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

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

NATIONAL INCOME AND PRODUCT ACCOUNTS GROSS DOMESTIC PRODUCT: SECOND QUARTER 2013 (ADVANCE ESTIMATE)

COMPREHENSIVE REVISION: 1929 THROUGH FIRST QUARTER 2013

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 1.7 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency. The “second” estimate for the second quarter, based on more complete data, will be released on August 29, 2013.

The increase in real GDP in the second quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, private inventory investment, and residential 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 in the second quarter primarily reflected upturns in nonresidential fixed investment and in exports, a smaller decrease in federal government spending, and an upturn in state and local government spending that were partly offset by an acceleration in imports and decelerations in private inventory investment and in PCE.

Comprehensive Revision of the National Income and Product Accounts

The estimates released today reflect 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

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.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.3 percent in the second quarter, compared with an increase of 1.2 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 0.8 percent in the second quarter compared with 1.4 percent in the first.

Real personal consumption expenditures increased 1.8 percent in the second quarter, compared with an increase of 2.3 percent in the first. Durable goods increased 6.5 percent, compared with an increase of 5.8 percent. Nondurable goods increased 2.0 percent, compared with an increase of 2.7 percent. Services increased 0.9 percent, compared with an increase of 1.5 percent.

Real nonresidential fixed investment increased 4.6 percent in the second quarter, in contrast to a decrease of 4.6 percent in the first. Nonresidential structures increased 6.8 percent, in contrast to a decrease of 25.7 percent. Equipment increased 4.1 percent, compared with an increase of 1.6 percent. Intellectual property products increased 3.8 percent, compared with an increase of 3.7 percent. Real residential fixed investment increased 13.4 percent, compared with an increase of 12.5 percent.

Real exports of goods and services increased 5.4 percent in the second quarter, in contrast to a decrease of 1.3 percent in the first. Real imports of goods and services increased 9.5 percent, compared with an increase of 0.6 percent.

Real federal government consumption expenditures and gross investment decreased 1.5 percent in the second quarter, compared with a decrease of 8.4 percent in the first. National defense decreased 0.5 percent, compared with a decrease of 11.2 percent. Nondefense decreased 3.2 percent, compared with a decrease of 3.6 percent. Real state and local government consumption expenditures and gross investment increased 0.3 percent, in contrast to a decrease of 1.3 percent.

The change in real private inventories added 0.41 percentage point to the second-quarter change in real GDP after adding 0.93 percentage point to the first-quarter change. Private businesses increased inventories $56.7 billion in the second quarter, following increases of $42.2 billion in the first quarter and $7.3 billion in the fourth.

Real final sales of domestic product -- GDP less change in private inventories -- increased 1.3 percent in the second quarter, compared with an increase of 0.2 percent in the first.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.4 percent in the second quarter, compared with an increase of 1.4 percent in the first.

Disposition of personal income

Current-dollar personal income increased $140.1 billion (4.1 percent) in the second quarter, in contrast to a decrease of $157.1 billion (4.4 percent) in the first. The upturn in personal income primarily reflected sharp upturns in personal dividend income and in wages and salaries and a sharp deceleration in contributions for government social insurance (a subtraction in the calculation of personal income).

* Personal dividend income increased in the second quarter, in contrast to a large decrease in the first. The first-quarter decline in dividend income primarily reflected the accelerated and special dividends that were paid by many companies in the fourth quarter of 2012.

* Wages and salaries increased in the second quarter, in contrast to a decrease in the first. The first-quarter decline in wages and salaries is based on preliminary quarterly census of employment and wages data from the Bureau of Labor Statistics.

* The sharp deceleration in contributions for government social insurance primarily reflected the first-quarter expiration of the “payroll tax holiday” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points.

Personal current taxes increased $36.0 billion in the second quarter, compared with an increase of $74.3 billion in the first.

