U.S. Fourth 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 fourth quarter of 2013 (that is, from the third quarter to the fourth quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.1 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, the increase in real GDP was 3.2 percent. With this second estimate for the fourth quarter, an increase in personal consumption expenditures (PCE) was smaller than previously estimated (see “Revisions” on page 3).

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

The deceleration in real GDP growth in the fourth quarter reflected a deceleration in private inventory investment, a larger decrease in federal government spending, and downturns in residential fixed investment and in state and local government spending that were partly offset by accelerations in exports, in PCE, and in nonresidential fixed investment and a deceleration in imports.

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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 (2009) 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/2014/tech4q13_2nd.htm) and Highlights (www.bea.gov/newsreleases/national/gdp/2014/pdf/gdp4q13_2nd_fax. pdf) related to this release. For information on revisions, see “Revisions to GDP, GDI, and Their Major Components” (www.bea.gov/scb/pdf/2011/07 July/0711_revisions.pdf). _______

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.5 percent in the fourth quarter, 0.3 percentage point more than in the advance estimate; this index increased 1.8 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.8 percent in the fourth quarter, compared with an increase of 1.5 percent in the third.

Real personal consumption expenditures increased 2.6 percent in the fourth quarter, compared with an increase of 2.0 percent in the third. Durable goods increased 2.5 percent, compared with an increase of 7.9 percent. Nondurable goods increased 3.5 percent, compared with an increase of 2.9 percent. Services increased 2.2 percent, compared with an increase of 0.7 percent.

Real nonresidential fixed investment increased 7.3 percent in the fourth quarter, compared with an increase of 4.8 percent in the third. Nonresidential structures increased 0.2 percent, compared with an increase of 13.4 percent. Equipment increased 10.6 percent, compared with an increase of 0.2 percent. Intellectual property products increased 8.0 percent, compared with an increase of 5.8 percent. Real residential fixed investment decreased 8.7 percent, in contrast to an increase of 10.3 percent.

Real exports of goods and services increased 9.4 percent in the fourth quarter, compared with an increase of 3.9 percent in the third. Real imports of goods and services increased 1.5 percent, compared with an increase of 2.4 percent.

Real federal government consumption expenditures and gross investment decreased 12.8 percent in the fourth quarter, compared with a decrease of 1.5 percent in the third. National defense decreased 14.4 percent, compared with a decrease of 0.5 percent. Nondefense decreased 10.1 percent, compared with a decrease of 3.1 percent. Real state and local government consumption expenditures and gross investment decreased 0.5 percent, in contrast to an increase of 1.7 percent.

The change in real private inventories added 0.14 percentage point to the fourth-quarter change in real GDP, after adding 1.67 percentage points to the third-quarter change. Private businesses increased inventories $117.4 billion in the fourth quarter, following increases of $115.7 billion in the third quarter and $56.6 billion in the second.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.3 percent in the fourth quarter, compared with an increase of 2.5 percent in the third.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.4 percent in the fourth quarter, compared with an increase of 3.9 percent in the third.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation’s output of goods and services -- increased 4.0 percent, or $167.8 billion, in the fourth quarter to a level of $17,080.7 billion. In the third quarter, current-dollar GDP increased 6.2 percent, or $251.9 billion.

Revisions

The second estimate of the fourth-quarter percent change in real GDP is 0.8 percentage point, or $32.7 billion, less than the advance estimate issued last month, primarily reflecting downward revisions to personal consumption expenditures (PCE), to private inventory investment, to exports, and to state and local government spending that were partly offset by an upward revision to nonresidential fixed investment.

Advance Estimate Second Estimate (Percent change from preceding quarter)

Real GDP............................... 3.2 2.4 Current-dollar GDP..................... 4.6 4.0 Gross domestic purchases price index... 1.2 1.5

2013 GDP

Real GDP increased 1.9 percent in 2013 (that is, from the 2012 annual level to the 2013 annual level), compared with an increase of 2.8 percent in 2012.

