April 29, 2021
Real gross domestic product (GDP) rose at an annual rate of 6.4% for the first quarter of 2021 according to the advance estimate released by the Bureau of Economic Analysis (BEA). However, for the fourth quarter of 2020, real GDP had a 4.3% growth. The upward movement in real GDP for the first quarter reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending. This movement was partly offset by negative contributions from private inventory investment and exports. Moreover, imports increased.
Notably, the increase in PCE was due to increases in durable goods, led by motor vehicles and parts, nondurable goods led by food and beverages as well as services which is led by food services and accommodations. The increase in nonresidential fixed investment is primarily attributable to increases in equipment led by information processing equipment and intellectual property products which is led by software. Moreover, BEA stated that, “the increase in federal government spending primarily reflected an increase in payments made to banks for processing and administering the Paycheck Protection Program loan applications as well as purchases of COVID-19 vaccines for distribution to the public. The decrease in private inventory investment primarily reflected a decrease in retail trade inventories.”
“Current dollar GDP increased 10.7%, or $554.2 billion, in the first quarter to a level of $22.05 trillion. In the fourth quarter, GDP increased 6.3%, or $324.5 billion,” according to BEA.
In the first quarter of 2021, the price index for gross domestic purchases went up 3.8% when compared to a similar rising by 1.7% in the fourth quarter of 2020. In addition, the PCE price index increased 3.5% relative to an increase of 1.5%. With the exception of the food and energy prices, the PCE price index climbed 2.3% versus an increase of 1.3%.
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