Disposable personal income increased $104.1 billion (3.4 percent) in the second quarter, in contrast to a decrease of $231.5 billion (7.2 percent) in the first. Real disposable personal income increased 3.4 percent, in contrast to a decrease of 8.2 percent.

Personal outlays increased $44.7 billion (1.5 percent) in the second quarter, compared with an increase of $98.7 billion (3.4 percent) in the first. Personal saving -- disposable personal income less personal outlays -- was $553.4 billion in the second quarter, compared with $494.0 billion in the first.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was 4.5 percent in the second quarter, compared with 4.0 percent in the first. 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, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp

Current-dollar GDP

Current-dollar GDP -- the market value of the nation’s output of goods and services -- increased 2.4 percent, or $98.1 billion, in the second quarter to a level of $16,633.4 billion. In the first quarter, current-dollar GDP increased 2.8 percent, or $115.0 billion.

COMPREHENSIVE REVISION OF THE NATIONAL INCOME AND PRODUCT

ACCOUNTS: 1929 THROUGH FIRST QUARTER 2013

Today, BEA released revised statistics of gross domestic product (GDP) and of other national income and product accounts (NIPAs) series from 1929 through the first quarter of 2013. Comprehensive revisions, which are carried out about every 5 years, are an important part of BEA’s regular process for improving and modernizing its accounts to keep pace with the ever-changing U.S. economy.

Most of the tables in this release present revised statistics for 2002 through the first quarter of 2013. Selected NIPA tables, with statistics from 1929 forward, are available on BEA’s Web site (www.bea.gov). Most of the remaining NIPA tables will be released later in August. An article describing the statistics will be published in the September 2013 issue of BEA’s monthly journal, the Survey of Current Business.

Summary of revisions

The picture of the economy shown in the revised estimates is very similar in broad outline to the picture shown in the previously published estimates. The similarity and some of the differences can be seen in the following:

* For 1929-2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates. For the more recent period, 2002-2012, the growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates.

* For 2002-2012, the average rate of change in the prices paid by U.S. residents was 2.3 percent, 0.1 percentage point lower than in the previously published estimates.

* For 2009-2012, the average annual growth rate of real GDP was 2.4 percent, 0.3 percentage point higher than in the previously published estimates. The percent change in real GDP was revised up 0.1 percentage point for 2010, was unrevised for 2011, and was revised up 0.6 percentage point for 2012.

* For the period of contraction from the fourth quarter of 2007 to the second quarter of 2009, real GDP decreased at an average annual rate of 2.9 percent; in the previously published estimates, it decreased 3.2 percent.

* For the period of expansion from the second quarter of 2009 to the first quarter of 2013, real GDP increased at an average annual rate of 2.2 percent; in the previously published estimates, it increased 2.1 percent.

Improvements incorporated in this comprehensive revision

Comprehensive revisions encompass three major types of improvements:

* Changes in definitions and in classifications that update the accounts to more accurately portray the evolving U.S. economy,

* Changes in presentations that make the NIPA tables more informative, and

* Statistical changes that introduce new and improved methodologies and that bring in newly available and revised source data.

The improvements incorporated in the revised estimates have been previewed in a series of articles in the Survey and are available on BEA’s Web site at www.bea.gov/gdp-revisions.

Changes in definitions, classifications, and presentations. The changes in definitions, in classifications, and in presentations introduced in this comprehensive revision include the following:

* Expenditures by business, government, and nonprofit institutions serving households (NPISH) for research and development (R&D) are recognized as fixed investment. The new treatment improves BEA’s measures of fixed investment and allows users to better measure the effects of innovation and intangible assets on the economy.

* Similarly, expenditures by private enterprises for the creation of entertainment, literary, and artistic originals are recognized as fixed investment, further expanding BEA’s measures of intangible assets.

* In the NIPA fixed investment tables, a new category of investment, “intellectual property products,” consists of research and development; entertainment, literary, and artistic originals; and software.

* Transactions of defined benefit pension plans are recorded on an accrual accounting basis, which recognizes the costs of unfunded liabilities.

