March 25, 2021

Real gross domestic product (GDP) increased at an annual rate of 4.3 percent in the fourth quarter of 2020, reflecting both the continued economic recovery from the sharp declines earlier in the year and the ongoing impact of the COVID-19 pandemic, including new restrictions and closures that took effect in some areas of the United States. The increase was 0.2 percentage point higher than the “second” estimate released in February. In the third quarter, real GDP increased 33.4 percent. For more details, including source data, see the Technical Note and Federal Recovery Programs and BEA Statistics.

Q2Q Change in Real GDP March25

Quarterly GDP highlights
The fourth-quarter increase in real GDP reflected increases in exports, business investment, consumer spending, housing investment, and inventory investment that were partly offset by a decrease in government spending. Imports, a subtraction in the calculation of GDP, increased.

The increase in exports primarily reflected an increase in goods (led by industrial supplies and materials). The increase in business investment reflected an increase in equipment (led by transportation equipment). The increase in consumer spending was more than accounted for by an increase in services (led by health care). The decrease in government spending reflected decreases in state and local as well as federal.

Updates to GDP
The revision to GDP primarily reflected an upward revision to inventory investment that was partly offset by a downward revision to business investment.

Q2Q Change in Corporate Profit March25

Quarterly corporate profits from current production
Profits decreased 1.4 percent at a quarterly rate in the fourth quarter after increasing 27.4 percent in the third quarter. Corporate profits decreased 0.7 percent in the fourth quarter from one year ago.

  • Profits of domestic nonfinancial corporations decreased 3.4 percent after increasing 44.3 percent.
  • Profits of domestic financial corporations increased 3.7 percent after increasing 2.6 percent.
  • Profits from the rest of the world decreased 0.2 percent after increasing 13.4 percent.

Quarterly gross domestic product by industry
Today’s release includes estimates of GDP by industry, or value added—a measure of an industry’s contribution to GDP. Private goods-producing industries increased 6.1 percent, private services producing industries increased 4.9 percent, and government decreased 1.1 percent. Overall, 17 of 22 industry groups contributed to the fourth-quarter increase in real GDP.

Real GDP by Industry March25
  • The increase in private goods-producing industries reflected increases in construction as well as durable goods manufacturing (led by computer and electronic products as well as fabricated metal products).
  • The increase in private services-producing industries reflected increases in finance and insurance (led by Federal Reserve banks, credit intermediation, and related activities); health care and social assistance (led by ambulatory health care services); administrative and waste management services (led by administrative and support services); and professional, scientific and technical services. These increases were partly offset by decreases in accommodation and food services (led by food services and drinking places); utilities; and educational services.
  • The decrease in government reflected decreases in state and local as well as federal.

For more information, read the full release.