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3Q21 GDP: Revised Only Slightly Higher
November 24, 2021
Bottom Line: The second reading of 3rd Quarter GDP offered only a slight positive revision to the disappointing initial reading. Consumption was revised just a touch higher, while business fixed investment was revised lower, and the drag from net exports was revised to be a slightly more significant drag. Overall, this report reveals that real growth, adjusted for the higher inflation seen over the last year, slowed considerably from the pandemic-recovery pace. That said, most indicators suggest a moderate acceleration in the current quarter from the anemic 3rd Quarter pace. Early estimates for the 4th Quarter are 4.9% annualized. GDP was REVISED UP by 0.1 points to 2.1% in this second estimate of economic activity for Q3-21. This was in line with market expectations for an upward revision to 2.2%.
Economic activity was 4.9% ABOVE its year-ago level and 29.8% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new September data, this revision suggests that the economic activity increased slightly at the end of the quarter.
Consumer Spending was revised higher by 0.13% to 1.7%, contributing 1.18% to economic growth. Business Fixed Investment was revised lower by -0.24% to 1.5%, contributing 0.21% to economic growth. Residential Investment was revised lower by -0.58% to -8.3%, contributing -0.41% to economic growth. Inventory Investment was revised slightly higher, contributing 2.13% to economic growth.
Net Exports were revised slightly lower with a modest decline in Exports and slight decline in Imports, contributing -1.16% to economic growth. Government Purchases were revised slightly higher but grew slightly for the 8th time in the past 12 quarters, contributing 0.16% to economic growth. As a result of all of these changes, Real Final Sales was revised slightly higher while Real Domestic Demand was unchanged. The GDP Price Index was REVISED UP by 0.16 points to 6.0%, compared with market expectations of 5.7%. Economy-wide prices are now 4.8% ABOVE its year-ago level.
Economic activity was 4.9% ABOVE its year-ago level and 29.8% ABOVE its 2007 Q4 cyclical peak. Because most of the adjustment was due to new September data, this revision suggests that the economic activity increased slightly at the end of the quarter.
Consumer Spending was revised higher by 0.13% to 1.7%, contributing 1.18% to economic growth. Business Fixed Investment was revised lower by -0.24% to 1.5%, contributing 0.21% to economic growth. Residential Investment was revised lower by -0.58% to -8.3%, contributing -0.41% to economic growth. Inventory Investment was revised slightly higher, contributing 2.13% to economic growth.
Net Exports were revised slightly lower with a modest decline in Exports and slight decline in Imports, contributing -1.16% to economic growth. Government Purchases were revised slightly higher but grew slightly for the 8th time in the past 12 quarters, contributing 0.16% to economic growth. As a result of all of these changes, Real Final Sales was revised slightly higher while Real Domestic Demand was unchanged. The GDP Price Index was REVISED UP by 0.16 points to 6.0%, compared with market expectations of 5.7%. Economy-wide prices are now 4.8% ABOVE its year-ago level.
Article by
Contingent Macro Advisors