* An expanded set of ownership transfer costs for residential fixed assets is recognized as fixed investment, and the accuracy of the associated asset values and services lives is improved.

* The reference year for the chain-type quantity and price indexes and for the chained-dollar estimates is updated to 2009 from 2005.

Statistical changes. Important statistical changes that introduce new and improved methodologies and that bring in newly available source data include the following:

* BEA’s 2007 benchmark input-output (I-O) accounts, which provide the most thorough and detailed information on the structure of the U.S. economy, are used to benchmark the expenditure components of GDP and some of the income components.

* Beginning with 1966, the estimates of employers・ contributions to state and local government- sponsored defined contribution pension plans are improved by incorporating new source data.

* Beginning with 1985, the methods for computing financial services provided by commercial banks are improved to establish a more accurate picture of banking output.

* Beginning with 1993, the estimates of proprietors・income are improved by more accurately accounting for the capital gains and losses attributable to corporate partners.

* Beginning with 1993, the estimates of mortgage interest paid for nonfarm permanent-site housing are improved by incorporating several new data sources.

A table that summarizes the major sources of revision for selected NIPA components is available on BEA’s Web site at www.bea.gov/gdp-revisions.

Effects of improvements on major aggregates. The improvements and the new and revised source data incorporated with this comprehensive revision have notable effects on current-dollar NIPA aggregates without changing broad economic trends or the general patterns of business cycles. In the aggregate, changes in definitions (mainly the recognition of new forms of fixed investment) have the largest effect on current-dollar GDP and GDI for 1929・012, and statistical changes (improved data and methodologies) tend to have smaller effects. For example, for 2012, the level of current-dollar GDP was revised up $559.8 billion; $526.0 billion of this upward revision resulted from definitional changes.

Changes in definitions (mainly accrual accounting for defined benefit pension plans, which credits households with the value of accrued benefits from these plans) raise personal income and personal saving; statistical changes have mixed effects on personal income and on personal saving.

News release tables. This release includes the tables that will be regularly shown in future GDP news releases; in addition, special tables have been included to highlight the effects of the comprehensive revision. The special tables are:

* Tables 1A, 2A, and 4A compare revised and previously published estimates for percent changes

in real GDP, for contributions to percent change in real GDP, and for percent changes in chain- type price indexes for GDP and related measures, respectively;

* Tables 7A, 7B, and 7C show annual levels, percent changes, and revisions to percent changes for current-dollar GDP, for real (chained-dollar) GDP, and for chain-type price indexes for GDP, respectively;

* Table 12C shows revisions to corporate profits by industry.

Most of the tables show annual estimates beginning with 2002; quarterly estimates (if shown) begin with the first quarter of 2007. Three of the regular tables -- tables 3, 11, and 12 -- are split into A and B segments in this release to accommodate this longer-than-usual time span.

With this release, selected NIPA tables are available on BEA痴 Web site. Most of the remaining NIPA tables will be available later in August.

New and revised data

The revised estimates reflect the incorporation of newly available and revised source data. The most important source data that affect the estimates are BEA’s benchmark 2007 input-output (I-O) accounts. The revised estimates also incorporate data on inventories, on receipts and expenses of business establishments and of governments, on sales by detailed commodity and by product line, on final industry and product shipments from the 2007 Economic Census, and on trade margins from both the 2007 Economic Census and the 2007 annual surveys of merchant wholesale and of retail trade. In addition, the revised estimates incorporate monthly and annual Census Bureau industry data on manufacturing, on wholesale trade, and on retail trade for 2003 forward. The revised estimates also reflect data on housing from the 2010 decennial Census of Population and Housing. Estimates that are based on BEA’s international transactions accounts (ITAs) -- primarily net exports of goods and services and rest-of-the-world income receipts and payments -- were revised to reflect improvements to the ITAs that were introduced since 2009. Estimates of underreported income were revised using Internal Revenue Service (IRS) National Research Program data for 2006. Other data that were incorporated include revised data on the expenditures and receipts of state and local governments for fiscal years 2006-2009 from the Census Bureau.

