Q3 GDP Rebounded at 33.4%

December 22, 2020

Gross Domestic Product (Third Estimate), Corporate Profits (Revised), and GDP by Industry, Third Quarter 2020 Real gross domestic product (GDP) increased at an annual rate of 33.4 percent in the third quarter of 2020 (table 1), according to the "third" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP decreased 31.4 percent.

The “third” estimate of GDP released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 33.1 percent. The upward revision primarily reflected larger increases in personal consumption expenditures (PCE) and nonresidential fixed investment.

The increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. For more information, see the Technical Note.
The increase in real GDP reflected increases in PCE, private inventory investment, exports, nonresidential fixed investment, and residential fixed investment that were partly offset by decreases in federal government spending (reflecting fewer fees paid to administer the Paycheck Protection Program loans) and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The increase in PCE reflected increases in services (led by health care as well as food services and accommodations) and goods (led by clothing and footwear as well as motor vehicles and parts). The increase in private inventory investment primarily reflected an increase in retail trade (led by motor vehicle dealers). The increase in exports primarily reflected an increase in goods (led by automotive vehicles, engines, and parts as well as capital goods). The increase in nonresidential fixed investment primarily reflected an increase in equipment (led by transportation equipment). The increase in residential fixed investment primarily reflected an increase in brokers’ commissions and other ownership transfer costs.

Current dollar GDP increased 38.3 percent at an annual rate, or $1.65 trillion, in the third quarter to a level of $21.17 trillion. In the second quarter, GDP decreased 32.8 percent, or $2.04 trillion (table 1 and table 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 3.3 percent in the third quarter, in contrast to a decrease of 1.4 percent in the second quarter. The PCE price index increased 3.7 percent, in contrast to a decrease of 1.6 percent. Excluding food and energy prices, the PCE price index increased 3.4 percent, in contrast to a decrease of 0.8 percent.

Gross Domestic Income and Corporate Profits

Real gross domestic income (GDI) increased 25.8 percent in the third quarter, in contrast to a decrease of 32.6 percent in the second quarter. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 29.6 percent in the third quarter, in contrast to a decrease of 32.0 percent in the second quarter (table 1).

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $499.6 billion in the third quarter, in contrast to a decrease of $208.9 billion in the second quarter.

Profits of domestic financial corporations increased $12.1 billion in the third quarter, compared with an increase of $26.5 billion in the second quarter. Profits of domestic nonfinancial corporations increased $436.2 billion, in contrast to a decrease of $145.9 billion. Rest-of-the-world profits increased $51.3 billion, in contrast to a decrease of $89.5 billion. In the third quarter, receipts increased $113.0 billion, and payments increased $61.7 billion.