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3Q21 GDP: Modest Growth, 4Q Likely Stronger, 1st Quarter '21?

December 22, 2021
Bottom Line:  The final reading of 3rd Quarter GDP confirmed modest growth led by inventory investment with consumption slightly higher than previously reported.  Quarter-on-quarter annualized growth was still just 2.3% after these upward revisions. Of course, this is old news with only a week and a half to go in the 4th Quarter. Consumption likely rebounded sharply in the 4th Quarter with robust retail sales readings in October indicating the quarter started with early holiday shopping. While growth likely slowed over the quarter, most indicators suggest it will be in the 5-7% range. The Atlanta Fed's model, which will be updated tomorrow, stood at 7.1%, while the consensus forecast was 6%. Our models were running a touch below the consensus. The economic recovery remains robust but volatile -- and we may still see more volatility in the 1st Quarter as businesses and consumers contend with the impact of the omicron variant. Consensus forecasts are still at 4% for the 1st Quarter, down from 4.5% and likely moving lower.
GDP was REVISED HIGHER by 0.2 percentage points to 2.3% in this third estimate for 2021 3rd Quarter.  This compared with market expectations for no change revision to 2.1%. Economic activity was 4.9% above its year-ago level.
In final sales categories, residential investment, consumption, fixed investment and government purchases were revised higher while, net exports, were revised lower.
As a result of all of these changes, real final sales were revised up by 0.1 percentage points to 0.1% while real domestic demand was revised up by 0.2 percentage points to 1.3%.
The GDP Price Index
was REVISED UP by 0.06 points to 6.1%, compared with market expectations of 5.9%. Economy-wide prices were 4.8% ABOVE year-ago levels.