GDP and the Economy
Second Estimates for the Third Quarter of 2021
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third quarter of 2021, according to the second estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 With the second estimate, real GDP growth for the third quarter was revised up by 0.1 percentage point from the advance estimate. 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.
- 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), and health care (notably, nonprofit hospitals).
- The decrease in goods primarily reflected a decrease in spending on motor vehicles and parts.
- The increase in state and local government spending was led by employee compensation (notably, education).
- The increase in nonresidential fixed investment reflected an increase in intellectual property products (led by software and research and development) that was partly offset by decreases in structures and equipment.
- The decrease in residential fixed investment primarily reflected decreases in improvements and in 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 loan applications by banks on behalf of the federal government ended in the second quarter.
- The decrease in exports reflected a decrease in goods that was partly offset by an increase in services.
- The increase in imports primarily reflected an increase in services (led by travel and transport).
The 2.1 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).
Real gross domestic income, which is the sum of incomes earned and costs incurred in the production of GDP, increased 6.7 percent in the third quarter after increasing 4.3 percent (revised) in the second quarter.
|Line||Series||Share of current-dollar GDP (percent)||Change from preceding period (percent)||Contribution to percent change in real GDP (percentage points)|
|1||Gross domestic product1||100.0||4.5||6.3||6.7||2.1||4.5||6.3||6.7||2.1|
|2||Personal consumption expenditures||68.8||3.4||11.4||12.0||1.7||2.26||7.44||7.92||1.18|
|7||Gross private domestic investment||17.6||24.7||−2.3||−3.9||11.6||4.01||−0.37||−0.65||1.93|
|12||Intellectual property products||5.2||10.2||15.6||12.5||9.3||0.50||0.76||0.62||0.47|
|14||Change in private inventories||−0.3||......||......||......||......||1.10||−2.62||−1.26||2.13|
|15||Net exports of goods and services||−4.1||......||......||......||......||−1.65||−1.56||−0.18||−1.16|
|22||Government consumption expenditures and gross investment||17.6||−0.5||4.2||−2.0||0.9||−0.09||0.77||−0.36||0.16|
|26||State and local||10.9||1.2||−0.1||0.2||4.7||0.14||−0.01||0.02||0.50|
|27||Gross domestic income (GDI)2||......||19.6||6.3||4.3||6.7||......||......||......||......|
|28||Average of GDP and GDI||......||11.9||6.3||5.5||4.4||......||......||......||......|
|29||Final sales of domestic product||100.3||3.4||9.1||8.1||0.0||3.44||8.90||7.99||−0.02|
|33||Motor vehicle output||2.5||−12.8||1.1||−14.1||−38.4||−0.40||0.03||−0.42||−1.26|
|34||GDP excluding motor vehicle output||97.5||5.1||6.4||7.4||3.5||4.94||6.25||7.15||3.37|
- The GDP estimates under the contribution columns are also percent changes.
- GDI is deflated by the implicit price deflator for GDP.
Prices for gross domestic purchases—goods and services purchased by U.S. residents—increased 5.5 percent in the third quarter after increasing 5.8 percent in the second quarter (table 2 and chart 3). Except for private inventory investment, software investment, and “other” information processing equipment (specifically, medical equipment and instruments), price increases were widespread across the components of gross domestic purchases and were led by increases for consumer goods and services.
Within consumer 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), food and beverages purchased for off-premises consumption (groceries), and gasoline and other energy goods.
Within gross domestic purchases, food prices increased 7.9 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 5.0 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.
|Line||Series||Change from preceding period (percent)||Contribution to percent change in gross domestic purchases prices (percentage points)|
|1||Gross domestic purchases1||1.8||3.9||5.8||5.5||1.8||3.9||5.8||5.5|
|2||Personal consumption expenditures||1.5||3.8||6.5||5.3||1.00||2.51||4.23||3.50|
|7||Gross private domestic investment||1.9||2.8||2.9||5.9||0.32||0.50||0.52||0.99|
|12||Intellectual property products||3.2||−2.3||1.5||0.9||0.16||−0.12||0.08||0.05|
|14||Change in private inventories||......||......||......||......||−0.01||−0.14||−0.28||−0.18|
|15||Government consumption expenditures and gross investment||3.0||5.4||6.1||6.0||0.52||0.93||1.04||1.01|
|19||State and local||3.3||6.3||7.3||6.7||0.35||0.66||0.76||0.70|
|Gross domestic purchases:|
|21||Energy goods and services||12.4||47.8||21.2||19.3||0.26||0.91||0.49||0.48|
|22||Excluding food and energy||1.7||3.2||5.6||5.0||1.56||3.02||5.20||4.63|
|Personal consumption expenditures:|
|23||Food and beverages purchased for off-premises consumption||0.0||0.7||4.1||7.7||......||......||......||......|
|24||Energy goods and services||13.3||47.7||20.4||18.9||......||......||......||......|
|25||Excluding food and energy||1.2||2.7||6.1||4.5||......||......||......||......|
|26||Gross domestic product||2.2||4.3||6.1||5.9||......||......||......||......|
|27||Exports of goods and services||6.2||21.0||19.4||9.8||......||......||......||......|
|28||Imports of goods and services||2.2||13.3||13.4||6.0||......||......||......||......|
- The estimates for gross domestic purchases under the contribution columns are also percent changes.
