U.S. GDP slows in third quarter

Intelligent Economics > Blog > U.S. GDP slows in third quarter
Source: Bureau of Economic Analysis

The US Gross Domestic Product begins to slow down its growth pace. In the third quarter of 2021 the real GDP grew 2% after the 6.7% increase in the second quarter.  In the second quarter of 2020 real GDP fell by 9.4% because of the pandemic and its implications. However, 2021 began on a positive slope and has had growth compared to 2020.

The slowdown in the third quarter of 2021 is due principally to a reduced personal consumption. A resurgence in positive covid-19 cases has had public policy implications causing stricter restrictions for commercial establishments to operate thus delaying the recovery process. Another impact on real GDP includes the fact that government assistance payments to businesses, local and state governments and other beneficiaries have ceased. There was also a decrease in housing investments, primarily in housing improvement and new single-family structures. Federal spending also decreased with the end of the Paycheck Protection Program (PPP) which provided forgivable loans to help small businesses and nonprofit organizations impacted by the pandemic cover payroll and other expenses.

On the other hand, there were increases in inventory investment primarily reflected by wholesale and retail, led by motor vehicles and parts dealers. At the same time, consumer spending reflected a decrease in spending for goods like motor vehicles and an increase led by services in international travel, transportation, and health services.

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