GDP and the Economy

Advance Estimates for the First Quarter of 2021

Volume 101, Number 5  |  May 20, 2021

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Real gross domestic product (GDP) increased at an annual rate of 6.4 percent in the first quarter of 2021, according to the “advance” estimates of the National Income and Product Accounts (chart 1 and table 1).1 In the fourth quarter, real GDP increased 4.3 percent. The increase in real GDP in the first quarter reflected increases in consumer spending, nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2).

Chart 1. Real GDP: Percent Change from Preceding Quarter

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Chart 2. Real GDP: Contributions to the Percent Change in 2021:Q1

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The acceleration in real GDP growth in the first quarter reflected the continued economic recovery from the COVID-19 pandemic as government assistance payments were distributed to households and businesses. An acceleration in consumer spending and upturns in federal as well as state and local government spending more than accounted for the acceleration in real GDP. These were partly offset by downturns in private inventory investment and exports and by decelerations in residential fixed investment and nonresidential fixed investment. Imports slowed.

  • The acceleration in consumer spending reflected an upturn in spending on goods and an acceleration in spending on services.
    • Within goods, all components of both durable and nondurable goods contributed to the upturn. The leading contributors were upturns in spending on motor vehicles and parts as well as on food and beverages purchased for off-premises consumption.
    • Within services, the leading contributors to the acceleration were upturns in spending on food services and accommodations and on transportation services.
  • An upturn in federal government spending was the second largest contributor to the acceleration in real GDP. The upturn primarily reflected an upturn in nondefense spending on intermediate goods and services purchased by government. In the first quarter, the processing and administration of Paycheck Protection Program loan applications by banks on behalf of the federal government added approximately $13.2 billion ($52.6 billion at an annual rate) to nondefense services. Federal government purchases of COVID-19 vaccines for distribution to the public contributed to the upturn in nondefense goods.
  • The upturn in state and local government spending reflected an upturn in consumption expenditures, led by compensation of employees, that was partly offset by a downturn in gross investment, led by a downturn in structures.
  • The downturn in private inventory investment was led by a larger decrease in retail trade and a downturn in manufacturing. Within retail trade, the largest contributor was a larger decrease in inventory investment by motor vehicle dealers. Within manufacturing, there were downturns in both durable and nondurable goods manufacturing inventory investment.
  • The downturn in exports reflected downturns in both goods (led by a deceleration in industrial supplies and a downturn in foods, feeds, and beverages) and services (led by a deceleration in transport and a downturn in royalties and license fees).
  • Residential fixed investment slowed, largely reflecting a slowdown in new residential structures, notably single-family units, and a downturn in brokers' commissions.
