Real GDP increases 6.9% in 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 “third” estimate. Real GDP increased 2.3% in the third quarter of 2021.

The increase in fourth quarter GDP reflected the continued economic impact of the COVID-19 pandemic. In the fourth quarter, 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 as provisions of several federal programs expired or tapered off. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the fourth quarter because the impacts are generally embedded in source data and cannot be separately identified.

The increase in real GDP primarily reflected increases in private inventory investment, exports, PCE, and nonresidential fixed investment that were partly offset by decreases in both federal and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Consumption added 1.76 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 5.32 pp to GDP. Residential investment added a total of 0.10 pp to GDP.

Business investment added 5.82 pp to GDP growth. Investment in intellectual property added 0.45 pp to GDP, while investment in transportation equipment subtracted 0.40 pp.

Government spending increased, subtracting 0.46 pp from GDP. Federal and state and local government subtracted 0.29 and 0.17 pp from GDP, respectively.

Read the BEA release.