The revised estimates for 2010-2012 also reflect the incorporation of newly available and revised source data that became available since the last annual NIPA revision in July 2012. The most important of these data sources are Census Bureau annual surveys of state and local governments for fiscal year 2010 (revised) and fiscal year 2011 (preliminary), of manufactures for 2010 (revised) and 2011 (preliminary), of merchant wholesale trade and of retail trade for 2010 (revised) and 2011 (preliminary), and of services and of the value of construction spending for 2010 and 2011 (revised) and 2012 (preliminary); federal government budget data for fiscal years 2012 and 2013 (revised); Bureau of Labor Statistics (BLS) quarterly census of employment and wages (QCEW) for 2010-2012 (revised); IRS tabulations of corporate tax returns for 2010 (revised) and 2011 (preliminary) and of sole proprietorship and partnership tax returns for 2011; and U.S. Department of Agriculture (USDA) farm statistics for 2010-2012 (revised).

Data from BEA’s annual revision of the ITAs were incorporated for 2010-2012 for most components at their “best level;” revisions for earlier years, along with data from the June 2014 revision of the ITAs, will be incorporated in the NIPAs in the 2014 annual revision.

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The revisions

For this comprehensive revision, many current-dollar estimates were revised back to 1929, the earliest year for which NIPA estimates are available, as a result of changes in definitions, in classifications, and in presentations.

Real GDP growth. For 1929-2012, the average annual growth rate of real GDP was 3.3 percent, 0.1 percentage point higher than in the previously published estimates. For the more recent period, 2002-2012, the average annual growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates. For the most recent years, 2009-2012, the average annual growth rate of real GDP was 2.4 percent, 0.3 percentage point higher than in the previously published estimates. For the 3 most recent years, the annual growth rate:

* was revised up from 2.4 percent to 2.5 percent for 2010, * was unrevised at 1.8 percent for 2011, and

was revised up from 2.2 percent to 2.8 percent for 2012.

Real GDI growth. For 1929-2012, the average annual growth rate of real GDI was 3.3 percent, 0.1 percentage point higher than in the previously published estimates. For the more recent period, 2002・012, the average annual growth rate was 1.8 percent, 0.2 percentage point higher than in the previously published estimates. For the most recent years, 2009・012, the average annual growth rate of real GDI was 2.6 percent, 0.3 percentage point higher than in the previously published estimates. For the 3 most recent years, the annual growth rate:

* was revised down from 3.1 percent to 2.7 percent for 2010, * was revised up from 1.8 percent to 2.5 percent for 2011, and * was revised up from 2.2 percent to 2.5 percent for 2012.

Business cycles. For the contraction that lasted from the fourth quarter of 2007 to the second quarter of 2009, real GDP decreased at a 2.9 percent annual rate; in the previously published estimates, it decreased 3.2 percent. The cumulative decrease in real GDP (not at an annual rate) was 4.3 percent; in the previously published estimates, the cumulative decrease was 4.7 percent. In the revised estimates, real GDP decreased in the first, third, and fourth quarters of 2008 and in the first and second quarters of 2009.

For the expansion from the second quarter of 2009 to the first quarter of 2013, real GDP increased at a 2.2 percent annual rate; in the previously published estimates, it increased 2.1 percent. From the third quarter of 2009 to the first quarter of 2013, real GDP increased in all quarters except for the first quarter of 2011, when real GDP decreased 1.3 percent; in the previously published estimates, real GDP increased in all quarters during this period. Earlier business cycles show little revision.

