The Bureau of Economic Analysis (BEA) released growth rate figures for Real Gross Domestic Product (GDP) for the third quarter of 2021. Real GDP increased by 2.3% in the third quarter and 6.7% in the second These are the third estimates the BEA releases for the third quarter of 2021, the latest estimates take into account data which was not previously available
The BEA attributes the slowdown in the third quarter to the resurgence of COVID cases which resulted in stricter restrictions to the economic activity in some parts of the country. There was also a decrease in government assistance payments to households and businesses as well as grants to state and local governments. The deceleration in real GDP in the third quarter was more than accounted for by a slowdown in Personal Consumption Expenditures. 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).
The increase in the real GDP reflected an increase in private inventory investment, state and local government increased spending and non-residential fixed investment, these were partly offset by decreases in exports, residential fixed investment, and federal government spending. There was also an increase in imports. The decrease in exports reflected decreases in both goods and serviceswhite the the increase in imports primarily reflected an increase in services (led by travel and transport).
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). 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. Meanwhile,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.