Survey of Current Business

Survey of Current Business
Chronicling 100 Years of the U.S. Economy

March 2022
Volume 102, Number 3

GDP and the Economy

Second Estimates for the Fourth Quarter of 2021

PDF

Real gross domestic product (GDP) increased at an annual rate of 7.0 percent in the fourth quarter of 2021, according to the second estimates of the National Income and Product Accounts (chart 1 and table 1).1 With the second estimate, real GDP growth was revised up 0.1 percentage point from the advance estimate issued last month. In the third quarter, real GDP increased 2.3 percent.

In 2021 (from the 2020 annual level to the 2021 annual level), real GDP increased 5.7 percent after decreasing 3.4 percent in 2020 (see “Real GDP, 2021”).

Chart 1. Real GDP: Percent Change from Preceding Quarter

[Click chart to expand]

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

  • The increase in private inventory investment was led by retail and wholesale trade industries. Within retail, inventory investment by motor vehicle dealers was the leading contributor.
  • The increase in exports reflected increases in both goods and services. The increase in exports of goods was widespread, and the leading contributors were consumer goods; foods, feeds, and beverages; and industrial supplies and materials. The increase in exports of services was led by travel.
Chart 2. Real GDP: Contributions to the Percent Change in 2021:Q4

[Click chart to expand]

  • The increase in consumer spending primarily reflected an increase in services, led by health care, financial services and insurance, and transportation.
  • The increase in nonresidential fixed investment primarily reflected an increase in intellectual property products that was partly offset by a decrease in structures.
  • The decrease in federal government spending primarily reflected a decrease in defense spending on intermediate goods and services.
  • The decrease in state and local government spending reflected a decrease in gross investment (led by new educational structures).
  • The increase in imports primarily reflected an increase in goods (led by nonfood and nonautomotive consumer goods as well as capital goods).

Real GDP accelerated in the fourth quarter, increasing 7.0 percent after increasing 2.3 percent in the third quarter. The acceleration in real GDP in the fourth quarter primarily reflected upturns in exports and residential investment and accelerations in private inventory investment and consumer spending that were partly offset by a downturn in state and local government spending. Imports accelerated.

Prices for gross domestic purchases—goods and services purchased by U.S. residents—increased 7.0 percent in the fourth quarter after increasing 5.6 percent in the third quarter (table 2 and chart 3). The increase was the largest since the second quarter of 1981. Price increases were widespread across all expenditure categories and were led by increases for consumer goods and services.

  • Within goods, price increases for motor vehicles and parts (for both new and used motor vehicles), gasoline and other energy goods, and food and beverages purchased for off-premises consumption (groceries) were the leading contributors.
  • Within services, the leading contributor was an increase in prices paid for housing and utilities.
Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

Food prices increased 9.0 percent in the fourth quarter after increasing 7.9 percent in the third quarter. Prices for energy goods and services increased 33.9 percent after increasing 19.4 percent. Gross domestic purchases prices excluding food and energy increased 6.2 percent after increasing 5.1 percent.

Consumer prices excluding food and energy, a measure of the “core” rate of inflation, increased 5.0 percent in the fourth quarter after increasing 4.6 percent in the third quarter.

Measured in current dollars, personal income increased $122.3 billion in the fourth quarter, compared with an increase of $153.9 billion (revised, see below) in the third quarter (table 3).

The increase in personal income primarily reflected an increase in compensation that was partly offset by a decrease in personal current transfer receipts (notably, government social benefits). Within compensation, the leading contributor to the increase was private wages and salaries. Within government social benefits, the leading contributor to the decrease was unemployment insurance, following the expiration of pandemic-related unemployment programs.

Personal current taxes increased $103.3 billion in the fourth quarter after increasing $108.6 billion (revised) in the third quarter.

Disposable personal income (DPI) increased $19.0 billion in the fourth quarter after increasing $45.3 billion (revised) in the third quarter. Personal outlays increased $366.9 billion after increasing $291.2 billion in the third quarter.