The increase in real GDP in 2013 primarily reflected positive contributions from PCE, exports, nonresidential fixed investment, residential fixed investment, and private inventory 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 2013 primarily reflected a deceleration in nonresidential fixed investment, a larger decrease in federal government spending, and decelerations in PCE and in exports that were partly offset by a deceleration in imports and a smaller decrease in state and local government spending.

The price index for gross domestic purchases increased 1.2 percent in 2013, compared with an increase of 1.7 percent in 2012.

Current-dollar GDP increased 3.4 percent, or $552.9 billion, in 2013, to a level of $16,797.5 billion, compared with an increase of 4.6 percent, or $710.8 billion, in 2012.

During 2013 (that is, measured from the fourth quarter of 2012 to the fourth quarter of 2013), real GDP increased 2.5 percent. Real GDP increased 2.0 percent during 2012. The price index for gross domestic purchases increased 1.2 percent during 2013, compared with an increase of 1.5 percent during 2012.

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 -- March 27, 2014 at 8:30 A.M. EDT for: Gross Domestic Product: Fourth Quarter and Annual 2013 (Third Estimate) Corporate Profits: Fourth Quarter 2013 Explanatory Note: NIPA Measures of Quantities and Prices

Current-dollar GDP is a measure of the market value of goods, services, and structures produced in the economy in a particular period. Changes in current-dollar GDP can be decomposed into quantity and price components. Quantities, or “real” measures, and prices are expressed as index numbers with the reference year -- at present, the year 2009 -- equal to 100.

Annual changes in quantities and prices are calculated using a Fisher formula that incorporates weights from two adjacent years. (Quarterly changes in quantities and prices are calculated using a Fisher formula that incorporates weights from two adjacent quarters; quarterly indexes are adjusted for consistency to the annual indexes before percent changes are calculated.) For example, the 2008-09 annual percent change in real GDP uses prices for 2008 and 2009 as weights, and the 2008-09 annual percent change in GDP prices uses quantities for 2008 and 2009 as weights. These annual changes are “chained” (multiplied) together to form time series of quantity and price indexes. Percent changes in Fisher indexes are not affected by the choice of reference year. (BEA also publishes a measure of the price level known as the implicit price deflator (IPD), which is calculated as the ratio of the current-dollar value to the corresponding chained-dollar value, multiplied by 100. The values of the IPD are very close to the values of the corresponding “chain-type” price index.)

Index numbers of quantity and price indexes for GDP and its major components are presented in this release in tables 5 and 6. Percent changes from the preceding period are presented in tables 1, 4, 7, 8, and appendix table A. Contributions by major components to the percent change in real GDP are presented in table 2.

Measures of real GDP and its major components are also presented in dollar-denominated form, designated “chained (2009) dollar estimates.” For most series, these estimates, which are presented in table 3, are computed by multiplying the current-dollar value in 2009 by a corresponding quantity index number and then dividing by 100. For example, if a current-dollar GDP component equaled $100 in 2009 and if real output for this component increased 10 percent in 2010, then the chained (2009) dollar value of this component in 2010 would be $110 (= $100 x 110 / 100). Percent changes calculated from chained-dollar estimates and from chain-type quantity indexes are the same; any differences will be small and due to rounding.

Chained-dollar values for the detailed GDP components will not necessarily sum to the chained-dollar estimate of GDP (or to any intermediate aggregate). This is because the relative prices used as weights for any period other than the reference year differ from those of the reference year. A measure of the extent of such differences is provided by a “residual” line, which indicates the difference between GDP (or other major aggregate) and the sum of the most detailed components in the table. For periods close to the reference year, when there usually has not been much change in the relative prices that are used as weights, the residuals tend to be small, and the chained-dollar estimates can be used to approximate the contributions to growth and to aggregate the detailed estimates. For periods further from the reference year, the residuals tend to be larger, and the chained-dollar estimates are less useful for analyses of contributions to growth. Thus, the contributions to percent change shown in table 2 provide a better measure of the composition of GDP growth. In particular, for components for which relative prices are changing rapidly, calculation of contributions using chained-dollar estimates may be misleading even just a few years from the reference year.

Reference “Chained-Dollar Indexes: Issues, Tips on Their Use, and Upcoming Changes,” November 2003 Survey, pp. 8-16.

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



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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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