Q2 GDP up 6.5% vs. 8% expected, core prices rise 6.1%

Real gross domestic product (GDP) increased at an annual rate of 6.5 percent in the second quarter of 2021 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 6.3 percent (revised).

The increase in real GDP in the second quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The increase in PCE reflected increases in services (led by food services and accommodations) and goods (led by "other" nondurable goods, notably pharmaceutical products). The increase in nonresidential fixed investment reflected increases in equipment (led by transportation equipment) and intellectual property products (led by research and development). The increase in exports reflected an increase in goods (led by nonautomotive capital goods) and services (led by travel). The decrease in private inventory investment was led by a decrease in retail trade inventories.The decrease in federal government spending primarily reflected a decrease in nondefense spending on intermediate goods and services In the second quarter, nondefense services decreased as the processing and administration of Paycheck Protection Program (PPP) loan applications by banks on behalf of the federal government declined.

Current‑dollar GDP increased 13.0 percent at an annual rate, or $684.4 billion, in the second quarter to a level of $22.72 trillion. In the first quarter, current-dollar GDP increased 10.9 percent, or $560.6 billion (revised, tables 1 and 3). More information on the source data that underlie the estimates is available in the Key Source Data and Assumptions file on BEA's website.

The price index for gross domestic purchases increased 5.7 percent in the second quarter, compared with an increase of 3.9 percent (revised) in the first quarter (table 4). The PCE price index increased 6.4 percent, compared with an increase of 3.8 percent (revised). Excluding food and energy prices, the PCE price index increased 6.1 percent, compared with an increase of 2.7 percent (revised).

Personal Income

Current-dollar personal income decreased $1.32 trillion in the second quarter, or 22.0 percent, in contrast to an increase of $2.33 trillion (revised), or 56.8 percent, in the first quarter. The decrease  primarily reflected a decrease in government social benefits related to pandemic relief programs, notably the decrease in direct economic impact payments to households established by the Coronavirus Response and Relief Supplemental Appropriations Act and the American Rescue Plan Act (table 8). Additional information on factors impacting personal income can be found in Effects of Selected Federal Pandemic Response Programs on Personal Income.

Disposable personal income decreased $1.42 trillion, or 26.1 percent, in the second quarter, in contrast to an increase of $2.27 trillion, or 63.7 percent (revised), in the first quarter. Real disposable personal income decreased 30.6 percent, in contrast to an increase of 57.6 percent.

Personal outlays increased $680.8 billion, after increasing $538.8 billion. The increase in outlays was led by an increase in PCE for services.

Personal saving was $1.97 trillion in the second quarter, compared with $4.07 trillion (revised) in the first quarter.  The personal saving rate—personal saving as a percentage of disposable personal income—was 10.9 percent in the second quarter, compared with 20.8 percent in the first quarter.