Measured in current dollars, personal income increased $132.8 billion in the third quarter, in contrast to a decrease of $1.20 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 to persons.
- Within compensation, both private and government wages and salaries increased.
- Within government social benefits to persons, unemployment insurance and “other” social benefits decreased, reflecting decreased economic impact payments to households established by the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. The addenda lines in table 3 include detail on the effects of selected federal pandemic response programs on personal income.
Personal current taxes increased $86.7 billion in the third quarter after increasing $120.4 billion (revised) in the second quarter.
Disposable personal income (DPI) increased $46.1 billion in the third quarter after decreasing $1.32 trillion in the second quarter (revised). Personal outlays increased $279.4 billion after increasing $689.4 billion.
The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 9.6 percent in the third quarter, compared with 10.9 percent in the second quarter (revised).
Real DPI (chart 5) decreased 4.0 percent in the third quarter after decreasing 29.1 percent in the second quarter (revised). Current-dollar DPI increased 1.0 percent after decreasing 24.5 percent (revised).
In addition to presenting updated estimates for the third quarter, this estimate presents revised estimates of second-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Wages and salaries are now estimated to have increased $301.2 billion in the second quarter, an upward revision of $101.3 billion. Personal current taxes are now estimated to have increased $120.4 billion, an upward revision of $17.7 billion. Contributions for government social insurance are now estimated to have increased $38.4 billion, an upward revision of $13.5 billion. With the incorporation of these new data, real gross domestic income is now estimated to have increased 4.3 percent in the second quarter, an upward revision of 2.0 percentage points from the previously published estimate.
|Line||Series||Level||Change from preceding period|
|2||Compensation of employees||12,416.6||12,729.9||424.5||124.7||327.7||313.3|
|3||Wages and salaries||10,180.4||10,462.4||372.7||96.2||301.2||282.0|
|8||Trade, transportation, and utilities||1,582.0||1,621.2||59.0||17.7||56.7||39.2|
|9||Other services-producing industries||5,457.4||5,629.3||258.4||53.0||192.1||171.9|
|11||Supplements to wages and salaries||2,236.2||2,267.5||51.8||28.6||26.5||31.3|
|12||Proprietors' income with IVA and CCAdj||1,848.2||1,854.2||−30.7||−16.1||134.2||6.0|
|15||Rental income of persons with CCAdj||716.3||728.0||−4.5||6.9||−0.7||11.7|
|16||Personal income receipts on assets||2,932.1||2,949.8||57.9||−10.7||33.3||17.7|
|17||Personal interest income||1,639.4||1,640.7||12.8||19.8||9.2||1.4|
|18||Personal dividend income||1,292.8||1,309.1||45.1||−30.6||24.1||16.4|
|19||Personal current transfer receipts||4,329.0||4,148.7||−639.9||2,253.1||−1,653.5||−180.3|
|20||Government social benefits to persons||4,257.8||4,080.8||−640.2||2,250.3||−1,662.8||−176.9|
|27||Other current transfer receipts, from business (net)||71.2||67.9||0.3||2.8||9.3||−3.3|
|28||Less: Contributions for government social insurance||1,572.2||1,608.0||42.7||32.5||38.4||35.7|
|29||Less: Personal current taxes||2,532.5||2,619.2||78.0||152.3||120.4||86.7|
|30||Equals: Disposable personal income (DPI)||18,137.4||18,183.5||−313.5||2,173.0||−1,317.9||46.1|
|31||Less: Personal outlays||16,165.0||16,444.4||162.4||538.8||689.4||279.4|
|32||Personal consumption expenditures||15,681.7||15,952.4||173.8||537.8||676.3||270.7|
|33||Personal interest payments1||267.4||272.4||−18.5||−0.6||12.1||5.0|
|34||Personal current transfer payments||215.9||219.7||7.1||1.6||1.1||3.8|
|35||Equals: Personal saving||1,972.4||1,739.1||−475.9||1,634.2||−2,007.3||−233.3|
|36||Personal saving as a percentage of DPI||10.9||9.6||......||......||......||......|
|Percent change at annual rate|
|38||Real DPI, chained (2012) dollars||......||......||−8.3||54.7||−29.1||−4.0|
|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||14.3||8.7||27.8||−45.3||13.4||−5.5|
|40||Paycheck Protecton Program loans to businesses3||11.3||7.0||−6.1||2.3||6.4||−4.3|
|In nonfarm proprietors' income with IVA and CCAdj:|
