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 1.9 percent in the second quarter of 2008
(that is, from the first quarter to the second quarter), according to advance estimates released by the
Bureau of Economic Analysis. In the first quarter, real GDP increased 0.9 percent.
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 28, 2008.
BOX --
The estimates released today reflect the regular annual revision to the national income and product
accounts (NIPAs), beginning with the estimates for the first quarter of 2005. Annual revisions, which
are usually released in July, incorporate source data that are more complete, more detailed, and
otherwise more reliable than those previously available. This release includes the revised quarterly
estimates of GDP, corporate profits, and personal income and provides an overview of the effects of the
revision.
The August 2008 Survey of Current Business will contain NIPA tables and an article describing
the revisions. The revised estimates will be available on BEA's Web site at www.bea.gov.
FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2000)
dollars. Price indexes are chain-type measures.
This news release is available on BEA's Web site along with the Technical Note and Highlights
related to this release.
The increase in real GDP in the second quarter primarily reflected positive contributions from
exports, personal consumption expenditures (PCE), nonresidential structures, federal government
spending, and state and local government spending that were partly offset by negative contributions
from private inventory investment, residential fixed investment, and equipment and software. Imports,
which are a subtraction in the calculation of GDP, decreased.
The acceleration in real GDP growth in the second quarter primarily reflected a larger decrease in
imports, an acceleration in exports, a smaller decrease in residential fixed investment, and an
acceleration in PCE that were partly offset by a larger decrease in inventory investment.
Final sales of computers contributed 0.12 percentage point to the second-quarter growth in real
GDP after contributing 0.05 percentage point to the first-quarter growth. Motor vehicle output
subtracted 1.07 percentage points from the second-quarter growth in real GDP after subtracting 0.41
percentage point from the first-quarter growth.
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 4.2 percent in the second quarter, compared with an increase of 3.5 percent in the first.
Excluding food and energy prices, the price index for gross domestic purchases increased 2.2 percent in
the second quarter, the same as in the first.
Real personal consumption expenditures increased 1.5 percent in the second quarter, compared
with an increase of 0.9 percent in the first. Durable goods decreased 3.0 percent, compared with a
decrease of 4.3 percent. Nondurable goods increased 4.0 percent, in contrast to a decrease of 0.4
percent. Services increased 1.1 percent, compared with an increase of 2.4 percent.
Real nonresidential fixed investment increased 2.3 percent in the second quarter, compared with
an increase of 2.4 percent in the first. Nonresidential structures increased 14.4 percent, compared with
an increase of 8.6 percent. Equipment and software decreased 3.4 percent, compared with a decrease of
0.6 percent. Real residential fixed investment decreased 15.6 percent, compared with a decrease of 25.1
percent.
Real exports of goods and services increased 9.2 percent in the second quarter, compared with an
increase of 5.1 percent in the first. Real imports of goods and services decreased 6.6 percent, compared
with a decrease of 0.8 percent.
Real federal government consumption expenditures and gross investment increased 6.7 percent in
the second quarter, compared with an increase of 5.8 percent in the first. National defense increased 7.3
percent, the same as in the first. Nondefense increased 5.3 percent, compared with an increase of 2.9
percent. Real state and local government consumption expenditures and gross investment increased 1.6
percent, in contrast to a decrease of 0.3 percent.
The real change in private inventories subtracted 1.92 percentage points from the second-quarter
change in real GDP after subtracting 0.02 percentage point from the first-quarter change. Private
businesses decreased inventories $62.2 billion in the second quarter, following decreases of $10.2 billion
in the first and $8.1 billion in the fourth.
Real final sales of domestic product -- GDP less change in private inventories -- increased 3.9
percent in the second quarter, compared with an increase of 0.9 percent in the first.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- decreased 0.5 percent in the second quarter, in contrast to an increase of 0.1 percent in the
first.
Disposition of personal income
Current-dollar personal income increased $214.5 billion (7.4 percent) in the second quarter,
compared with an increase of $109.1 billion (3.7 percent) in the first. The acceleration primarily
reflected an acceleration in personal current transfer receipts due to the effects of the rebates to
individuals who pay no income taxes (or for whom the rebate exceeded the amount of taxes they pay)
from the Economic Stimulus Act of 2008.