Price changes. The revisions to major price indexes are small. For 1929-2012, the average annual increase in the price index for gross domestic purchases was revised down from 3.0 percent to 2.9 percent; the average annual increase in the price index for GDP was unrevised at 2.9 percent. For 2002-2012, the average annual increase in the price index for gross domestic purchases was revised down from 2.4 percent to 2.3 percent; the average annual increase in the price index for GDP was revised down from 2.3 percent to 2.1 percent. For 2009-2012, the average annual increase in the price index for gross domestic purchases was revised down from 1.9 percent to 1.8 percent; the average annual increase in the price index for GDP was revised down from 1.8 percent to 1.6 percent.

For 1929-2012, the average annual increase in the price index for personal consumption expenditures (PCE) was unrevised at 2.9 percent. For 2002・012, the average annual increase in the PCE price index was revised down from 2.2 percent to 2.1 percent. For 2009-2012, the average annual increase in the PCE price index was unrevised at 2.0 percent.

Real disposable personal income (DPI) growth. For 1929-2012, the average annual increase in real DPI was 3.2 percent, 0.1 percentage point higher than in the previously published estimates. For 2002-2012, the average annual increase was 2.0 percent, 0.2 percentage point higher than in the previously published estimates. For 2009-2012, the average annual increase was 1.8 percent, 0.2 percentage point higher than in the previously published estimates.

Personal saving. Personal saving (DPI less personal outlays) was revised up for 1929-2007, down for 2008, and up for 2009-2012. These revisions reflect the revisions to DPI and are mainly the result of adopting the accrual treatment of defined benefit pension plans. The personal saving rate (personal saving as a percentage of DPI) was revised up for 1929-2007, down for 2008, and up for 2009-2012, reflecting the revisions to personal saving.

Revisions to current-dollar estimates

The revisions to current-dollar GDP, to personal income and its disposition, and to national income are shown in table 1B. This table shows the “revisions in level,” that is, the revised estimates less the previously published estimates; table 1B also shows the revisions as a percent of the previously published estimates for selected years. The revised levels of annual GDP and its major components for 1965-2012, along with percent changes from the preceding year and revisions to the percent changes, are shown in table 7A.

GDP. Current-dollar GDP was revised up for all years (1929・012). The upward revisions to current-dollar GDP mainly reflect the recognition of additional expenditures -- for R&D; for the creation of entertainment, literary, and artistic originals; and for an expanded set of ownership transfer costs - - as fixed investment (see “Revision Analysis for GDP, 2012”). The new accrual treatment for government-sponsored defined benefit pension plans results in revisions to current-dollar GDP through revisions to supplements to wages and salaries for government employees (specifically, employer contributions for employee pension and insurance funds); these revisions are upward for 1929-1978, downward for 1979-1991, and upward for 1992-2012.

PCE. Revisions to PCE are generally small before 1985; PCE was revised up for 1985 and 1986, down for 1987-2011, and up for 2012. PCE for services accounts for most of the revisions for all years except for 2011.

Services. PCE for services was revised up for 1985 and 1986, down for 1987-2010, and up for 2011 and 2012. For most years beginning with 1985, the improved method for estimating services of commercial banks results in downward revisions to PCE for financial services. For 1965-2012 (and for several prior years), the gross output of NPISH was revised down; the removal of R&D expenses of NPISH (and their reclassification as fixed investment) more than offsets the addition to expenses of consumption of fixed capital (CFC) for R&D capital. The revisions also reflect the incorporation of the 2007 benchmark I-O accounts, of new and revised annual Census Bureau surveys of services, and of other new and revised source data.

Goods. Revisions to PCE for goods begin with 1998 and follow a mixed pattern, with downward revisions for 2010・012. The revisions to PCE for goods reflect the incorporation of the 2007 benchmark I-O accounts, of new and revised data from the Census Bureau’s retail trade surveys, and of other new and revised source data.

Private fixed investment. Current-dollar private fixed investment was revised up for 1929-2012. The upward revisions reflect the recognition of additional expenditures -- for R&D; for the creation of entertainment, literary, and artistic originals; and for an expanded set of ownership transfer costs - - as fixed investment.

