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Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 2.3 percent in the second quarter of 1999, according to advance estimates released by the Commerce Department's Bureau of Economic Analysis. In the first quarter, real GDP increased 4.3 percent. Real GDP increased $44.0 billion in the second quarter, following an increase of $81.9 billion in the first.

The Bureau emphasized that the second-quarter "advance" estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3). The second- quarter "preliminary" estimates, based on more comprehensive data, will be released on August 26, 1999.

As announced in the February issue of the Survey of Current Business, the Bureau of Economic Analysis plans to release the initial results of its 11th comprehensive, or benchmark, revision of the national income and product accounts (NIPA's) on October 28, 1999, along with the release of the advance estimates for the third quarter of 1999. The annual revision of the NIPA's that would normally take place this summer will be included as part of the comprehensive revision. An overview of the major improvements that will be introduced in the comprehensive revision is provided in a "technical note" that is posted on BEA's and STAT-USA's Web sites. Beginning with the August 1999 issue of the Survey, a series of articles will be presented that discuss the comprehensive revision.

The major contributors to the increase in real GDP in the second quarter were: Personal consumption expenditures (PCE), nonresidential fixed investment, and exports. The contributions of these components were partially offset by the effects of an increase in imports and of a decrease in inventory investment.

The deceleration in real GDP in the second quarter primarily reflected a deceleration in PCE and a downturn in government spending that more than offset an upturn in exports.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.1 percent in the second quarter, compared with an increase of 1.2 percent in the first. Excluding food and energy prices, which are normally more volatile than many other prices, the price index increased 1.4 percent in the second quarter, compared with an increase of 1.3 percent in the first.

Real personal consumption expenditures increased 4.0 percent in the second quarter, compared with an increase of 6.7 percent in the first. Durable goods purchases increased 5.6 percent, compared with an increase of 12.9 percent. Nondurable goods increased 3.0 percent, compared with an increase of 9.5 percent. Services expenditures increased 4.2 percent, compared with an increase of 4.1 percent.

Real nonresidential fixed investment increased 10.8 percent in the second quarter, compared with an increase of 8.5 percent in the first. Nonresidential structures decreased 1.2 percent, in contrast to an increase of 5.7 percent. Producers' durable equipment increased 15.3 percent, compared with an increase of 9.5 percent. Real residential fixed investment increased 5.1 percent, compared with an increase of 15.4 percent.

Real exports of goods and services increased 4.5 percent in the second quarter, in contrast to a decrease of 5.1 percent in the first. Real imports of goods and services increased 9.7 percent, compared with an increase of 13.5 percent.

Real federal government consumption expenditures and gross investment decreased 3.2 percent in the second quarter, compared with a decrease of 1.9 percent in the first. National defense decreased 3.2 percent, compared with a decrease of 6.6 percent. Nondefense decreased 3.1 percent, in contrast to an increase of 7.4 percent. Real state and local government consumption expenditures and gross investment decreased 0.1 percent, in contrast to an increase of 7.7 percent.

The real change in business inventories subtracted 0.86 percentage point from the second-quarter change in real GDP, after subtracting 0.27 percentage point from the first-quarter change. Businesses increased inventories $19.4 billion in the second quarter, following increases of $38.7 billion in the first quarter and $44.2 billion in the fourth.

Real final sales of domestic product -- GDP less change in business inventories -- increased 3.2 percent in the second quarter, compared with an increase of 4.6 percent in the first.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 3.0 percent in the second quarter, compared with an increase of 6.6 percent in the first.

Disposition of personal income

Current-dollar personal income increased $93.2 billion in the second quarter, compared with an increase of $91.4 billion in the first. Personal tax and nontax payments increased $18.0 billion, compared with an increase of $19.2 billion.

Disposable personal income increased $75.2 billion in the second quarter, compared with an increase of $72.1 billion in the first. Real disposable personal income increased 2.4 percent, compared with an increase of 3.5 percent.

Personal outlays increased $100.4 billion in the second quarter, compared with an increase of $117.1 billion in the first. Personal saving -- disposable personal income less personal outlays -- was a negative $70.7 billion in the second quarter, compared with a negative $45.5 billion in the first. The personal saving rate -- saving as a percentage of disposable personal income -- decreased from a negative 0.7 percent in the first quarter to a negative 1.1 percent in the second.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 3.9 percent, or $84.6 billion, in the second quarter. In the first quarter, current-dollar GDP increased 6.0 percent, or $127.5 billion.