Personal current taxes decreased $178.9 billion in the second quarter, in contrast to an increase of
$20.7 billion in the first. The sharp downturn reflected the rebates to individuals with tax liabilities,
which are treated as an offset to taxes.
Disposable personal income increased $393.4 billion (15.9 percent) in the second quarter,
compared with an increase of $88.5 billion (3.5 percent) in the first. Real disposable personal income
increased 11.3 percent, in contrast to a decrease of 0.1 percent.
Personal outlays increased $143.6 billion (5.6 percent) in the second quarter, compared with an
increase of $95.7 billion (3.8 percent) in the first. Personal saving -- disposable personal income less
personal outlays -- was $284.9 billion in the second quarter, compared with $35.1 billion in the first.
The personal saving rate -- saving as a percentage of disposable personal income -- was 2.6 percent in
the second quarter, compared with 0.3 percent in the first. Saving from current income may be near zero
or negative when outlays are financed by borrowing (including borrowing financed through credit cards
or home equity loans), by selling investments or other assets, or by using savings from previous periods.
For more information, see the FAQs on "Personal Saving" on BEA's Web site. For a comparison of personal
saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's
flow of funds accounts and data on changes in net worth (which helps finance negative saving), go to
/bea/dn/nipaweb/Nipa-Frb.asp.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.0 percent, or $105.7 billion, in the second quarter to a level of $14,256.5 billion. In the first quarter,
current-dollar GDP increased 3.5 percent, or $119.6 billion.
BOX --
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 Web site. Within a few days after the release, a detailed
"Key Source Data and Assumptions" file is posted on the Web site. In the middle of each month, an
analysis of the current quarterly estimates of GDP and related series is made available on the Web site;
click on Survey of Current Business, "GDP and the Economy."
Revision of the National Income and Product Accounts
The revised estimates, which begin with 2005, reflect the results of the regular annual revision of
the national income and product accounts (NIPAs). These revisions, usually made each July,
incorporate newly available and more comprehensive source data, as well as improved estimating
methodologies. In this annual revision, the notable revisions primarily reflected the incorporation of
newly available and revised source data. For example, the revised estimates of profits reflect newly
available Internal Revenue Service tabulations of tax returns for corporations for 2006 and revised
tabulations for 2005. A table showing the major current-dollar revisions and their sources for each
component of GDP, national income, and personal income will be published in the August 2008 issue of
the Survey of Current Business.
Because of the additional data shown, tables 3, 11, and 12 are each divided into two separate
tables -- 3A and 3B, 11A and 11B, and 12A and 12B. There are also a number of special tables that
compare the revised and previously published estimates for selected periods: Table 1A shows the
percent change in real GDP and related measures; table 1B shows revisions to current-dollar GDP, to
national income, and to disposition of personal income; table 2A shows contributions to the percent
change in real GDP; table 4A shows the percent change in the chain-type price indexes for GDP and
related measures; and table 12C shows revisions to corporate profits by industry.
This section of the release discusses the highlights of the revisions and describes their sources.
Summary of revisions
* For 2004-2007, real GDP grew at an average annual rate of 2.6 percent, 0.1 percentage point less
than in the previously published estimates. The average annual rate of growth of real GDP from
the fourth quarter of 2004 to the first quarter of 2008 is 2.4 percent, 0.1 percentage point less
than in the previously published estimates.
* The relatively small revisions to the annual estimates reflect partly offsetting revisions to the
quarters within a year. For example, for 2007, the annual rate of growth of real GDP for the
second quarter was revised up 1.0 percentage point, from 3.8 percent to 4.8 percent, while the
growth rate for the fourth quarter was revised down 0.8 percentage point, from a small increase
(0.6 percent) to a small decrease (0.2 percent).
* For the 13 quarters from the first quarter of 2005 to the first quarter of 2008, the average revision
(without regard to sign) was 0.4 percentage point.
* The average annual rate of growth of real disposable personal income for 2004-2007 was 2.6
percent, the same as in the previously published estimates.
* The revised estimates of prices show similar rates of increase to the previously published
estimates. From the fourth quarter of 2004 to the first quarter of 2008, the average annual rate of
increase in the price index for gross domestic purchases was revised up 0.1 percentage point to
3.3 percent. The average annual rate of increase in the price index for personal consumption
expenditures (PCE) remained unchanged at 2.9 percent, and the "core" PCE price index (which excludes
food and energy) remained unchanged at 2.2 percent.