  • Nonresidential fixed investment slowed, reflecting a slowdown in investment in equipment that was partly offset by a smaller decrease in investment in structures. Investment in intellectual property products grew at about the same rate as in the fourth quarter.
    • The slowdown in equipment investment was more than accounted for by a slowdown in transportation equipment that was partly offset by an acceleration in information processing equipment.
    • The smaller decrease in structures was more than accounted for by a smaller decrease in investment in industrial structures.
  • Imports slowed. As a subtraction in the calculation of GDP, imports contributed to the acceleration in first-quarter GDP. The main contributor was a downturn in automotive vehicles, engines, and parts.
Table 1. Real Gross Domestic Product (GDP) and Related Measures
[Seasonally adjusted at annual rates]
Line Series Share of current-dollar GDP (percent) Change from preceding period (percent) Contribution to percent change in real GDP (percentage points)
2021 2020 2021 2020 2021
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
1 Gross domestic product1 100.0 −31.4 33.4 4.3 6.4 −31.4 33.4 4.3 6.4
2 Personal consumption expenditures 68.2 −33.2 41.0 2.3 10.7 −24.01 25.44 1.58 7.02
3 Goods 23.5 −10.8 47.2 −1.4 23.6 −2.06 9.55 −0.32 4.94
4 Durable goods 8.7 −1.7 82.7 −1.1 41.4 0.00 5.20 −0.09 2.95
5 Nondurable goods 14.8 −15.0 31.1 −1.6 14.4 −2.05 4.35 −0.23 2.00
6 Services 44.7 −41.8 38.0 4.3 4.6 −21.95 15.89 1.90 2.07
7 Gross private domestic investment 17.7 −46.6 86.3 27.8 −5.0 −8.77 11.96 4.41 −0.87
8 Fixed investment 18.1 −29.2 31.3 18.6 10.1 −5.27 5.39 3.04 1.77
9 Nonresidential 13.4 −27.2 22.9 13.1 9.9 −3.67 3.20 1.65 1.29
10 Structures 2.5 −33.6 −17.4 −6.2 −4.8 −1.11 −0.53 −0.17 −0.12
11 Equipment 6.0 −35.9 68.2 25.4 16.7 −2.03 3.26 1.32 0.93
12 Intellectual property products 4.9 −11.4 8.4 10.5 10.1 −0.53 0.46 0.49 0.48
13 Residential 4.7 −35.6 63.0 36.6 10.8 −1.60 2.19 1.39 0.49
14 Change in private inventories −0.4 ...... ...... ...... ...... −3.50 6.57 1.37 −2.64
15 Net exports of goods and services −3.8 ...... ...... ...... ...... 0.62 −3.21 −1.53 −0.87
16 Exports 10.5 −64.4 59.6 22.3 −1.1 −9.51 4.89 2.04 −0.10
17 Goods 7.3 −66.8 104.3 31.1 −0.9 −6.56 4.87 1.88 −0.06
18 Services 3.1 −59.6 −0.5 5.2 −1.5 −2.95 0.03 0.16 −0.05
19 Imports 14.3 −54.1 93.1 29.8 5.7 10.13 −8.10 −3.57 −0.77
20 Goods 12.2 −49.6 110.2 31.0 5.5 7.32 −7.67 −3.12 −0.64
21 Services 2.1 −69.9 24.9 23.8 6.5 2.80 −0.43 −0.45 −0.13
22 Government consumption expenditures and gross investment 17.9 2.5 −4.8 −0.8 6.3 0.77 −0.75 −0.14 1.12
23 Federal 7.1 16.4 −6.2 −0.9 13.9 1.17 −0.38 −0.06 0.93
24 National defense 4.1 3.8 3.2 4.8 −3.4 0.18 0.17 0.20 −0.14
25 Nondefense 3.0 37.6 −18.3 −8.9 44.8 0.98 −0.55 −0.26 1.07
26 State and local 10.9 −5.4 −3.9 −0.8 1.7 −0.40 −0.37 −0.08 0.19
Addenda:
27 Gross domestic income (GDI)2 ...... −32.6 24.1 15.7 ...... ...... ...... ...... ......
28 Average of GDP and GDI ...... −32.0 28.7 9.9 ...... ...... ...... ...... ......
29 Final sales of domestic product 100.4 −28.1 25.9 2.9 9.2 −27.88 26.87 2.95 9.03
30 Goods 31.2 −29.0 62.4 5.4 9.9 −7.40 17.42 1.69 3.05
31 Services 60.0 −32.9 23.7 2.1 5.3 −21.32 14.60 1.27 3.18
32 Structures 8.9 −28.4 14.9 16.7 1.7 −2.66 1.42 1.36 0.16
33 Motor vehicle output 2.7 −86.9 1,133.9 −12.7 −1.4 −3.99 5.92 −0.40 −0.04
34 GDP excluding motor vehicle output 97.3 −29.0 26.7 4.9 6.6 −27.39 27.52 4.72 6.42
  1. The GDP estimates under the contribution columns are also percent changes.
  2. GDI is deflated by the implicit price deflator for GDP.