Nonresidential structures. The downward revisions for 2003-2012 primarily reflect the incorporation of data from the 2007 benchmark I-O accounts, of revised footage drilled and expenditure data from the Census Bureau and trade sources, and of revised Census Bureau construction spending data.

Equipment. Software is now classified as part of intellectual property products rather than as part of private equipment and software. Private equipment (without software) was revised up for 2003- 2012, reflecting the incorporation of BEA’s 2007 benchmark I-O accounts, of new and revised Census Bureau surveys of manufactures, and of other new and revised source data.

Residential fixed investment. The upward revisions to residential fixed investment for 1929-2012 mainly reflect the recognition of an expanded set of ownership transfer costs for residential fixed assets as fixed investment. The revisions also reflect the incorporation of data from the 2007 benchmark I-O accounts and of new and revised data from the Census Bureau surveys of construction spending.

Intellectual property products. Beginning with this comprehensive revision, the NIPA tables include a new category of fixed investment, “intellectual property products.” The recognition of expenditures for R&D and for the creation of entertainment, literary, and artistic originals as fixed investment results in upward revisions to gross private domestic investment. The downward revisions to software investment for 2010-2012 (and small revisions for 2003-2009) reflect the incorporation of the 2007 benchmark I-O accounts and of new and revised annual Census Bureau surveys of services.

Change in private inventories. The revisions begin with 2002 and are mostly upward; the revisions are dominated by revisions to nonfarm inventories for 2002-2010 and by farm inventories for 2011 and 2012. The revisions to nonfarm inventories reflect data from a variety of sources, including newly available and revised Census Bureau data on inventory book values, and the incorporation of new commodity price weights from the 2007 benchmark I-O accounts. The revisions to farm inventories reflect revised USDA farm statistics for 2010-2012.

Exports and imports of goods and services. Revisions to net exports of goods and services are generally small before 2002; the revisions are upward for 2002-2007, downward for 2008-2011, and upward for 2012. The revisions to net exports are mostly due to revisions to exports for 2002-2009 and for 2012 and are mostly due to revisions to imports for 2010 and 2011. Exports were revised up for 2002-2007, down for 2008-2010, and up for 2011 and 2012. The revisions to imports are upward for 2010 and 2011 and are small for other years. The estimates reflect the incorporation of revised data from BEA’s ITAs for 1999-2012.

Government consumption expenditures and gross investment. Government consumption expenditures and gross investment was revised up for 1929-2012. The revisions mainly reflect the recognition of expenditures for R&D as fixed investment and the addition to consumption expenditures of the CFC for R&D assets.

Federal government. The upward revisions to federal government consumption expenditures and gross investment for 1929-2012 mainly reflect the recognition of expenditures for R&D as fixed investment. The new accrual treatment for defined benefit pension plans results in upward revisions to contributions for employee pension and insurance funds for 1929-1979 and downward revisions for 1980-2012. The revisions also reflect improved source data and methods, including revised federal budget data for 2012 and 2013.

State and local government. State and local government consumption expenditures and gross investment was revised up for 1929-1975, down for 1976-1988, and up for 1989-2012. These revisions mainly reflect the new accrual approach for measuring state and local government-sponsored defined benefit pension plans, which results in revisions to state and local government contributions for employee pension and insurance funds that are upward for 1929-1978, downward for 1979-1986, and upward for 1987-2012. Revisions also result from statistical changes, including the incorporation of improved source data on expenditures for defined contribution pension plans and the improved method for estimating services of commercial banks. The revisions also reflect the incorporation of the 2007 benchmark I-O accounts, of new and revised government finances data from the Census Bureau, and of other new and revised source data.

Personal income. Personal income was revised up for 1929-2007, down for 2008, and up for 2009-2012. These revisions mainly reflect the accrual approach for measuring defined benefit pension plans, which results in upward revisions to personal income receipts on assets for 1929-2012 and in upward revisions to supplements (specifically, employer contributions for employee pension and insurance funds) for 1929-1975, for 1989-2002, and for 2004-2011. A number of other definitional and statistical changes affected the revisions to personal income. The revisions to the components of personal income are discussed below.