* For the revision period, national income was revised up for all 3 years: 0.8 percent for 2005, 1.2
percent for 2006, and 0.4 percent for 2007.
* For the revision period, corporate profits was revised up for all 3 years: 5.5 percent for 2005, 7.4
percent for 2006, and 3.0 percent for 2007.
Revisions to 2005-2007 estimates
The percent change from the preceding year in real GDP was revised down for all 3 years: From
3.1 percent to 2.9 percent for 2005, from 2.9 percent to 2.8 percent for 2006, and from 2.2 percent to 2.0
percent for 2007.
For 2005, the largest contributors to the downward revision to real GDP growth were downward
revisions to PCE and to state and local government spending; these revisions were partly offset by an
upward revision to inventory investment. For 2006, the largest contributors to the downward revision
were downward revisions to residential fixed investment and to PCE for services; these revisions were
partly offset by upward revisions to fixed investment in equipment and software, to exports, and to PCE
for durables. For 2007, the largest contributors to the downward revision were downward revisions to
PCE for services and to inventory investment, and an upward revision to imports; these revisions were
partly offset by upward revisions to exports and to fixed investment in equipment and software.
The percent change from fourth quarter to fourth quarter in real GDP was revised down for all 3
years: From 2.9 percent to 2.7 percent for 2005, from 2.6 percent to 2.4 percent for 2006, and from 2.5
percent to 2.3 percent for 2007.
The percent change from the preceding year in the price index for gross domestic purchases was
unrevised at 3.7 percent for 2005, was revised up from 3.3 percent to 3.4 percent for 2006, and was
revised up from 2.7 percent to 2.8 percent for 2007. For the quarters of 2005 to 2007, the percent
change in the price index was revised down for four quarters and was revised up for eight quarters; the
largest upward revision was 0.6 percentage point (the third quarter of 2005).
Current-dollar GDP was revised down for all 3 years: $12.0 billion, or 0.1 percent, for 2005;
$16.3 billion, or 0.1 percent, for 2006; and $33.8 billion, or 0.2 percent, for 2007. The percent change
from the preceding year was revised down from 6.4 percent to 6.3 percent for 2005; remained
unchanged at 6.1 percent for 2006; and was revised down from 4.9 percent to 4.8 percent for 2007.
Current-dollar gross national product (GNP) (GDP plus net receipts of income from the rest of the
world) was revised up $12.5 billion, or 0.1 percent, for 2005; was revised up $3.9 billion, or less than
0.1 percent, for 2006; and was revised down $27.1 billion, or 0.2 percent, for 2007. Net receipts of
income was revised up for all 3 years: $24.5 billion for 2005, $20.3 billion for 2006, and $6.7 billion for
2007. The revisions to net receipts of income -- which affect GNP, national income, corporate profits,
net interest and miscellaneous payments, and personal interest income -- result from the revisions to
BEA's international transactions accounts (ITAs) that were released in June. Although the revisions to
the ITAs extended back to 2002, the revisions prior to 2005 are not incorporated into the NIPAs at this
time. (An article describing the revisions to the ITAs was published in the July 2008 issue of the Survey
of Current Business.)
National income was revised up for all 3 years: $86.4 billion, or 0.8 percent, for 2005; $140.1
billion, or 1.2 percent, for 2006; and $42.9 billion, or 0.4 percent, for 2007. For 2005, a large upward
revision to corporate profits and a smaller upward revision to net interest and miscellaneous payments
were partly offset by a downward revision to nonfarm proprietors' income. For 2006, large upward revisions
to corporate profits and to net interest and miscellaneous payments were partly offset by downward revisions
to supplements to wages and salaries and to rental income of persons. For 2007, large upward revisions to
net interest and miscellaneous payments and to corporate profits were partly offset by large downward
revisions to compensation of employees and to rental income of persons.
Corporate profits from current production -- profits before tax with inventory valuation and
capital consumption adjustments -- was revised up for all 3 years: $75.1 billion, or 5.5 percent, for
2005; $114.8 billion, or 7.4 percent, for 2006; and $47.2 billion, or 3.0 percent, for 2007. For 2005 and
2006, large upward revisions to corporate profits before tax and to the capital consumption adjustment
accounted for most of the revision. For 2007, a large upward revision to the capital consumption
adjustment accounted for most of the revision, although profits before tax was also revised up.
