GDP growth fell back to earth in the third quarter, according to the Bureau of Economic Analysis advance estimate…(BEA)
- Real gross domestic product increased at an annual clip of 2.0% in the third quarter of 2021.
- REMINDER: GDP growth saw an annual growth rate of 6.7% in Q2 and 6.3% in Q1.
Why the big pull back? Supply chains concerns are real. The big categories that pulled back hard in Q3 were motor vehicles and parts which detracted 2.39% followed by residential investment (-0.38%) and furnishings and durable household equipment (-0.22%).
- On the flip side, the big categories that helped propel the economy were household consumption expenditures that added 3.68% followed by private inventories (2.07%), transportation services (+0.67%), and health care (+0.62%).
NOTE: The pull back in Housing investment primarily reflected a decrease in housing improvements and new single-family structures.
Inflation stays elevated. Prices of goods and services purchased by U.S. residents increased 5.4% in Q3 after increasing 5.8% in Q2.
- Breaking it down, energy prices jumped 19.3% and food prices increased 7.8%. Excluding food and energy, prices increased 4.8%.
ANALYSIS: Joseph Brusuelas said on Twitter: “US Q3’21 GDP slows to 2% just above the long run 1.8% growth trend. Personal consumption at 1.6%, GDP price index at 5.7% and core PCE Q/Q at 4.5%. Slower growth due to Delta, supply chain disruptions & inflation extracts a powerful toll on overall growth.”