Note. Percent changes are from National Income and Product Account (NIPA) tables 1.1.1 and 1.2.1, contributions are from NIPA tables 1.1.2 and 1.2.2, and shares are from NIPA table 1.1.10 or are calculated from NIPA table 1.2.5.

Prices for gross domestic purchases—goods and services purchased by U.S. residents—increased 3.8 percent in the first quarter after increasing 1.7 percent in the fourth quarter (table 2 and chart 3). The leading contributors to the acceleration were accelerations in the prices that consumers paid for gasoline and other energy goods and for health care services. A notable offset was in the prices that consumers paid for motor vehicles and parts.

Food prices decreased 0.1 percent in the first quarter; they were unchanged in the fourth quarter. Prices for energy goods and services increased 46.7 percent after increasing 9.1 percent. Gross domestic purchases prices excluding food and energy increased 3.1 percent after increasing 1.6 percent.

Chart 3. Prices for Gross Domestic Purchases

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Consumer prices excluding food and energy, a measure of the “core” rate of inflation, accelerated, increasing 2.3 percent in the first quarter after increasing 1.3 percent in the fourth quarter.

Table 2. Prices for Gross Domestic Purchases
[Percent change at annual rates; based on seasonally adjusted index numbers (2012=100)]
Line Series Change from preceding period (percent) Contribution to percent change in gross domestic purchases prices (percentage points)
2020 2021 2020 2021
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
1 Gross domestic purchases1 −1.4 3.3 1.7 3.8 −1.4 3.3 1.7 3.8
2 Personal consumption expenditures −1.6 3.7 1.5 3.5 −1.06 2.39 0.96 2.31
3 Goods −5.6 5.4 0.1 5.4 −1.21 1.18 0.02 1.18
4 Durable goods −3.1 8.2 0.0 1.0 −0.23 0.62 0.00 0.08
5 Nondurable goods −6.8 4.0 0.2 8.0 −0.98 0.56 0.02 1.10
6 Services 0.3 2.8 2.2 2.6 0.15 1.21 0.94 1.13
7 Gross private domestic investment −0.1 2.7 1.5 2.6 0.00 0.43 0.26 0.46
8 Fixed investment 0.8 2.2 1.8 3.2 0.14 0.38 0.30 0.56
9 Nonresidential 0.8 0.1 0.2 0.5 0.11 0.02 0.03 0.07
10 Structures −1.1 0.5 0.1 4.0 −0.03 0.01 0.00 0.10
11 Equipment 0.0 −0.6 −1.8 1.2 0.00 −0.03 −0.10 0.07
12 Intellectual property products 2.9 0.7 2.7 −2.0 0.14 0.04 0.13 −0.10
13 Residential 1.0 9.5 6.5 11.4 0.04 0.37 0.27 0.49
14 Change in private inventories ...... ...... ...... ...... −0.14 0.05 −0.04 −0.10
15 Government consumption expenditures and gross investment −1.9 2.6 2.8 6.2 −0.35 0.48 0.48 1.05
16 Federal −1.1 1.7 2.6 3.8 −0.08 0.12 0.18 0.25
17 National defense −2.5 2.0 2.8 4.2 −0.10 0.08 0.11 0.17
18 Nondefense 1.0 1.3 2.4 3.2 0.03 0.04 0.06 0.09
19 State and local −2.4 3.2 2.9 7.7 −0.28 0.36 0.30 0.79
  Addenda:
  Gross domestic purchases:                
20 Food 15.7 −1.7 0.0 −0.1 0.77 −0.09 0.00 0.00
21 Energy goods and services −45.7 27.4 9.1 46.7 −1.47 0.59 0.19 0.91
22 Excluding food and energy −0.8 3.0 1.6 3.1 −0.71 2.80 1.51 2.91
  Personal consumption expenditures:                
23 Food and beverages purchased for off-premises consumption 15.4 −1.9 −0.4 0.7 ...... ...... ...... ......
24 Energy goods and services −44.9 24.9 11.5 47.2 ...... ...... ...... ......
25 Excluding food and energy −0.8 3.4 1.3 2.3 ...... ...... ...... ......
26 Gross domestic product −1.8 3.5 2.0 4.1 ...... ...... ...... ......
27 Exports of goods and services −18.8 12.8 5.9 19.7 ...... ...... ...... ......
28 Imports of goods and services −12.8 8.6 2.2 13.3 ...... ...... ...... ......
  1. The estimates under the contribution columns are also percent changes.

Note. Most percent changes are from NIPA table 1.6.7; percent changes for personal consumption expenditures (PCE) for food and energy goods and services and for PCE excluding food and energy are from NIPA table 2.3.7. Contributions are from NIPA table 1.6.8. GDP, export, and import prices are from NIPA table 1.1.7.

Measured in current dollars, personal income increased $2.40 trillion in the first quarter, in contrast to a decrease of $351.4 billion in the fourth quarter (table 3). The increase in personal income primarily reflected increases in personal current transfer receipts (notably, government social benefits) and compensation that were partly offset by decreases in proprietors' income and personal dividend income. The addenda lines in table 3 include detail on the effects of selected federal pandemic response programs on personal income.

  • Within government social benefits, “other” social benefits and unemployment insurance increased, primarily reflecting increases in economic impact payments and in pandemic unemployment compensation payments.
  • Within compensation, the leading contributor to the increase was private wages and salaries.
  • Within proprietors' income, a decrease in farm proprietors' income was partly offset by an increase in nonfarm proprietors' income. For farm proprietors' income, the decrease primarily reflected a decrease in payments related to the Coronavirus Food Assistance Program designed to support farmers and ranchers impacted by COVID-19.
  • The decrease in personal dividend income was based primarily on company financial data for the first quarter.