For 2005, profits of domestic nonfinancial corporations, profits from the rest of the world, and
profits of domestic financial corporations were revised up. For 2006, upward revisions to profits of
domestic nonfinancial corporations and to profits from the rest of the world were partly offset by a
downward revision to profits of domestic financial corporations. For 2007, upward revisions to profits
of domestic nonfinancial corporations and to profits from the rest of the world were partly offset by a
downward revision to profits of domestic financial corporations.
Personal income was revised down $31.3 billion, or 0.3 percent, for 2005; was revised up $10.5
billion, or 0.1 percent, for 2006; and was revised down $2.4 billion, or less than 0.1 percent, for 2007.
For 2005, the downward revision was primarily accounted for by downward revisions to personal
dividend income and to nonfarm proprietors' income. For 2006, upward revisions to personal interest income
and to nonfarm proprietors' income were partly offset by a downward revision to supplements to wages and
salaries. For 2007, large downward revisions to compensation of employees, to rental income of persons,
and to government social benefits to persons were mostly offset by an upward revision to personal interest
income. Within compensation of employees, supplements to wages and salaries accounted for most of the
downward revision, although wages and salaries was also revised down. In addition, contributions for
government social insurance, which are subtracted in the calculation of personal income, was revised down.
Disposable personal income (DPI) (personal income less personal current taxes) was revised
down $30.0 billion, or 0.3 percent, for 2005; was revised up $11.6 billion, or 0.1 percent, for 2006; and
was revised down $11.4 billion, or 0.1 percent, for 2007. Personal current taxes was revised down $1.3
billion for 2005, was revised down $1.1 billion for 2006, and was revised up $9.1 billion for 2007. The
percent change from the preceding year in real DPI was revised down from 1.7 percent to 1.4 percent for
2005, was revised up from 3.1 percent to 3.5 percent for 2006, and was revised down from 3.1 percent to
2.8 percent for 2007.
Personal outlays -- PCE, personal interest payments, and personal current transfer payments --
was revised down for all 3 years: $17.9 billion for 2005, $20.3 billion for 2006, and $21.0 billion for
2007. For 2005 and 2006, downward revisions to PCE mostly accounted for the revisions; for 2007, a
downward revision to PCE more than accounted for the downward revision. The personal saving rate
(personal saving as a percentage of DPI) was revised down from 0.5 percent to 0.4 percent for 2005, was
revised up from 0.4 percent to 0.7 percent for 2006, and was revised up from 0.5 percent to 0.6 percent
for 2007.
The statistical discrepancy is current-dollar GDP less current-dollar gross domestic income
(GDI). It arises because most components of GDP and of GDI are estimated independently. GDP
measures final expenditures -- the sum of consumer spending, private investment, net exports, and
government spending. GDI measures the incomes earned in the production of GDP. In concept, GDP is
equal to GDI. In practice, they differ because they are estimated using different source data and
different methods.
As a result of the annual revision, the statistical discrepancy as a percentage of GDP (without
regard to sign) was revised from less than 0.1 percent to 0.6 percent for 2005, was revised from 0.1
percent to 1.2 percent for 2006, and was revised from 0.2 percent to 0.6 percent for 2007. For all 3
years, the revisions to the discrepancy reflected downward revisions to GDP and upward revisions to
GDI.
New source data
The annual revision incorporated data from the following major federal statistical sources:
Census Bureau annual surveys of manufactures, of merchant wholesale trade, and of retail trade for
2006 and revised monthly indicators of manufactures, of merchant wholesale trade, and of retail trade
for 2005-2007; Census Bureau annual surveys of services for 2005 (revised), 2006 (revised), and 2007
(preliminary), and of state and local government finances for 2004 (revised), 2005 (revised), and 2006
(preliminary); Census Bureau monthly survey of construction spending (value put in place) for
2006-2007 (revised); Census Bureau quarterly survey of services for 2005-2007 (revised); Census
Bureau current population survey/housing vacancy survey for 2007; federal government budget data for
fiscal years 2007 and 2008; Internal Revenue Service tabulations of tax returns for corporations for 2005
(revised) and 2006 (preliminary) and for sole proprietorships and partnerships for 2006; Bureau of Labor
Statistics quarterly census of employment and wages for 2005-2007 (revised); Department of
Agriculture farm statistics for 2005-2007; and BEA's ITAs for 2005-2007 (revised).
