Real gross domestic product (GDP) increased at an annual rate of 4.3% in the fourth quarter of 2020, according to the “third” estimate released Thursday by the Bureau of Economic Analysis. In the third quarter, real GDP increased 33.4%.

The “third” estimate of GDP released today is 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 4.1%. The upward revision primarily reflected an upward revision to private inventory investment that was partly offset by a downward revision to nonresidential fixed investment.

The increases were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment, that were partly offset by decreases in state and local government spending as well as federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans). Imports, which are a subtraction in the calculation of GDP, increased.

The increase in exports primarily reflected an increase in goods (led by industrial supplies and materials). The increase in nonresidential fixed investment primarily reflected an increase in equipment (led by transportation equipment). The increase in PCE reflected an increase in services (led by health care). The increase in residential fixed investment primarily reflected an increase in single family units. The increase in private inventory investment primarily reflected an increase in manufacturing, including both durable and nondurable goods industries.

Current‑dollar GDP increased 6.3% at an annual rate, or $324.4 billion, in the fourth quarter to a level of $21.49 trillion. In the third quarter, GDP increased 38.3%, or $1.65 trillion.

The price index for gross domestic purchases increased 1.7% in the fourth quarter, compared with an increase of 3.3% in the third quarter. The PCE price index increased 1.5%, compared with an increase of 3.7%. Excluding food and energy prices, the PCE price index increased 1.3%, compared with an increase of 3.4%.