WASHINGTON (MaceNews) – Real gross domestic product grew at a 6.4 percent annualized rate in the first quarter according to the third estimate released today by the Bureau of Economic Analysis, thereby confirming the “second” estimate.
The result was exactly in-line with expectations, with the median of an Econoday survey of economists’ forecast calling for a 6.4 percent expansion following a 4.3 percent annualized expansion in the fourth quarter of last year.
The Bureau of Economic Analysis explained the latest changes in its technical note that follows:
Real GDP increased 6.4 percent at an annual rate (1.6 percent at a quarterly rate in the first quarter of 2021, following an increase of 4.3 percent at an annual rate (1.1 percent at a quarterly rate) in the fourth quarter. The increase in first quarter GDP reflected the continued economic recovery, reopening of establishments, and continued government response related to the COVID-19 pandemic. In the first quarter, government assistance payments, such as direct economic impact payments, expanded unemployment benefits, and Paycheck Protection Program loans, were distributed to households and businesses through the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act. Real GDP for the first quarter of 2021 is 0.9 percent below the level of real GDP for the fourth quarter of 2019.
The increase in real GDP reflected increases in consumer spending, nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government pending that were partly offset by decreases in private inventory investment and exports. Imports, which are a subtraction in the calculation of GDP, increased. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the first quarter of 2021 because the impacts are generally embedded in source data and cannot be separately identified.
Sources of Revision to Real GDP:
The increase in first-quarter real GDP was unrevised from the “second” estimate. The updated estimates primarily reflected upward revisions to nonresidential fixed investment, private inventory investment, exports, and consumer spending, that were offset by an upward revision to imports (which are a subtraction in the calculation of GDP).
• Within nonresidential fixed investment, the revision reflected upward revisions to structures (notably, warehouses), based on revised February and March Census Value of Construction Put in Place data, and equipment (notably, communication equipment and computers and peripheral equipment), based primarily on updated Census trade in goods data. Partly offsetting these upward revisions was a downward revision to intellectual property products (notably, software), based on updated Census Quarterly Services Survey (QSS) data.
• The revision to private inventory investment reflected an upward revision to nonfarm inventories, notably information industries, based primarily on updated inventory data from the Census Quarterly Financial Report (QFR).
• Within exports, the leading contributor to the upward revision was goods (notably, foods, feeds and beverages). Within imports, the leading contributor to the upward revision was also goods (notably non-automotive consumer and capital goods). The upward revisions to both exports and imports were based primarily on revised Census Bureau goods data and the annual revision of the international transactions accounts (ITAs), which was incorporated on a best-change basis.
• Within consumer spending, an upward revision to goods was mostly offset by a downward revision to services. Within goods, the leading contributors to the revision were upward revisions to food and beverages and other nondurable goods, based primarily on revised March data from the Census Monthly Retail Trade Survey. Within services, revisions were primarily based on updated Census QSS data. Downward revisions to health care (notably, physicians services and home health care) and transportation services (notably, motor vehicle maintenance and repair) were partly offset by upward revisions to financial services and insurance (notably, portfolio management and investment advice services) and recreation services (notably, casino gambling).
Prices
BEA’s featured measure of inflation in the U.S. economy, the price index for gross domestic purchases, increased 4.0 percent in the first quarter, an upward revision of 0.1 percentage point. The price index for personal consumption expenditures (PCE) increased 3.7percent, unrevised from the second estimate. Excluding food and energy prices, the PCE price index increased 2.5 percent, also unrevised.
See the full technical note here:
https://www.bea.gov/sites/default/files/2021-06/tech1q21_3rd_0.pdf
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