Wages and salaries. The revisions mainly reflect revisions to private wages and salaries. The revisions are generally small and mixed for years prior to 2002, are downward for 2002-2011, and are upward for 2012. The revisions reflect revised estimates of misreporting and new and revised BLS QCEW data.

Supplements to wages and salaries. The revisions to supplements reflect the revisions to employer contributions for pension and insurance funds that result from the accrual approach for measuring defined benefit pension plans. Employer contributions for state and local government defined benefit plans was revised up for 1929-1978, down for 1979-1986, and up for 1987-2012. Employer contributions for federal government defined benefit plans was revised up for 1929-1979 and down for 1980-2012. Employer contributions for private defined benefit plans was revised down for 1968-1985, up for 1986-2001, down for 2002-2006, up for 2007, and down for 2008-2012. Contributions for state and local government defined contribution pension plans was revised up for 1967-2012, reflecting the incorporation of improved source data.

Proprietors’ income. Proprietors’ income was revised down for 1965-2011 and up for 2012; the revisions for years before 1965 are small. Nonfarm proprietors’ income was revised down for 1965-2011 and up for 2012. The revisions to proprietors・ income primarily reflect revisions to nonfarm proprietors’ income for most years (except for 2009 and for 2012). Farm proprietors’ income had relatively large upward revisions for 2011 and 2012, reflecting the incorporation of revised USDA data for 2010-2012.

The revisions to nonfarm proprietors’ income reflect a number of definitional and statistical changes as well as revised source data. Revisions due to the improved accounting for the capital gains and losses attributable to corporate partners are downward for 2002-2008, upward for 2009, and downward for 2010-2012. Revisions due to the capitalization of expenditures for the creation of entertainment, literary, and artistic originals and for an expanded set of ownership transfer costs are downward, while the revisions due to the capitalization of R&D expenditures are upward. The revisions also reflect new IRS estimates for underreporting of income as well as new IRS tabulations of tax return data for sole proprietorships and partnerships for 2011.

Rental income of persons. Rental income of persons was revised down for 1929-2002 and was revised up for 2003 forward. The improved methodology for estimating mortgage interest paid for nonfarm permanent site housing results in downward revisions to rental income of persons for 1993 -2001 and upward revisions for 2002-2012. The recognition of an expanded set of ownership transfer costs for residential assets as fixed investment results in downward revisions for all years, partly offsetting the upward revisions to rental income of persons for 2003-2012. The revisions also reflect revisions to owner- and tenant-occupied space rent, based on data from the 2010 Census of Housing and the incorporation of other new and revised source data.

Personal interest income. Personal interest income was revised up for all years except for 2008. The upward revisions mainly reflect the new accrual treatment of defined benefit pension plans. Personal interest income was also affected by several other changes in methodology, including an improved method for distributing the investment income of regulated investment companies by type of income and the improved method for measuring interest associated with financial services of commercial banks. Revisions to personal interest income also reflect the incorporation of new and revised source data from the Federal Reserve Board and other sources.

Personal dividend income. Personal dividend income was revised up for most years for 1991- 2009, was revised down for 2010, was revised up for 2011, and was revised down for 2012. The revisions to personal dividend income reflect the improved method for distributing the investment income of regulated investment companies by type of income as well as the incorporation of new and revised IRS tabulations of corporate tax returns and of data from BEA’s ITAs on dividends from the rest of the world.

Personal current transfer receipts. Personal current transfer receipts was revised down for 2002, up for 2003-2009, and down for 2010-2012. The revisions reflect the incorporation of new and revised source data.

Contributions for government social insurance. The revisions to contributions for government social insurance (which is deducted in the calculation of personal income) are small for 2002-2012.