Personal current taxes increased $36.6 billion in the first quarter after increasing $50.7 billion in the fourth quarter.

Disposable personal income (DPI) increased $2.36 trillion in the first quarter after decreasing $402.1 billion in the fourth quarter. Personal outlays increased $492.8 billion after increasing $125.3 billion in the fourth quarter.

The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 21.0 percent in the first quarter, compared with 13.0 percent in the fourth.

Real DPI (chart 5) increased 61.3 percent in the first quarter after decreasing 10.1 percent in the fourth quarter. Current-dollar DPI increased 67.0 percent after decreasing 8.8 percent.

Chart 4. Personal Saving Rate

[Click chart to expand]

Chart 5. Real Disposable Personal Income

[Click chart to expand]

Table 3. Personal Income and Its Disposition
[Billions of dollars; quarterly estimates are seasonally adjusted at annual rates]
Line Series Level Change from preceding period
2020 2021 2020 2021
Q4 Q1 Q2 Q3 Q4 Q1
1 Personal income 19,502.1 21,900.3 1,506.3 −603.8 −351.4 2,398.2
2 Compensation of employees 11,704.1 11,898.1 −724.9 516.7 238.0 193.9
3 Wages and salaries 9,546.0 9,702.2 −617.3 434.5 202.7 156.2
4 Private industries 8,109.3 8,253.4 −557.3 413.7 208.3 144.1
5 Goods-producing industries 1,530.3 1,557.8 −112.1 75.3 23.9 27.5
6 Manufacturing 889.1 907.6 −56.0 29.2 2.1 18.5
7 Services-producing industries 6,579.0 6,695.6 −445.2 338.4 184.4 116.6
8 Trade, transportation, and utilities 1,469.9 1,494.0 −82.0 85.7 22.1 24.1
9 Other services-producing industries 5,109.1 5,201.6 −363.2 252.7 162.3 92.5
10 Government 1,436.8 1,448.8 −60.0 20.8 −5.6 12.0
11 Supplements to wages and salaries 2,158.1 2,195.9 −107.7 82.2 35.2 37.8
12 Proprietors' income with IVA and CCAdj 1,759.7 1,737.9 −194.1 291.1 −43.3 −21.8
13 Farm 100.5 62.4 −17.5 23.8 37.8 −38.2
14 Nonfarm 1,659.1 1,675.5 −176.6 267.2 −81.1 16.4
15 Rental income of persons with CCAdj 804.3 816.0 −6.3 8.3 −0.1 11.7
16 Personal income receipts on assets 2,904.3 2,896.8 −74.1 −57.9 52.0 −7.5
17 Personal interest income 1,624.3 1,646.7 −42.7 −17.3 4.5 22.4
18 Personal dividend income 1,280.0 1,250.1 −31.4 −40.6 47.5 −29.9
19 Personal current transfer receipts 3,792.1 6,047.0 2,442.5 −1,308.8 −577.2 2,254.9
20 Government social benefits to persons 3,745.8 6,000.1 2,437.8 −1,304.0 −577.6 2,254.3
21 Social security 1,089.6 1,107.5 6.9 5.2 8.9 18.0
22 Medicare 860.6 880.1 19.4 18.7 17.9 19.5
23 Medicaid 682.4 687.3 44.7 14.9 −1.3 4.8
24 Unemployment insurance 296.4 544.4 1,041.1 −309.4 −478.7 247.9
25 Veterans' benefits 148.2 150.9 3.5 3.3 2.9 2.7
26 Other 668.5 2,629.9 1,322.1 −1,036.7 −127.3 1,961.4
27 Other current transfer receipts, from business (net) 46.2 46.9 4.7 −4.7 0.3 0.6
28 Less: Contributions for government social insurance 1,462.4 1,495.5 −63.2 53.3 20.8 33.0
29 Less: Personal current taxes 2,242.3 2,278.8 −155.9 95.1 50.7 36.6
30 Equals: Disposable personal income (DPI) 17,259.8 19,621.5 1,662.2 −698.9 −402.1 2,361.7
31 Less: Personal outlays 15,012.4 15,505.3 −1,513.3 1,297.2 125.3 492.8
32 Personal consumption expenditures 14,537.0 15,041.1 −1,448.1 1,304.2 135.5 504.1
33 Personal interest payments1 270.5 257.7 −66.9 1.2 −16.7 −12.8
34 Personal current transfer payments 205.0 206.4 1.7 −8.2 6.5 1.5
35 Equals: Personal saving 2,247.3 4,116.2 3,175.5 −1,996.0 −527.4 1,868.8
36 Personal saving as a percentage of DPI 13.0 21.0 ...... ...... ...... ......
Addenda:
  Percent change at annual rate            
37 Current-dollar DPI ...... ...... 46.2 −14.4 −8.8 67.0
38 Real DPI, chained (2012) dollars ...... ...... 48.6 −17.4 −10.1 61.3
  The effects of selected federal pandemic response programs on personal income (billions of dollars)            
  In farm proprietors' income with IVA and CCAdj:            
39 Coronovirus Food Assistance Program2 46.2 0.9 16.9 1.6 27.8 −45.3
