Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- decreased at an annual rate of 3.8 percent in the fourth quarter of 2008,
(that is, from the third quarter to the fourth quarter), according to advance estimates released by the
Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.
The Bureau emphasized that the fourth-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 4). The fourth-
quarter preliminary estimates, based on more comprehensive data, will be released on February 27,
2009.
The decrease in real GDP in the fourth quarter primarily reflected negative contributions from
exports, personal consumption expenditures, equipment and software, and residential fixed investment
that were partly offset by positive contributions from private inventory investment and federal
government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Most of the major components contributed to the much larger decrease in real GDP in the fourth
quarter than in the third. The largest contributors were a downturn in exports and a much larger
decrease in equipment and software. The most notable offset was a much larger decrease in imports.
Final sales of computers subtracted less than 0.01 percentage point from the change in real GDP
after subtracting 0.01 percentage point from the third-quarter change. Motor vehicle output subtracted
2.04 percentage points from the fourth-quarter change in real GDP after contributing 0.16 percentage
point to the third-quarter change.
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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 BEAs Web site along with the Technical Note and Highlights
related to this release.
_________________________________
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
decreased 4.6 percent in the fourth quarter, in contrast to an increase of 4.5 percent in the third.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.2 percent in
the fourth quarter, compared with an increase of 2.8 percent in the third.
Real personal consumption expenditures decreased 3.5 percent in the fourth quarter, compared
with a decrease of 3.8 percent in the third. Durable goods decreased 22.4 percent, compared with a
decrease of 14.8 percent. Nondurable goods decreased 7.1 percent, the same as in the third. Services
expenditures increased 1.7 percent, in contrast to a decrease of 0.1 percent.
Real nonresidential fixed investment decreased 19.1 percent in the fourth quarter, compared with a
decrease of 1.7 percent in the third. Nonresidential structures decreased 1.8 percent, in contrast to an
increase of 9.7 percent. Equipment and software decreased 27.8 percent, compared with a decrease of
7.5 percent. Real residential fixed investment decreased 23.6 percent, compared with a decrease of 16.0
percent.
Real exports of goods and services decreased 19.7 percent in the fourth quarter, in contrast to an
increase of 3.0 percent in the third. Real imports of goods and services decreased 15.7 percent,
compared with a decrease of 3.5 percent.
Real federal government consumption expenditures and gross investment increased 5.8 percent in
the fourth quarter, compared with an increase of 13.8 percent in the third. National defense increased
2.1 percent, compared with an increase of 18.0 percent. Nondefense increased 14.5 percent, compared
with an increase of 5.1 percent. Real state and local government consumption expenditures and gross
investment decreased 0.5 percent, in contrast to an increase of 1.3 percent.
The real change in private inventories added 1.32 percentage points to the fourth-quarter change in
real GDP after adding 0.84 percentage point to the third-quarter change. Private businesses increased
inventories $6.2 billion in the fourth quarter, following a decrease of $29.6 billion in the third quarter
and a decrease of $50.6 billion in the second.
Real final sales of domestic product -- GDP less change in private inventories -- decreased 5.1
percent in the fourth quarter, compared with a decrease of 1.3 percent in the third.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- decreased 3.7 percent in the fourth quarter, compared with a decrease of 1.5 percent in the
third.
Disposition of personal income
Current-dollar personal income decreased $35.3 billion (1.2 percent) in the fourth quarter, in
contrast to an increase of $7.2 billion (0.2 percent) in the third.
Personal current taxes increased $29.6 billion in the fourth quarter, compared with an increase of
$122.5 billion in the third. The sharp deceleration reflected the pattern of rebates to individuals with tax
liabilities (which are treated as an offset to taxes) from the Economic Stimulus Act of 2008.
Disposable personal income (DPI) decreased $64.8 billion (2.4 percent) in the fourth quarter,
compared with a decrease of $115.3 billion (4.2 percent) in the third. Real DPI increased 3.3 percent, in
contrast to a decrease of 8.8 percent. The increase in real DPI, in contrast to the decrease in current-
dollar DPI, reflected the sharp downturn in the personal consumption expenditures implicit price
deflator (IPD) that is used to deflate DPI; the IPD decreased 5.5 percent in the fourth quarter, following
an increase of 5.0 percent in the third.
Personal outlays decreased $244.2 billion (8.9 percent) in the fourth quarter, in contrast to an
increase of $21.7 billion (0.8 percent) in the third. Personal saving -- disposable personal income less
personal outlays -- was $310.3 billion in the fourth quarter, compared with $130.8 billion in the third.
The personal saving rate -- saving as a percentage of disposable personal income -- was 2.9 percent in
the fourth quarter, compared with 1.2 percent in the third. For a comparison of personal saving in
BEAs national income and product accounts with personal saving in the Federal Reserve Boards flow
of funds accounts and data on changes in net worth, go to /national/nipaweb/Nipa-
Frb.asp.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- decreased
4.1 percent, or $148.2 billion, in the fourth quarter to a level of $14,264.6 billion. In the third quarter,
current-dollar GDP increased 3.4 percent, or $118.3 billion.
2008 GDP
Real GDP increased 1.3 percent in 2008 (that is, from the 2007 annual level to the 2008 annual
level), compared with an increase of 2.0 percent in 2007.
The major contributors to the increase in real GDP in 2008 were exports, personal consumption
expenditures (PCE) for services, federal government spending, nonresidential structures, and state and
local government spending. These were partly offset by residential fixed investment, PCE for goods,
equipment and software, and private inventory investment. Imports, which are a subtraction in the
calculation of GDP, decreased.
The deceleration in real GDP primarily reflected a sharp deceleration in PCE, a downturn in
equipment and software, and decelerations in exports and in state and local government spending that
were partly offset by a sharp downturn in imports, an acceleration in federal government spending, and a
smaller decrease in private inventory investment.
The price index for gross domestic purchases increased 3.2 percent in 2008, compared with an
increase of 2.8 percent in 2007.
Current-dollar GDP increased 3.4 percent, or $473.1 billion, in 2008. Current-dollar GDP
increased 4.8 percent, or $629.2 billion, in 2007.
During 2008 (that is, measured from the fourth quarter of 2007 to the fourth quarter 2008), real
GDP decreased 0.2 percent. Real GDP increased 2.3 percent during 2007. The price index for gross
domestic purchases increased 1.8 percent during 2008, compared with an increase of 3.3 percent during
2007.
_________________________
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."
_________________________
* * *
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 -- February 27, 2009, at 8:30 A.M. EST for:
Gross Domestic Product: Fourth Quarter 2008 (Preliminary)
Release dates in 2009
Gross Domestic Product
2008: IV and 2008 annual 2009: I 2009: II 2009: III
Advance......... January 30 April 29 July 31 October 29
Preliminary..... February 27 May 29 August 27 November 24
Final........... March 26 June 25 September 30 December 22
Corporate Profits
Preliminary..... ..... May 29 August 27 November 24
Final............... March 26 June 25 September 30 December 22
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 2005.
