Real gross domestic product (GDP) increased at an annual rate of 6.4% in the first quarter of 2021, according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 4.3%.
The “third” estimate of GDP released on Thursday was based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was also 6.4%. The upward trends for nonresidential fixed investment, private inventory investment and exports were offset by an upward revision to imports, which are a subtraction in the calculation of GDP.
The increase in real GDP in the first quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports. Imports, which are a subtraction in the calculation of GDP, increased.
The increase in first quarter GDP also reflected the continued economic recovery, reopening of establishments and continued government response related to the COVID-19 pandemic.
The increase in PCE reflected increases in durable goods [led by motor vehicles and parts], nondurable goods [led by food and beverages], and services [led by food services and accommodations].
The increase in nonresidential fixed investment reflected increases in equipment [led by information processing equipment] and intellectual property products [led by software]. The increase in federal government spending primarily reflected an increase in payments made to banks for processing and administering the Paycheck Protection Program loan applications as well as purchases of COVID-19 vaccines for distribution to the public. The decrease in private inventory investment primarily reflected a decrease in retail trade inventories, mainly driven by motor vehicles and parts dealers.
Current-dollar GDP increased 11% at an annual rate, or $566.8 billion, in the first quarter to a level of $22.06 trillion. In the fourth quarter, GDP increased 6.3%, or $324.4 billion
The price index for gross domestic purchases was up by 4% in the first quarter, compared with an increase of 1.7% in 4Q. The PCE price index increased 3.7%, compared with an increase of 1.5%. Excluding food and energy prices, the PCE price index increased 2.5% , compared with an increase of 1.3%.