Personal current taxes. Personal current taxes was revised up for 2011 and 2012; revisions are generally small for prior years. The revisions reflect the incorporation of new tax collections data from the Treasury Department and the Social Security Administration and of new and revised Census Bureau state and local government finances data.

Disposable personal income. The pattern of revisions to disposable personal income, which is equal to personal income less personal current taxes, is similar to that of personal income.

Personal outlays. This series consists of PCE, personal interest payments, and personal current transfer payments. The revisions to personal outlays primarily reflect the revisions to PCE that were previously described. Personal interest payments was revised up for 1985 forward; revisions for prior years are small. The revisions to personal interest payments result from the improved method for measuring the financial services of commercial banks and associated interest income from the incorporation of new and revised source data. Personal current transfer payments was revised down for 2007-2012.

GDI. Current-dollar GDI, like current-dollar GDP, was revised up for all years for 1929-2012. The upward revisions to current-dollar GDI and GDP mainly reflect the recognition of additional expenditures -- for R&D; for the creation of entertainment, literary, and artistic originals; and for an expanded set of ownership transfer costs -- as fixed investment.

National income. National income was revised up for 1929・ 978, down for 1979-2001, up for 2002-2004, down for 2005-2010, and up for 2011 and 2012. The revisions to national income reflect the revisions to the components of national income that were previously described; the revisions to the remaining components of national income are discussed below.

Corporate profits with inventory valuation and capital consumption adjustments. Corporate profits was revised up for 1929-1986, down for 1987-2001, and up for 2002-2012. Revisions to corporate profits due to the capitalization of expenditures for R&D and for the creation of entertainment, literary, and artistic originals are upward for 1929-2012. Revisions to corporate profits due to the new accrual treatment of defined benefit pension plans are upward for 1968-1985, downward for 1986-2002, upward for 2003-2006, downward for 2007-2009, and upward for 2010-2012. The improved method for distributing the investment income of regulated investment companies by type of income results in revisions that are downward for 1992-2001, upward for 2002, and downward for 2003-2012. The revisions to corporate profits also reflect the incorporation of new and revised IRS tabulations of corporate tax return data and of new and revised data from BEA’s ITAs and from other sources.

Net interest and miscellaneous payments. Net interest and miscellaneous payments was revised up for most years for 1965-2001 and down for 2002-2012. Revisions for years prior to 1965 are small. The revisions reflect the incorporation of several definitional and statistical improvements, including the new accrual treatment of defined benefit pension plans, the improved method for distributing the investment income of regulated investment companies by type of income, the improved methodology for estimating mortgage interest paid for nonfarm permanent site housing, and the improved method for measuring the financial services of commercial banks, and the incorporation of new and revised data from a number of sources.

Consumption of fixed capital (CFC). CFC was revised up substantially for 1929-2012. The upward revisions to CFC reflect the addition of CFC for R&D; for the creation of entertainment, literary, and artistic originals; and for an expanded set of ownership transfer costs of residential assets. In addition, CFC was revised up to reflect a faster depreciation rate of brokers・commissions on residential structures. The revisions to CFC also reflect statistical improvements and revisions to BEA’s estimates of fixed investment and prices.

Statistical discrepancy. The statistical discrepancy, which is the difference between GDP and GDI, was revised for 1929-2012. The directions of the revisions are mixed for 1929-2000; the statistical discrepancy was revised down for 2001-2003, was revised up for 2004-2008, was revised down for 2009, was revised up for 2010, and was revised down for 2011 and 2012. (In theory, GDP should equal GDI; in practice, they differ because their components are estimated using largely independent and less-than-perfect source data.)

Next release -- August 29, 2013, at 8:30 A.M. EDT for: Gross Domestic Product: Second Quarter 2013 (Second Estimate)

Corporate Profits: Second Quarter (Preliminary Estimate)

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

To contact the reporter on this story: Kristy Scheuble in Washington at kmckeaney@bloomberg.net

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

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