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

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

GROSS DOMESTIC PRODUCT: THIRD QUARTER 2013 (ADVANCE ESTIMATE)

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 2.8 percent in the third quarter of 2013 (that is, from the second quarter to the third quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.5 percent.

The Bureau emphasized that the third-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 third quarter, based on more complete data, will be released on December 5, 2013.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, residential fixed investment, nonresidential fixed investment, and state and local government spending 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 the third quarter primarily reflected a deceleration in imports and accelerations in private inventory investment and in state and local government spending that were partly offset by decelerations in exports, in nonresidential fixed investment, and in PCE.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.8 percent in the third quarter, compared with an increase of 0.2 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 1.5 percent in the third quarter, compared with an increase of 0.8 percent in the second.

___________ 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.

Real personal consumption expenditures increased 1.5 percent in the third quarter, compared with an increase of 1.8 percent in the second. Durable goods increased 7.8 percent, compared with an increase of 6.2 percent. Nondurable goods increased 2.7 percent, compared with an increase of 1.6 percent. Services increased 0.1 percent, compared with an increase of 1.2 percent.

Real nonresidential fixed investment increased 1.6 percent in the third quarter, compared with an increase of 4.7 percent in the second. Nonresidential structures increased 12.3 percent, compared with an increase of 17.6 percent. Equipment decreased 3.7 percent, in contrast to an increase of 3.3 percent. Intellectual property products increased 2.2 percent, in contrast to a decrease of 1.5 percent. Real residential fixed investment increased 14.6 percent, compared with an increase of 14.2 percent.

Real exports of goods and services increased 4.5 percent in the third quarter, compared with an increase of 8.0 percent in the second. Real imports of goods and services increased 1.9 percent, compared with an increase of 6.9 percent.

Real federal government consumption expenditures and gross investment decreased 1.7 percent in the third quarter, compared with a decrease of 1.6 percent in the second. National defense decreased 0.7 percent, compared with a decrease of 0.6 percent. Nondefense decreased 3.3 percent, compared with a decrease of 3.1 percent. Real state and local government consumption expenditures and gross investment increased 1.5 percent, compared with an increase of 0.4 percent.

The change in real private inventories added 0.83 percentage point to the third-quarter change in real GDP after adding 0.41 percentage point to the second-quarter change. Private businesses increased inventories $86.0 billion in the third quarter, following increases of $56.6 billion in the second quarter and $42.2 billion in the first.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.0 percent in the third quarter, compared with an increase of 2.1 percent in the second.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.5 percent in the third quarter, the same increase as in the second.

Disposition of personal income

Current-dollar personal income increased $132.7 billion (3.8 percent) in the third quarter, compared with an increase of $139.1 billion (4.1 percent) in the second. The deceleration in personal income primarily reflected decelerations in personal dividend income and in wages and salaries that were partly offset by an acceleration in government social benefits to persons and an upturn in farm proprietors・income.

Personal current taxes decreased $5.3 billion in the third quarter, in contrast to an increase of $35.8 billion in the second.

Disposable personal income increased $138.1 billion (4.5 percent) in the third quarter, compared with an increase of $103.2 billion (3.4 percent) in the second. Real disposable personal income increased 2.5 percent, compared with an increase of 3.5 percent.

Personal outlays increased $109.0 billion (3.7 percent) in the third quarter, compared with an increase of $42.1 billion (1.4 percent) in the second. Personal saving -- disposable personal income less personal outlays -- was $592.2 billion in the third quarter, compared with $563.2 billion in the second.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was 4.7 percent in the third quarter, compared with 4.5 percent in the second. 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 (formerly called the 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 4.8 percent, or $196.6 billion, in the third quarter to a level of $16,857.6 billion. In the second quarter, current-dollar GDP increased 3.1 percent, or $125.7 billion.

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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.”

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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.

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Next release -- December 5, 2013, at 8:30 A.M. EST for: Gross Domestic Product: Third Quarter 2013 (Second Estimate)

Corporate Profits: Third Quarter (Preliminary Estimate)

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Comparisons of Revisions to GDP

Quarterly estimates of GDP are released on the following schedule: the “advance” estimate, based on source data that are incomplete or subject to further revision by the source agency, is released near the end of the first month after 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.

Annual revisions, which generally 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 of real 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 1.3 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 second or to the third estimates. The larger average revisions to the latest estimate reflect the fact that comprehensive revisions include major improvements, such as the incorporation of BEA’s latest benchmark input-output accounts. The quarterly estimates correctly indicate the direction of change of real GDP 97 percent of the time, correctly indicate whether GDP is accelerating or decelerating 72 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend growth more than four-fifths of the time.

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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