|41||Paycheck Protecton Program loans to businesses3||177.6||110.2||−196.7||−7.8||100.9||−67.5|
|In government social benefits to persons, Medicare:|
|42||Increase in Medicare rembursement rates4||14.1||14.3||−0.1||−0.2||0.0||0.1|
|In government social benefits to persons, Unemployment insurance5:|
|43||Extended Unemployment Benefits||5.8||5.7||9.3||12.0||−19.2||−0.2|
|44||Pandemic Emergency Unemployment Compensation||104.5||61.5||55.4||15.7||6.8||−43.1|
|45||Pandemic Unemployment Assistance||82.1||50.0||−31.4||−11.6||−13.2||−32.0|
|46||Pandemic Unemployment Compensation Payments||237.2||113.2||−399.1||272.2||−49.7||−124.0|
|In government social benefits to persons, other:|
|48||Child tax credit6||34.4||218.9||0.0||4.2||0.0||184.5|
|49||Economic impact payments7||290.1||38.9||−10.5||1,928.6||−1,643.6||−251.2|
|50||Lost wages supplemental payments8||0.6||0.1||−70.4||−34.2||−1.0||−0.5|
|51||Paycheck Protecton Program loans to NPISH3||24.7||14.0||−56.8||−13.6||13.9||−10.7|
|52||Provider Relief Fund to NPISH9||26.6||37.4||−24.0||8.3||−16.2||10.8|
|In personal outlays, personal interest payments:|
|53||Student loan forbearance10||−37.8||−37.8||0.0||0.0||0.0||0.0|
- Capital consumption adjustment
- Inventory valuation adjustment
- Nonprofit institutions serving households
- 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.
- 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.
- 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)?”.
- A 2 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
- 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?”.
- The American Rescue Plan increased the Child Tax Credit to $3,000 per child over the age of six and $3,600 for children under the age of six, and raised the age limit from 16 to 17. It also authorized that up to half of these credits could be distributed through advance payments during the tax year, while the rest would be claimed when parents file tax returns the following year.
- Economic impact payments, initially established by the CARES Act, provide direct payments to individuals. For more information, see “How are the federal economic impact payments to support individuals during the COVID-19 pandemic recorded in the NIPAs?”
- 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.
- 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.
- 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”.
In the second estimate for the third quarter, real GDP increased 2.1 percent, an upward revision of 0.1 percentage point from the advance estimate. Upward revisions to consumer spending, private inventory investment, and state and local government spending were partly offset by downward revisions to exports, nonresidential fixed investment, residential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, were revised down.
- Within consumer spending, an upward revision to goods was partly offset by a downward revision to services.
- Within goods, the leading contributor to the upward revision was motor vehicles and parts (notably, net purchases of used motor vehicles).
- Downward revisions to services were widespread, led by “other” services (mainly personal care services) and transportation services.
- The revision to private inventory investment was led by upward revisions to wholesale trade (notably, farm products and electrical goods) and “other” industries (notably, information).
- The revision to state and local government spending primarily reflected an upward revision to structures investment (notably, highway and street construction).
- Within exports, goods were revised down, led by industrial supplies and materials (notably, durable goods).
- Within nonresidential fixed investment, a downward revision to intellectual property products was partly offset by upward revisions to structures and equipment.
- The downward revision to intellectual property products reflected downward revisions to software investment (notably, prepackaged software) and to research and development.
- Within structures, the leading contributor to the upward revision was investment in commercial and health care structures.
- For equipment, the leading contributor to the upward revision was information processing equipment (notably, computers and peripherals as well as communication equipment).
- Within residential fixed investment, the leading contributor to the downward revision was improvements.