Changes in methodology
The annual revision also incorporated refinements to estimating methodologies, including the
following improvements:
* Estimates of the consumption of goods purchased at grocery stores are now based on point-of-
sale retail scanner data from trade sources. The new method captures the annual variation in the
composition of goods sold by grocery stores (mainly food and beverage items) and alters the
composition of commodities within total PCE goods. The use of these data is
part of BEA's initiative to acquire and incorporate real-time data into the
economic accounts.
* The valuation of unit sales and inventory change for new domestic and foreign autos now
incorporates price data from JD Power for all 3 model years that are usually sold within a
calendar year. The improved method is now consistent with the methodology used to value new
domestic and foreign light trucks.
* The price index used for deflating consumer purchases of domestic airline services has been
changed to an improved Bureau of Labor Statistics producer price index (PPI). Similarly, the
price index used for deflating international airline services purchased by U.S. residents from U.S.
carriers has been changed to an improved PPI for international scheduled passenger air
transportation. The improved PPIs capture all Internet pricing and fare codes, include frequent
flier miles tickets, and include pricing from all distribution channels, making them more
consistent with the current-dollar expenditures series that are being deflated.
* Estimates of international trade in most business services are now based on redesigned surveys in
which data on intrafirm trade and trade with unrelated parties are collected in the same detail and
on the same forms. Previously, the two types of trade had been collected on separate surveys
and in different detail, which sometimes led to inconsistent responses. The more integrated
approach to data collection was initiated in a benchmark survey for 2006 and carried over to
quarterly follow-on surveys, beginning with the first quarter of 2007. These improvements build
upon earlier initiatives, implemented in 2004, to consolidate surveys and convert reporting of
trade in most types of services from annual to quarterly.
* * *
BEA's national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the
site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.
* * *
Next release -- August 28, 2008, at 8:30 A.M. EDT for:
Gross Domestic Product: Second Quarter 2008 (Preliminary)
Corporate Profits: Second Quarter 2008
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, which cover the quarters of the 3 most recent calendar years, are usually
carried out each summer and incorporate newly available major annual source data. Comprehensive
(or benchmark) revisions are carried out at about 5-year intervals and incorporate major periodic
source data, as well as improvements in concepts and methods that update the accounts to portray
more accurately the evolving U.S. economy.
The table below shows comparisons of the revisions between quarterly percent changes of
current-dollar and real GDP for the different vintages of the estimates. From the advance estimate
to the preliminary estimate (one month later), the average revision to real GDP without regard to
sign is 0.5 percentage point, while from the advance estimate to the final estimate (two months
later), it is 0.6 percentage point. From the advance estimate to the latest estimate, the
average revision without regard to sign is 1.2 percentage points. The average revision (with regard to
sign) from the advance estimate to the latest estimate is 0.3 percentage point, which is larger
than the average revisions from the advance estimate to the preliminary or to the final estimates.
The larger average revisions to the latest estimate reflect the fact that comprehensive revisions
include major improvements such as the introduction of chain indexes and the capitalization of software.
The current quarterly estimates correctly indicate the direction of change of real GDP 98 percent of the
time, correctly indicate whether it is accelerating or decelerating 74 percent of the time,and correctly
indicate whether real GDP growth is above, near, or below trend growth more than three-fifths of the time.
Revisions Between Quarterly Percent Changes of GDP: Vintage Comparisons
[Annual rates]
Vintages Average Average without Standard deviation of
compared regard to sign revisions without regard
to sign
Current-dollar GDP
Advance to preliminary.......... 0.2 0.5 0.4
Advance to final................ .2 .7 .4
Preliminary to final............ .0 .3 .2
Advance to latest............... .4 1.1 .9
Real GDP
Advance to preliminary.......... 0.1 0.5 0.4
Advance to final................ .1 .6 .4
Preliminary to final............ .0 .3 .2
Advance to latest............... .3 1.2 1.0
NOTE.--These comparisons are based on the period from 1983 through 2004.
