News Release
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Gross Domestic Product, 4th quarter and annual 2014 (advance estimate)
Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.6 percent in the fourth quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent. The Bureau emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4 and "Comparisons of Revisions to GDP" on page 5). The "second" estimate for the fourth quarter, based on more complete data, will be released on February 27, 2015. The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and decelerations in nonresidential fixed investment and in exports that were partly offset by an upturn in private inventory investment and an acceleration in PCE. The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 0.3 percent in the fourth quarter, in contrast to an increase of 1.4 percent in the third. Excluding food and energy prices, the price index for gross domestic purchases increased 0.7 percent, compared with an increase of 1.6 percent. _______ 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 (2009) 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. For information on revisions, see "The Revisions to GDP, GDI, and Their Major Components." _______ Real personal consumption expenditures increased 4.3 percent in the fourth quarter, compared with an increase of 3.2 percent in the third. Durable goods increased 7.4 percent, compared with an increase of 9.2 percent. Nondurable goods increased 4.4 percent, compared with an increase of 2.5 percent. Services increased 3.7 percent, compared with an increase of 2.5 percent. Real nonresidential fixed investment increased 1.9 percent in the fourth quarter, compared with an increase of 8.9 percent in the third. Investment in nonresidential structures increased 2.6 percent, compared with an increase of 4.8 percent. Investment in equipment decreased 1.9 percent, in contrast to an increase of 11.0 percent. Investment in intellectual property products increased 7.1 percent, compared with an increase of 8.8 percent. Real residential fixed investment increased 4.1 percent, compared with an increase of 3.2 percent. Real exports of goods and services increased 2.8 percent in the fourth quarter, compared with an increase of 4.5 percent in the third. Real imports of goods and services increased 8.9 percent, in contrast to a decrease of 0.9 percent. Real federal government consumption expenditures and gross investment decreased 7.5 percent in the fourth quarter, in contrast to an increase of 9.9 percent in the third. National defense decreased 12.5 percent, in contrast to an increase of 16.0 percent. Nondefense increased 1.7 percent, compared with an increase of 0.4 percent. Real state and local government consumption expenditures and gross investment increased 1.3 percent, compared with an increase of 1.1 percent. The change in real private inventories added 0.82 percentage point to the fourth-quarter change in real GDP after subtracting 0.03 percentage point from the third-quarter change. Private businesses increased inventories $113.1 billion in the fourth quarter, following increases of $82.2 billion in the third quarter and $84.8 billion in the second. Real final sales of domestic product -- GDP less change in private inventories -- increased 1.8 percent in the fourth quarter, compared with an increase of 5.0 percent in the third. Gross domestic purchases Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 3.6 percent in the fourth quarter, compared with an increase of 4.1 percent in the third. Disposition of personal income Current-dollar personal income increased $136.8 billion in the fourth quarter, compared with an increase of $131.6 billion in the third. The acceleration in personal income primarily reflected accelerations in wages and salaries and in proprietors’ income that were partly offset by a deceleration in government social benefits to persons and a larger decrease in personal interest income. Personal current taxes increased $32.0 billion in the fourth quarter, compared with an increase of $26.5 billion in the third. Disposable personal income increased $104.8 billion, or 3.3 percent, in the fourth quarter, compared with an increase of $105.1 billion, or 3.3 percent, in the third. Real disposable personal income increased 3.8 percent, compared with an increase of 2.0 percent. Personal outlays increased $120.4 billion in the fourth quarter, compared with an increase of $143.4 billion in the third. Personal saving -- disposable personal income less personal outlays -- was $601.7 billion in the fourth quarter, compared with $617.2 billion in the third. The personal saving rate -- personal saving as a percentage of disposable personal income -- was 4.6 percent in the fourth quarter, compared with 4.7 percent in the third. For a comparison of personal saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's financial accounts of the United States and data on changes in net worth, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp. Current-dollar GDP Current-dollar GDP -- the market value of the production of goods and services in the United States -- increased 2.5 percent, or $110.9 billion, in the fourth quarter to a level of $17,710.7 billion. In the third quarter, current-dollar GDP increased 6.4 percent, or $271.6 billion. 2014 GDP Real GDP increased 2.4 percent in 2014 (that is, from the 2013 annual level to the 2014 annual level), compared with an increase of 2.2 percent in 2013. The increase in real GDP in 2014 reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, private inventory investment, state and local government spending, and residential fixed investment that were partly offset by a negative contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, increased. The acceleration in real GDP growth in 2014 reflected an acceleration in nonresidential fixed investment, a smaller decrease in federal government spending, and accelerations in private inventory investment, in PCE, and in state and local government spending that were partly offset by an acceleration in imports and a deceleration in residential fixed investment. The price index for gross domestic purchases increased 1.4 percent in 2014, compared with an increase of 1.3 percent in 2013. Current-dollar GDP increased 3.9 percent, or $652.6 billion, in 2014 to a level of $17,420.7 billion, compared with an increase of 3.7 percent, or $604.9 billion, in 2013. During 2014 (that is, measured from the fourth quarter of 2013 to the fourth quarter of 2014), real GDP increased 2.5 percent, compared with an increase of 3.1 percent during 2013. The price index for gross domestic purchases increased 1.1 percent during 2014, compared with an increase of 1.3 percent during 2013.? ________ 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 estimate of GDP and related series is made available on the Web site; click on Survey of Current Business, "GDP and the Economy." For information on revisions, see "Revisions to GDP, GDI, and Their Major Components." ________ 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, 2015 at 8:30 A.M. EST for: Gross Domestic Product: Fourth Quarter and Annual 2014 (Second Estimate) * * * Release dates in 2015 Gross Domestic Product 2014: IV and 2014 annual 2015: I 2015: II 2015: III Advance.... January 30 April 29 July 30 October 29 Second..... February 27 May 29 August 27 November 24 Third...... March 27 June 24 September 25 December 22 Corporate Profits Preliminary... .. May 29 August 27 November 24 Revised....... March 27 June 24 September 25 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 following the end of the quarter; as more detailed and more comprehensive data become available, the "second" and "third" estimates are released near the end of the second and third months, respectively. The "latest"” estimate reflects the results of both annual and comprehensive revisions, which are typically released in late July. Annual revisions, cover at a minimum the quarters of the 3 most recent calendar years, 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 real and current- dollar GDP for the different vintages of the estimates. From the advance estimate to the second 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 third 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. Larger average revisions for the latest estimates reflect the fact that comprehensive revisions include major improvements, such as the incorporation of BEA’s latest benchmark input-output accounts. 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 second or to the third estimates. The larger average revisions to the The quarterly estimates correctly indicate the direction of change of real GDP 96 percent of the time, correctly indicate whether GDP is accelerating or decelerating about 75 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend growth about 83 percent 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 ________________________________________________________Real GDP_____________________________________________________ Advance to second.................... 0.1 0.5 0.4 Advance to third..................... .1 .6 .4 Second to third...................... .0 .2 .2 Advance to latest.................... -0.1 1.2 1.0 ____________________________________________________Current-dollar GDP_______________________________________________ Advance to second.................... 0.2 0.5 0.4 Advance to third..................... .2 .6 .4 Second to third...................... .1 .3 .2 Advance to latest.................... .1 1.3 1.0 _____________________________________________________________________________________________________________________ NOTE. These comparisons are based on the period from 1993 through 2013.