent.

The increase in real GDP in the third quarter reflected increases in private inventory investment, consumer spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in residential fixed investment, federal government spending, and exports.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2 and table 1).

  • The increase in private inventory investment reflected increases in wholesale trade (led by nondurable goods industries) and in retail trade (led by motor vehicles and parts dealers).
  • The increase in consumer spending reflected an increase in services that was partly offset by a decrease in goods.
    • Within services, increases were widespread, with the largest contributions coming from “other” services (mainly international travel), transportation services (notably, air transportation), health care (notably, nonprofit hospitals), and food services and accommodations.
    • Within goods, a decrease in durable goods was partly offset by an increase in nondurable goods. The decrease in durable goods was led by motor vehicles and parts (notably, new light trucks). For nondurable goods, the leading contributor to the increase was gasoline and other motor fuel.
  • The increase in state and local government spending was led by employee compensation (notably, education).
  • Within nonresidential fixed investment, an increase in intellectual property products was partly offset by decreases in structures and equipment.
    • The increase in intellectual property products reflected increases in software (notably, prepackaged software) and research and development.
    • Within equipment, the leading contributors to the decrease were transportation equipment (notably, new light and heavy trucks) and information processing equipment (notably, communication equipment).
    • The decrease in structures was led by commercial and health care structures.
  • The decrease in residential fixed investment primarily reflected decreases in spending on improvements and on construction of new single-family structures.
  • The decrease in federal government spending primarily reflected a decrease in nondefense spending on intermediate goods and services after the processing and administration of Paycheck Protection Program (PPP) loan applications by banks on behalf of the federal government ended in the second quarter with the expiration of the PPP loan application period at the end of May.
  • The decrease in exports reflected a decrease in goods that was partly offset by an increase in services.
    • The decrease in exports of goods was led by foods, feeds, and beverages and nondurable industrial supplies and materials (notably, petroleum and petroleum products).
    • The increase in exports of services was led by "other" business services.
  • The increase in imports primarily reflected an increase in services (led by travel and transport).

The 2.0 percent increase in real GDP in the third quarter followed an increase of 6.7 percent in the second quarter. The deceleration in real GDP in the third quarter was more than accounted for by a slowdown in consumer spending. From the second quarter to the third quarter, spending for goods turned down (led by motor vehicles and parts) and services decelerated (led by food services and accommodations).

BEA's featured measure of inflation in the U.S. economy, the price index for gross domestic purchases (goods and services purchased by U.S. residents), increased 5.4 percent in the third quarter after increasing 5.8 percent in the second quarter (table 2 and chart 3). Except for private nonfarm inventory investment, price increases were widespread across the components of gross domestic purchases and were led by increases for consumer goods and services.

Within goods, prices for both durable and nondurable goods increased. The leading contributors were price increases for motor vehicles and parts (for both new and used motor vehicles) and for food and beverages purchased for off-premises consumption (groceries).

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

Within services, the leading contributors were price increases for housing and utilities and for foods services and accommodations (meals as well as hotels and motels).

Food prices increased 7.8 percent in the third quarter after increasing 1.6 percent in the second quarter. Prices for energy goods and services increased 19.3 percent after increasing 21.2 percent. Gross domestic purchases prices excluding food and energy increased 4.8 percent after increasing 5.6 percent.

Consumer prices excluding food and energy, a measure of the “core” rate of inflation, increased 4.5 percent in the third quarter after increasing 6.1 percent in the second quarter.

Measured in current dollars, personal income increased $47.8 billion in the third quarter, in contrast to a decrease of $1.29 trillion in the second quarter (table 3). The increase primarily reflected an increase in compensation that was partly offset by a decrease in government social benefits.

  • Within compensation, the leading contributor to the increase was private wages and salaries, mainly in services-producing industries. Government wages and salaries also increased.
  • Within government social benefits, unemployment insurance and “other” social benefits decreased, reflecting decreased payments from several federal COVID-19 relief programs that were initially established through the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act.
  • Also within government social benefits, the decrease was partly offset by the advance Child Tax Credit payments that began in the third quarter. For details, see “How does the Child Tax Credit provision of the American Rescue Plan Act of 2021 impact the NIPAs?

Personal current taxes increased $77.3 billion in the third quarter after increasing $102.7 billion in the second quarter.

Disposable personal income (DPI) decreased $29.4 billion in the third quarter after decreasing $1.39 trillion in the second quarter. Personal outlays increased $268.1 billion after increasing $689.4 billion in the second quarter.

The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 8.9 percent in the third quarter; in the second quarter, the personal saving rate was 10.5 percent.

Real DPI (chart 5) decreased 5.6 percent in the third quarter after decreasing 30.2 percent in the second quarter. Current-dollar DPI decreased 0.7 percent after decreasing 25.7 percent.

 


  1. “Real” estimates are in chained (2012) dollars, and price indexes are chain-type measures. Each GDP estimate for a quarter (advance, second, and third) incorporates increasingly comprehensive and improved source data; for more information, see “The Revisions to GDP, GDI, and Their Major Components” in the January 2021 Survey of Current Business. Quarterly estimates are expressed at seasonally adjusted annual rates, which reflect a rate of activity for a quarter as if it were maintained for a year.
  2. In this article, “consumer spending” refers to “personal consumption expenditures,” “inventory investment” refers to “change in private inventories,” and “government spending” refers to “government consumption expenditures and gross investment.”