Real gross domestic product (GDP) increased at an annual rate of 4% in the fourth quarter of 2020, according to the “advance” estimate released Thursday by the Bureau of Economic Analysis. In the third quarter, real GDP increased 33.4%.

The increase in real GDP reflected increases in exports, nonresidential fixed investment, personal consumption expenditures (PCE), residential fixed investment, and private inventory investment that were partly offset by decreases in state and local government spending and federal government spending. Imports, which are 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 nonresidential fixed investment reflected increases in all components, led by equipment. The increase in PCE was more than accounted for by spending on services (led by health care); spending on goods decreased (led by food and beverages). The increase in residential fixed investment primarily reflected investment in new single-family housing. The increase in private inventory investment primarily reflected increases in manufacturing and in wholesale trade that were partly offset by a decrease in retail trade.

Current‑dollar GDP increased 6% at an annual rate, or $309.2 billion, in the fourth quarter to a level of $21.48 trillion. In the third quarter, GDP increased 38.3%, or $1.65 trillion.

The price index for gross domestic purchases increased 1.7% in the fourth quarter, compared with an increase of 3.3% in the third quarter. The PCE price index increased 1.5%, compared with an increase of 3.7% in the third quarter. Excluding food and energy prices, the PCE price index increased 1.4%, compared with an increase of 3.4%.

Real GDP decreased 3.5% in 2020 (from the 2019 annual level to the 2020 annual level), compared with an increase of 2.2% in 2019.

The decrease in real GDP in 2020 reflected decreases in PCE, exports, private inventory investment, nonresidential fixed investment, and state and local government that were partly offset by increases in federal government spending and residential fixed investment. Imports decreased.