- Within imports, the leading contributor to the downward revision was travel services.
|Line||Series||Change from preceding period (percent)||Contribution to percent change in real GDP (percentage points)|
|Advance estimate||Second estimate||Second estimate minus advance estimate||Advance estimate||Second estimate||Second estimate minus advance estimate|
|1||Gross domestic product (GDP)1||2.0||2.1||0.1||2.0||2.1||0.1|
|2||Personal consumption expenditures||1.6||1.7||0.1||1.09||1.18||0.09|
|7||Gross private domestic investment||11.7||11.6||−0.1||1.94||1.93||−0.01|
|12||Intellectual property products||12.2||9.3||−2.9||0.61||0.47||−0.14|
|14||Change in private inventories||......||......||......||2.07||2.13||0.06|
|15||Net exports of goods and services||......||......||......||−1.14||−1.16||−0.02|
|22||Government consumption expenditures and gross investment||0.8||0.9||0.1||0.14||0.16||0.02|
|26||State and local||4.4||4.7||0.3||0.46||0.50||0.04|
|27||Final sales of domestic product||−0.1||0.0||0.1||−0.06||−0.02||0.04|
|28||Gross domestic purchases price index||5.4||5.5||0.1||......||......||......|
|29||GDP price index||5.7||5.9||0.2||......||......||......|
- The GDP estimates under the contribution columns are also percent changes.
Measured in current dollars, profits from current production (corporate profits with the inventory valuation adjustment (IVA) and the capital consumption adjustment (CCAdj)) increased $121.4 billion, or 4.3 percent at a quarterly rate, in the third quarter after increasing $267.8 billion in the second quarter (table 5). Profits of domestic financial corporations increased $13.8 billion, profits of domestic nonfinancial corporations increased $67.6 billion, and rest-of-the-world profits increased $40.1 billion.
Profits after tax (without IVA and CCAdj), BEA's profits measure that is conceptually most similar to the profits for companies in the Standard & Poor's 500 Index, increased $51.7 billion in the third quarter.
Also notable in the third quarter, subsidies, which are a subtraction in the calculation of gross domestic income, decreased in the third quarter quarter (see NIPA Table 1.12). Government pandemic assistance continued to support corporate profits and proprietors' income, but to a lesser extent than in previous quarters. Subsidies related to the Restaurant Revitalization Fund and for shuttered entertainment venues increased, while assistance from the Paycheck Protection Program declined. More information on federal subsidy programs and their impacts on income measures is presented in the table “Effects of Selected Federal Pandemic Response Programs on Federal Government Receipts, Expenditures, and Saving” on BEA’s website.
|Line||Billions of dollars (annual rate)||Percent change from preceding quarter (quarterly rate)|
|Level||Change from preceding quarter|
|1||Current production measures:|
|2||Corporate profits with IVA and CCAdj||2,940.6||−7.9||123.9||267.8||121.4||−0.3||5.1||10.5||4.3|
|6||Rest of the world||500.3||22.6||−10.6||−6.2||40.1||5.0||−2.2||−1.3||8.7|
|7||Receipts from the rest of the world||935.7||47.8||34.2||27.4||43.1||6.1||4.1||3.2||4.8|
|8||Less: Payments to the rest of the world||435.5||25.3||44.8||33.6||3.0||7.7||12.7||8.4||0.7|
|9||Less: Taxes on corporate income||396.9||15.3||28.1||34.9||18.3||5.1||8.9||10.1||4.8|
|10||Equals: Profits after tax||2,543.7||−23.3||95.8||232.9||103.1||−1.1||4.5||10.5||4.2|
|12||Undistributed profits from current production||1,104.2||−52.2||133.6||181.5||74.7||−6.8||18.7||21.4||7.3|
|13||Net cash flow||3,155.5||−30.2||154.5||224.7||76.9||−1.1||5.7||7.9||2.5|
|14||Profits with IVA||2,898.3||−3.3||104.7||285.9||150.5||−0.1||4.4||11.6||5.5|
|18||Rest of the world||500.3||22.6||−10.6||−6.2||40.1||5.0||−2.2||−1.3||8.7|
|19||Profits before tax (without IVA and CCAdj)||3,139.1||31.6||231.2||357.7||70.1||1.3||9.3||13.2||2.3|
|20||Profits after tax (without IVA and CCAdj)||2,742.1||16.3||203.1||322.8||51.8||0.8||9.4||13.6||1.9|
- Capital consumption adjustment
- Inventory valuation adjustment
- “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.
- 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.”