US Economic Growth Slows in Q3 2021

(01 November 2021) According to the latest data from the U.S. Bureau of Economic Analysis (BEA), in Q3 2021 U.S. GDP growth decelerated, dropping to only 2% over the previous quarter at a seasonally adjusted annual rate (SAAR). Detailed National Income and Product Accounts data from the Bureau of Labor Statistics helps to explain why real GDP growth in July through September 2021 was less than a third of the growth rates in Q1 and Q2.

• Slowdown in Q3 real GDP growth was caused mostly by deceleration in personal consumer spending. In Q3 2021 personal consumption, which accounts for almost 70% of U.S. GDP, contributed only 1.1 percentage points to real GDP growth, compared to 7.4 and 7.9 percentage point contributions in Q1 and Q2 2021.
• The detailed BEA data shows that the deceleration in personal consumption was mostly related to a decrease in durable goods consumer spending. This decrease alone subtracted 2.7 percentage points from the U.S. real GDP growth in Q3.  The decline in personal durables purchases was mainly caused by a drop in sales of motor vehicles amid supply chain disruptions and the Delta variant surge. Personal consumption of recreational goods and of furnishings and household equipment also contracted slightly.
• Meanwhile, expectations for Q4 real GDP growth remain high. Based on currently available data for the main high-frequency indicators, the Federal Reserve Bank of Atalanta estimates U.S. real GDP growth in Q4 2021 of 6.6% SAAR.