U.S. First Quarter Second Gross Domestic Product (Text)

Following is the text of the Gross Domestic Product report from the Commerce Department.

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 2.4 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, real GDP increased 2.5 percent. With the second estimate for the first quarter, increases in private inventory investment, in exports, and in imports were less than previously estimated, but the general picture of overall economic activity is not greatly changed (for more information, see “Revisions” on page 4).

Comprehensive Revision of the National Income and Product Accounts

BEA plans to release the results of the 14th comprehensive (or benchmark) revision of the national income and product accounts (NIPAs) in conjunction with the second quarter 2013 “advance” estimate on July 31, 2013. More information on the revision is available on BEA’s Web site at www.bea.gov/gdp-revisions. An article in the March 2013 issue of the Survey of Current Business discusses the upcoming changes in definitions and presentations, and an article in the May Survey describes the changes in statistical methods. An article in the September Survey will describe the estimates in detail. Revised NIPA table stubs and news release stubs will be available in June.

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 (2005) dollars. Price indexes are chain-type measures.

This news release is available on BEA’s Web site (www.bea.gov) along with the Technical Note (www.bea.gov/newsreleases/national/gdp/2013/tech1q13_2nd.htm) and Highlights (www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp1q13_2nd_fax. pdf) related to this release. For information on revisions, see “Revisions to GDP, GDI, and Their Major Components” (http://www.bea.gov/scb/pdf/2011/07 July/0711_revisions.pdf).

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and exports that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP in the first quarter primarily reflected an upturn in private inventory investment, an acceleration in PCE, a smaller decrease in federal government spending, and an upturn in exports that were partly offset by an upturn in imports and a deceleration in nonresidential fixed investment.

Motor vehicle output added 0.28 percentage point to the first-quarter change in real GDP after adding 0.18 percentage point to the fourth-quarter change. Final sales of computers added 0.02 percentage point to the first-quarter change in real GDP after adding 0.10 percentage point to the fourth-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.2 percent in the first quarter, 0.1 percentage point more than in the advance estimate; this index increased 1.6 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent in the first quarter, compared with an increase of 1.2 percent in the fourth.

Real personal consumption expenditures increased 3.4 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 8.2 percent, compared with an increase of 13.6 percent. Nondurable goods increased 2.2 percent, compared with an increase of 0.1 percent. Services increased 3.1 percent, compared with an increase of 0.6 percent.

Real nonresidential fixed investment increased 2.2 percent in the first quarter, compared with an increase of 13.2 percent in the fourth. Nonresidential structures decreased 3.5 percent, in contrast to an increase of 16.7 percent. Equipment and software increased 4.6 percent, compared with an increase of 11.8 percent. Real residential fixed investment increased 12.1 percent, compared with an increase of 17.6 percent.

Real exports of goods and services increased 0.8 percent in the first quarter, in contrast to a decrease of 2.8 percent in the fourth. Real imports of goods and services increased 1.9 percent, in contrast to a decrease of 4.2 percent.

Real federal government consumption expenditures and gross investment decreased 8.7 percent in the first quarter, compared with a decrease of 14.8 percent in the fourth. National defense decreased 12.1 percent, compared with a decrease of 22.1 percent. Nondefense decreased 2.1 percent, in contrast to an increase of 1.7 percent. Real state and local government consumption expenditures and gross investment decreased 2.4 percent, compared with a decrease of 1.5 percent.

The change in real private inventories added 0.63 percentage point to the first-quarter change in real GDP, after subtracting 1.52 percentage points from the fourth-quarter change. Private businesses increased inventories $38.3 billion in the first quarter, following an increases of $13.3 billion in the fourth quarter and $60.3 billion in the third.

Real final sales of domestic product -- GDP less change in private inventories -- increased 1.8 percent in the first quarter, compared with an increase of 1.9 percent in the fourth.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.5 percent in the first quarter; it was unchanged in the fourth quarter.

Gross national product

Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- increased 1.5 percent in the first quarter, compared with an increase of 0.9 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $30.3 billion in the first quarter after increasing $19.2 billion in the fourth; in the first quarter, receipts decreased $20.8 billion, and payments increased $9.5 billion.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation’s output of goods and services -- increased 3.6 percent, or $140.4 billion, in the first quarter to a level of $16,004.5 billion. In the fourth quarter, current-dollar GDP increased 1.3 percent, or $53.1 billion.