Information on the assumptions used for unavailable source data is provided in a technical note that is posted with the news release on BEA's and STAT-USA's Web sites. Within a few days after the release, a detailed "Key Source Data and Assumptions" file is also posted on the STAT-USA site. In the middle of each month, an analysis of the current quarterly estimates of GDP and related series is made available on both Web sites; click on Survey of Current Business, "Business Situation." (For more information, see below.)

BEA's major national, international, regional, and industry estimates; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site: <www.bea.doc.gov>

STAT-USA maintains an electronic bulletin board (EBB) and an Internet site that contain BEA estimates, the Survey of Current Business, and BEA news releases. The information available through STAT-USA is often more detailed and more timely than that available from other sources. For information about STAT-USA, go to <www.stat-usa.gov>, or call (202) 482-1986. Subscriptions for single-user unlimited access to STAT-USA's Internet information are $50.00 for 3 months or $150.00 for 1 year.

Summary BEA estimates are available on recorded messages at the time of public release at the following telephone numbers:

• (202) 606-5306 Gross domestic product
• (202) 606-5303 Personal income and outlays
• (202) 606-5362 U.S. international transactions

Most of BEA's estimates and analyses appear in the Survey of Current Business, BEA's monthly journal. The printed Survey of Current Business is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402. First class mail: Annual subscription $104.00 domestic. Second class mail: Annual subscription $42.00 domestic, $52.50 foreign; single issue $15.00 domestic, $18.75 foreign.

Next release -- August 26, 1999, at 8:30 A.M. EDT for: Gross Domestic Product: Second Quarter 1999 (Preliminary) Corporate Profits: Second Quarter 1999 .

Comparisons of Revisions to GDP

Quarterly estimates of GDP are released on the following schedule: "Advance" estimates, based on source data that are incomplete or subject to further revision by the source agency, are released near the end of the first month after the end of the quarter; as more detailed and more comprehensive data become available, "preliminary" and "final" estimates, are released near the end of the second and third months, respectively. The "latest" estimates reflect the results of both annual and comprehensive revisions.

Annual revisions are usually carried out each summer and cover the quarters of the most recent calendar year and of the 2 preceding years. Comprehensive (or benchmark) revisions are carried out at about 5-year intervals and incorporate definitional and classificational changes that update the accounts to portray more accurately the evolving U.S. economy and statistical changes that update the accounts to reflect the introduction of new and improved methodologies and the incorporation of newly available and revised source data.

The table below shows comparisons of the revisions between quarterly percent changes of GDP for the different vintages of the estimates. These comparisons can be used to assess the likely size of future revisions. For example, two-thirds of the revisions between the quarterly change in the advance estimate of real GDP and that in the final estimate were within a range of -0.6 to +0.9 percentage point. Thus, based on past history, the second- quarter change in real GDP now estimated at 2.3 percent at an annual rate, is not likely to be revised below 1.7 percent or above 3.2 percent in the next two releases.

Revisions Between Quarterly Percent Changes of GDP: Vintage Comparisons
                           [Annual rates]


   Vintages                    Average without                     Range
   compared                    regard to sign           Two-thirds      Nine-tenths
                                                        of revisions    of revisions

                         Current-dollar GDP


Advance to preliminary.....      0.6                  -0.5 to 0.8       -1.1 to 1.4
Advance to final................  .7                  - .6 to 1.0       -1.0 to 1.6
Preliminary to final...........   .3                  - .3 to  .4       - .6 to  .7
Advance to latest............... 1.3                  - .8 to 2.1       -1.6 to 3.3
Preliminary to latest..........  1.2                  -1.1 to 2.1       -1.7 to 2.9
Final to latest..................1.2                  - .9 to 2.0       -1.9 to 2.8

                                                             Real GDP

Advance to preliminary.....      0.5                  -0.5 to 0.7       -0.9 to 1.4
Advance to final................  .6                  - .6 to  .9       -1.0 to 1.3
Preliminary to final...........   .3                  - .4 to  .4       - .5 to  .7
Advance to latest............... 1.4                  -1.3 to 1.7       -1.9 to 3.0
Preliminary to latest..........  1.4                  -1.2 to 1.6       -2.3 to 3.0
Final to latest..................1.4                  -1.5 to 1.9       -2.2 to 3.0

NOTE.--These comparisons are based on the period from 1978 through 1997 for the first three comparisons in each
group and on the period from 1978 through 1995 for the last three comparisons in each group