Real GDP in Q1 2021 Grows at Estimated Annual Rate of 6.4%

The Bureau of Economic Analysis (BEA) reported today (4-29-21) that its “advance” estimated Real Gross Domestic Product (GDP) for Q1 of 2021 increased at an annual rate of 6.4%. In Q4 of 2020, real GDP increased 4.3%. According to the BEA, the increase in real GDP in Q1 2021 reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, federal government spending, residential fixed investment, and state and local government spending that were partly offset by decreases in private inventory investment and exports. Imports are a subtraction in the calculation of GDP. The BEA reports that personal income increased $2.40 trillion in Q1 2021, or 59.0%, compared with a decrease of $351.4 billion, or -6.9%, in Q4 2020. The increase primarily reflected government social benefits related to pandemic relief programs. Disposable personal income increased $2.36 trillion, or 67.0%, in Q1 2021, after decreasing $402.1 billion, or -8.8%, in Q4 2020. Real disposable personal income increased 61.3%, compared with a decrease of -10.1% in Q4 2020. Personal savings in Q1 2021 was $4.12 trillion, compared with $2.25 trillion in Q4 2020. The personal savings rate was 21% in Q1 2021, compared with 13.0 in Q4 2020.