Gross domestic income

Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, increased 2.5 percent in the first quarter, compared with an increase of 5.5 percent (revised) in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change.

Revisions

The “second” estimate of the third-quarter percent change in GDP is 0.1 percentage point, or $3.9 billion, less than the advance estimate issued last month, primarily reflecting downward revisions to private inventory investment, to exports, and to state and local government spending that were partly offset by a downward revision to imports and an upward revision to personal consumption expenditures.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $43.8 billion in the first quarter, in contrast to an increase of $45.4 billion in the fourth. Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- increased $110.9 billion in the first quarter, in contrast to a decrease of $89.8 billion in the fourth.

Taxes on corporate income decreased $13.6 billion in the first quarter, compared with a decrease of $4.4 billion in the fourth. Profits after tax with inventory valuation and capital consumption adjustments decreased $30.2 billion in the first quarter, in contrast to an increase of $49.8 billion in the fourth. Dividends decreased $101.7 billion in contrast to an increase of $124.3 billion. The large fourth-quarter increase reflected accelerated and special dividends paid by corporations at the end of 2012 in anticipation of changes to individual income tax rates. Current-production undistributed profits increased $71.4 billion, in contrast to a decrease of $74.3 billion.

Domestic profits of financial corporations decreased $2.0 billion in the first quarter, compared with a decrease of $3.5 billion in the fourth. Domestic profits of nonfinancial corporations decreased $8.8 billion in the first quarter, in contrast to an increase of $24.8 billion in the fourth. In the first quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value added decreased. The decrease in unit profits reflected an increase in the unit nonlabor costs incurred by corporations that was partly offset by a decrease in unit labor costs; unit prices were unchanged.

The rest-of-the-world component of profits decreased $33.0 billion in the first quarter, in contrast to an increase of $24.1 billion in the fourth. This measure is calculated as (1) receipts by U.S. residents of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The first-quarter decrease was accounted for by a decrease in receipts and an increase in payments.

Profits before tax decreased $49.8 billion in the first quarter, in contrast to an increase of $27.3 billion in the fourth. The before-tax measure of profits does not reflect, as does profits from current production, the capital consumption and inventory valuation adjustments. These adjustments convert depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to the current-cost measures used in the national income and product accounts. The capital consumption adjustment increased $12.9 billion in the first quarter (from -$199.5 billion to -$186.6 billion), compared with an increase of $0.5 billion in the fourth. The inventory valuation adjustment decreased $6.9 billion (from - $9.2 billion to -$16.1 billion), in contrast to an increase of $17.6 billion.

The first-quarter changes in taxes on corporate income and in the capital consumption adjustment mainly reflect the expiration of bonus depreciation claimed under the American Taxpayer Relief Act of 2012. For detailed data, see the table “Net Effects of the Tax Acts of 2002, 2003, 2008, 2009, 2010, and 2012 on Selected Measures of Corporate Profits” at www.bea.gov/national/xls/technote_tax_acts.xls. Profits from current production are not affected because they do not depend on the depreciation-accounting practices used for federal income tax returns; rather, they are based on depreciation of fixed assets valued at current cost using consistent depreciation profiles based on used-asset prices. For more details on the effect of tax act provisions on the capital consumption adjustment, see FAQ #999 on the BEA Web site, “Why does the capital consumption adjustment for domestic business decline so much in the first quarter of 2012?” (www.bea.gov/faq/index.cfm?faq_id=999&searchQuery=999&start=0&ca t_id=0).

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 -- June 26, 2013, at 8:30 A.M. EDT for: Gross Domestic Product: First Quarter 2013 (Third Estimate) Corporate Profits: First Quarter (Revised Estimate)

SOURCE: U.S. Commerce Department, http://www.bea.gov.



To contact the reporter on this story:
Chris Middleton in Washington at 
cmiddleton2@bloomberg.net

To contact the editor responsible for this story:
Marco Babic at  mbabic@bloomberg.net



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