Gross Domestic Product Increases 6.9% During the Fourth Quarter

Real GDP increased at a seasonally adjusted annual rate of 6.9% during the fourth quarter of 2021, according to the Bureau of Economic Analysis’s “advance” estimate. Real GDP increased 2.3% in the third quarter of 2021.

The increase in third quarter GDP reflected the continued economic impact of the COVID-19 pandemic. A resurgence of COVID-19 cases resulted in continued restrictions and disruptions in the operations 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. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the fourth quarter of 2021 because of data limitations.

Real GDP increase in the fourth quarter was a result of increases in private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. This was partially offset by decreases in both federal and state and local government spending. Imports, which are a subtraction from GDP, increased.

Consumption added 2.25 percentage points (pp) to growth, this follows a 1.35 pp addition during the third quarter of 2021. The increase in PCE was driven by services (led by healthcare) and durable goods (led by recreational goods and vehicles). Inventories rose, adding 4.90 pp to GDP. Residential investment subtracted a total of 0.03 pp from GDP.

Business investment added 5.15 pp to GDP growth. Investment in intellectual property added 0.53 pp to GDP, while investment in transportation equipment subtracted 0.43 pp.

Government spending increased, subtracting 0.51 pp from GDP. Both federal and state and local government subtracted 0.27 and 0.24 pp from GDP, respectively.

Read the BEA release.