Real GDP increased at a seasonally adjusted annual rate of 6.6% during the second quarter of 2021, according to the Bureau of Economic Analysis’s “second” estimate. Real GDP increased 6.3% in the first quarter of 2021.
The increase in second quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the pandemic. In the second quarter, government assistance payments in the form of loans to businesses and grants to state and local governments increased, while social benefits to households, such as the direct economic impact payments, declined. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the second quarter of 2021 because of data limitations.
Real GDP increase in the second quarter was a result of increases in personal consumption expenditures (PCE), nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment and residential fixed investment.
Consumption added 7.8 percentage points (pp) to growth, this follows a 7.4 pp addition during the first quarter of 2021. The increase in PCE was driven by services (led clothing and footwear) and nondurable goods (led by food and beverages). Inventories fell, subtracting 1.3 pp from GDP. Residential investment subtracted a total of 0.58 pp from GDP.
Business investment subtracted 0.67 pp from GDP growth. Investment in intellectual property and equipment saw slight improvements, while investment in structures subtracted 0.14 pp.
Government spending increased, subtracting 0.33 pp from GDP. The federal government subtracted 0.37 pp while state and local governments added 0.04 pp.
Read the BEA release.