COVID-19 Impact on the Third-Quarter 2021 GDP Estimate:  The increase in third quarter GDP reflected the continued economic impact of the COVID-19 pandemic. A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses grants to state and local governments and social benefits to households all decreased. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter because the impacts are generally embedded in source data and cannot be separately identified.

 

Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the third quarter of 2021 according to the ""third"" estimate released by the Bureau of Economic Analysis. In the second quarter real GDP increased 6.7 percent. The increase in real GDP in the third quarter reflected increases in private inventory investment PCE state and local government spending and nonresidential fixed investment that were partly offset by decreases in exports residential fixed investment and federal government spending.

 

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 PCE 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) and transportation services. 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 equipment and structures. 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 decreases in both goods and services. The increase in imports primarily reflected an increase in services (led by travel and transport).  The deceleration in real GDP in the third quarter was more than accounted for by a slowdown in PCE. 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).

 

Updates to GDP:  In the third estimate of the third quarter real GDP increased 2.3 percent 0.2 percentage point higher than in the second estimate. Upward revisions to PCE (specifically an upward revision to services) private inventory investment (both farm and nonfarm) residential fixed investment state and local government spending and nonresidential fixed investment were partly offset by downward revisions to exports and federal government spending. Imports were revised down.