The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 7.6 percent in the fourth quarter; in the third quarter, the personal saving rate was 9.5 percent (revised).

Real DPI (chart 5) decreased 5.6 percent in the fourth quarter after decreasing 4.1 percent (revised) in the third quarter. Current-dollar DPI increased 0.4 percent after increasing 1.0 percent (revised).

With the release of the second estimate of GDP, the Bureau of Economic Analysis also released revised estimates of third-quarter 2021 wages and salaries, personal taxes, contributions for social insurance, and gross domestic income (GDI). These estimates reflect new data for third-quarter private wages and salaries from the Bureau of Labor Statistics Quarterly Census of Employment and Wages. As a result:

  • Wages and salaries are now estimated to have increased $306.8 billion in the third quarter; in the previously published estimate, wages and salaries increased $279.1 billion.
  • Personal income is now estimated to have increased $153.9 billion; in the previously published estimate, personal income increased $127.9 billion.
  • Real DPI is now estimated to have decreased 4.1 percent; in the previously published estimate, real DPI decreased 4.3 percent.
  • The personal saving rate is now estimated at 9.5 percent, unrevised from the previously published estimate.
  • The percent change in third-quarter real GDI (table 1) is now estimated at 6.4 percent; in the previously published estimate, real GDI increased 5.8 percent.

In the second estimate of the fourth quarter, the growth rate in real GDP was revised up 0.1 percentage point from the advance estimate. The updated estimates primarily reflected upward revisions to nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by downward revisions to consumer spending and exports. Imports were revised down (table 4).

  • The upward revision to nonresidential fixed investment reflected upward revisions to equipment and structures. For equipment, the leading contributor to the upward revision was information processing equipment (notably, communication equipment). For structures, the leading contributor to the upward revision was manufacturing.
  • The revision to state and local government spending primarily reflected an upward revision to consumption expenditures (specifically, for education compensation) that was partly offset by a downward revision to gross investment (led by structures).
  • The upward revision to residential fixed investment was led by single-family structures.
  • Within consumer spending, a downward revision to services was partly offset by an upward revision to goods.
    • For services, the revision primarily reflected a downward revision to health care (both hospital and outpatient services).
    • For goods, the leading contributors to the upward revision were motor vehicles and parts (notably, new light trucks), food and beverages purchased for off-premises consumption (groceries), and “other” nondurable goods (mainly pharmaceuticals).
  • Within exports, the downward revision was to goods, led by industrial supplies and materials (both durable and nondurable).
  • Within imports, a downward revision to services (specifically, transport services) was partly offset by an upward revision to goods.

Real GDP increased 5.7 percent in 2021 (from the 2020 annual level to the 2021 annual level), in contrast to a decrease of 3.4 percent in 2020 (table 1). The increase in real GDP in 2021 reflected increases in all major subcomponents, led by consumer spending, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports increased (chart 6 and table 5).

  • The increase in consumer spending reflected increases in both goods and services.
    • Within goods, the leading contributors were “other” nondurable goods (including games and toys as well as pharmaceuticals), clothing and footwear, and recreational goods and vehicles.
Chart 6. Real GDP: Contributions to the Percent Change in 2021

[Click chart to expand]

    • Within services, the leading contributors were food services and accommodations as well as health care.
  • The increase in nonresidential fixed investment reflected increases in equipment (led by information processing equipment) and in intellectual property products (led by software as well as research and development) that were partly offset by a decrease in structures (widespread across most categories).
  • The increase in exports reflected an increase in goods (mainly nonautomotive capital goods and consumer goods except food and automotive) that was partly offset by a decrease in services (led by travel as well as royalties and license fees).
  • The increase in residential fixed investment mainly reflected an increase in new single-family construction.
  • The increase in private inventory investment primarily reflected an increase in wholesale trade (mainly in durable-goods industries).

 


  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.”