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Gross Domestic Product, Third Quarter 2021
(Advance Estimate)
October 28, 2021
This technical note provides background information about the source data and estimating methods
used to produce the estimates presented in the GDP news release; a brief summary of "highlights" is
available on BEA's website at www.bea.gov.
COVID-19 Impact on Third-Quarter 2021 GDP
Real GDP increased 2.0 percent at an annual rate (0.5 percent at a quarterly rate1 ) in the third quarter of
2021, following an increase of 6.7 percent at an annual rate (1.6 percent at a quarterly rate) in the
second quarter. In the third quarter, 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. Advance Child Tax Credit payments authorized by the American
Rescue Plan started in the third quarter and partly offset the decline in social benefits to households .
Real GDP for the third quarter of 2021 is 1.4 percent above the level of real GDP for the fourth quarter
of 20192 . The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate
for the third quarter of 2021 because the impacts are generally embedded in source data and cannot be
separately identified.
Key Source Data and Assumptions for the Advance Estimate
The advance estimate of GDP for the third quarter is based on source data that are incomplete and
subject to updates. Three months of source data were available for consumer spending on goods;
shipments of capital equipment; motor vehicle sales and inventories; manufacturing, wholesale, and
retail trade inventories; exports and imports of goods; federal government outlays; and consumer,
producer, and international prices. For major source data series for which only two months of data were
available, or for which data for the third quarter are not yet available, BEA's assumptions were based on
a variety of sources, most notably: private high-frequency payment card transactions data to more
accurately capture changing trends in consumer spending; industry and trade association reports that
1
Percent changes in quarterly seasonally adjusted series are displayed at annual rates, unless otherwise specified. For more
information, see the FAQ Why does BEA publish percent changes in quarterly series at annual rates?
2 The fourth quarter of 2019 was the most recent quarter prior to the onset of the COVID -19 pandemic. Calculated as the
percent change from the fourth quarter of 2019 to the third quarter of 2021 in news release table 3, line 1.
include volume data, such as health care patient visits and traveler throughput; and news reports
providing information on the operating status of businesses. More information on the source data and
BEA assumptions that underlie the third-quarter estimate is shown in the Key Source Data and
Assumptions table on the BEA website.
Real GDP and Related Aggregates
Real GDP increased 2.0 percent (annual rate) in the third quarter, following an increase of 6.7 percent in
the second quarter. The increase in real GDP 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. Imports, which are a subtraction in the calculation of GDP, increased.
•
The increase in private inventory investment was widespread, led by wholesale and retail trade
industries, primarily reflecting Census Bureau book values for all three months of the quarter.
Within retail, motor vehicle dealers was the leading contributor, based on monthly inventory
data from Census and Wards Intelligence.
•
The increase in consumer spending reflected an increase in services that was partly offset by a
decrease in goods. Within services, the leading contributors to the increase were “other”
services, transportation services, health care, and food services and accommodations. Within
goods, a decrease in durable goods was partly offset by an increase in nondurable goods.
o Within “other” services, the leading contributor to the increase was foreign travel,
based on data from BEA’s International Transactions Accounts and airline companies’
earnings reports.
o The increase in transportation services reflected increases in public transportation
(notably, air transportation), based on data from the Transportation Security
Administration and airline companies’ earnings reports, and motor vehicle services
(notably, motor vehicle rental), based primarily on payment card transactions data.
o Within health care, the increase was led by hospitals (notably, nonprofit hospitals),
based on Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) data as
well as data from trade sources.
o Within food services and accommodations, both categories contributed to the increase.
The increase in accommodations primarily reflected increases in hotels and motels,
based on private data from STR, as well as housing at schools, based primarily on
university occupancy rates from trade sources. The increase in food services was based
on Census Monthly Retail Trade Survey (MRTS) data.
o Within goods, the decrease in durable goods was led by motor vehicles and parts
(notably, new light trucks), based on Wards Intelligence unit sales data and IHS MarkitPolk registrations data. For nondurable goods, the leading contributor to the increase
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was gasoline and other motor fuel, based primarily on data from the Energy Information
Administration.
•
The increase in state and local government spending primarily reflected an increase in
compensation of state and local government employees (notably, education), based on BLS
employment data.
•
Within nonresidential fixed investment, an increase in intellectual property products was partly
offset by decreases in structures and equipment.
o The increase in intellectual property products reflected increases in software (notably,
prepackaged software) and research and development, based primarily on trends in
Census Quarterly Services Survey revenue data as well as BLS CES data.
o Within equipment, the leading contributors to the decrease were transportation
equipment (notably, new light and heavy trucks) and information processing equipment
(notably, communication equipment). For trucks, the decrease was based primarily on
unit sales data from Wards Intelligence. For communication equipment, the decrease
primarily reflected Census-BEA U.S. International Trade in Goods and Services imports
data and the Census Advance Economic Indicators Report for September.
o The decrease in structures was led by commercial and health care structures, based
primarily on July and August Census Value of Construction Put in Place data.
•
The decrease in exports reflected a decrease in goods that was partly offset by an increase in
services, based on Census-BEA U.S. International Trade in Goods and Services data and the
Census Advance Economic Indicators Report for September. The decrease in goods was led by
foods, feeds, and beverages and nondurable industrial supplies and materials (notably,
petroleum and petroleum products). The increase in services was led by other business services.
•
The decrease in residential fixed investment primarily reflected decreases in improvements,
based primarily on data from the Census MRTS and BLS CES, and single-family structures, based
on Census Value of Construction Put in Place.