40 Paycheck Protection Program loans to businesses3 2.8 4.9 6.5 2.7 −6.4 2.1
  In nonfarm proprietors' income with IVA and CCAdj:            
41 Paycheck Protection Program loans to businesses3 89.3 76.8 209.1 88.0 −207.7 −12.6
  In government social benefits to persons, Medicare:            
42 Increase in Medicare reimbursement rates4 15.1 15.5 9.7 5.1 0.3 0.4
  In government social benefits to persons, Unemployment insurance:5            
43 Extended Unemployment Benefits 11.0 18.6 ... 3.1 7.9 7.6
44 Pandemic Emergency Unemployment Compensation 63.6 74.1 7.2 16.7 39.8 10.5
45 Pandemic Unemployment Assistance 110.3 97.2 101.5 54.6 −45.8 −13.1
46 Pandemic Unemployment Compensation Payments 13.6 283.6 679.2 −306.1 −359.5 270.0
  In government social benefits to persons, Other:            
47 Economic impact payments6 5.0 1,933.7 1,078.1 −1,062.5 −10.5 1,928.6
48 Lost wages supplemental payments7 35.9 1.6 ... 106.2 −70.4 −34.2
49 Paycheck Protection Program loans to NPISH3 10.8 10.8 19.1 7.9 −16.2 0.0
50 Provider Relief Fund to NPISH8 34.5 43.0 160.9 −102.5 −24.0 8.5
  In personal outlays, personal interest payments:            
51 Student loan forbearance9 −36.0 −36.0 −28.9 0.0 0.0 0.0
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment
  1. Consists of nonmortgage interest paid by households. Note that mortgage interest paid by households is an expense item in the calculation of rental income of persons.
  2. The Coronavirus Food Assistance Program, initially established by the Coronavirus Aid, Relief and Economic Security Act (CARES), provides direct support to farmers and ranchers where prices and market supply chains have been impacted by the COVID-19 pandemic.
  3. The Paycheck Protection Program, initially established by the CARES Act, provides forgivable loans to help small businesses and nonprofit institutions make payroll and cover other expenses. It also provides funding to reimburse private lending institutions for the costs of administering these loans. For more information, see “How does the Paycheck Protection Program impact the national income and product accounts (NIPAs)?”.
  4. A two percent reduction in reimbursements paid to Medicare service providers that went into effect in 2013 was initially suspended by the CARES Act. The resulting increased reimbursement rates went into effect beginning on May 1, 2020.
  5. Unemployment insurance benefits were expanded through several programs that were initially established through the CARES Act. For more information, see “How will the expansion of unemployment benefits in response to the COVID-19 pandemic be recorded in the NIPAs?”.
  6. Economic impact payments, initially established by the CARES Act, provide direct payments to individuals. For more information, see “How are the economic impact payments to support individuals during the COVID-19 pandemic recorded in the NIPAs?”
  7. The Federal Emergency Mangement Agency (FEMA) was authorized to make payments from the Disaster Relief Fund to supplement wages lost as a result of the COVID-19 pandemic.
  8. The Department of Health and Human Services distributes money from the Provider Relief Fund to hospitals and health care providers on the front lines of the coronavirus response. This funding supports health care-related expenses or lost revenue attributable to COVID-19 and ensures uninsured Americans can get treatment for COVID-19. In the NIPAs, funds provided to nonprofit hospitals are recorded as social benefits.
  9. Interest payments due on certain categories of federally-held student loans were initially suspended by the CARES Act. For more information, see “How does the federal response to the COVID-19 affect BEA's estimate of personal interest payments?”.

Note. Dollar levels and percent changes are from NIPA tables 2.1 and 2.2B.

 

  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.”