•
The decrease in federal government spending primarily reflected a decrease in nondefense
spending on intermediate goods and services, notably services, as the processing and
administration of Paycheck Protection Program (PPP) loan applications by banks on behalf of the
federal government dropped to zero in the third quarter with the June expiration of the PPP
loan application period.
•
The increase in imports primarily reflected an increase in services, based on Census-BEA U.S.
International Trade in Goods and Services data and the Census Advance Economic Indicators
Report for September. The increase was led by travel (notably, personal travel) and transport.
Real final sales to private domestic purchasers, which measures private demand in the domestic
economy and is derived as the sum of consumer spending and private fixed investment, increased 1.1
percent in the third quarter after increasing 10.1 percent in the second quarter.
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Prices
BEA's featured measure of inflation in the U.S. economy, the price index for gross domestic purchases,
increased 5.4 percent in the third quarter, following a 5.8 percent increase in the second. Excluding food
and energy, gross domestic purchases prices increased 4.8 percent, after increasing 5.6 percent.
The price index for personal consumption expenditures (PCE) increased 5.3 percent in the third quarter,
after increasing 6.5 percent in the second. Excluding food and energy, the “core” PCE price index
increased 4.5 percent, after increasing 6.1 percent. The third quarter increase in “core” PCE prices was
widespread; the leading contributors were motor vehicles and parts (for both new and used motor
vehicles), foods services and accommodations (for meals as well as hotels and motels), and housing,
based primarily on BLS consumer price indexes.
Disposable Personal Income
Real disposable personal income (DPI) decreased 5.6 percent (at an annual rate) in the third quarter,
compared with a 30.2 percent decrease in the second. The decrease in current-dollar DPI primarily
reflected a decrease in personal current transfer receipts (notably, government social benefits) that was
partly offset by an increase in compensation.
•
Within government social benefits, unemployment insurance and “other” social benefits
decreased, primarily reflecting decreases in Pandemic Unemployment Compensation payments
which ended in September, based on data from the Department of Labor, and in Economic
Impact Payments, based on Monthly Treasury Statement data. These declines were partly offset
by an increase in the advance Child Tax Credit payments.
•
Within compensation, the leading contributor to the increase was private wages and salaries,
based primarily on BLS CES data.
The personal saving rate was 8.9 percent in the third quarter, compared with 10.5 percent in the
second. Additional information on factors impacting quarterly personal income and saving can be found
in Effects of Selected Federal Pandemic Response Programs on Personal Income.
Federal Government Economic Response to the COVID-19 Pandemic
Since the onset of the COVID-19 pandemic, several legislative acts, including the Coronavirus Aid, Relief,
and Economic Security (CARES) Act; the Coronavirus Response and Relief Supplemental Appropriations
(CRRSA) Act; and the American Rescue Plan (ARP) Act, were signed into law. The Acts established several
temporary programs and provided additional funding for existing federal programs to support
individuals, communities, and businesses impacted by the pandemic. Because the effects of the Acts
were in the form of transfers to individuals, subsidies to businesses, and grants to state and local
governments, their effects on GDP show up indirectly through the components of GDP, such as
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consumer spending, business investment, and government spending. Thus, BEA cannot separately
identify the total effect of the Acts on changes in GDP.
It is possible, however, to identify the impacts of select recovery programs on aggregate federal
government spending. Further information on these and other pandemic response programs, including
estimates of the effects of these programs on federal government spending is available in Effects of
Selected Federal Pandemic Response Programs on Federal Government Receipts, Expenditures, and
Saving.
Impact of Hurricane Ida on Third Quarter 2021 Estimates
Hurricane Ida struck the United States on August 29 causing wind and flood damage in Louisiana,
Mississippi, and Alabama. On September 1, the storm caused significant flash flooding in the northea st.
These natural disasters disrupted consumption and business activities while provision of emergency and
remediation services increased in response to the disasters. These impacts on production are included,
but not separately identified, in the source data that BEA uses to prepare the estimates of GDP;
consequently, it is not possible to estimate the overall impact of Hurricane Ida on 2021 third quarter
GDP. The destruction of fixed assets, such as residential and nonresidential structures, does not directly
affect GDP or personal income. BEA estimates of disaster losses are presented in NIPA table 5.1, “Saving
and Investment.” BEA's preliminary estimates show that Hurricane Ida resulted in losses of $58.0 billion
in privately-owned fixed assets ($232.0 billion at an annual rate) and $4.0 billion in state and local
government-owned fixed assets ($16.0 billion at an annual rate).
BEA also estimates the insurance benefits paid and received as a result of major disasters. These
benefits are recorded on an accrual basis in the quarter in which the disaster occurred and are classified
as capital transfers; they do not directly affect the measures of GDP, personal income, or saving. BEA’s
preliminary estimates, presented in NIPA table 5.11U, “Capital Transfers,” show domestic insurance
companies expect to pay benefits for disaster losses related to Hurricane Ida in the amount of $23.7
billion ($94.8 billion at an annual rate), and foreign insurance companies expect to pay $3.8 billion
($15.2 billion at an annual rate).
For additional information, see "How are the measures of production and income in the national
accounts affected by a natural or man-made disaster?”
More Information
The complete set of statistics for the third quarter is available on BEA's website. In a few weeks, the
Survey of Current Business, BEA’s online monthly journal, will present a more detailed analysis of the
estimates ("GDP and the Economy").
Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612
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@FedFRASER