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U.S. Fourth Quarter Advance GDP Technical Note (Text)

Following is the technical note of the Gross Domestic Product from the Commerce Department.

Technical Note

Gross Domestic Product

Fourth Quarter of 2010 (Advance)

This technical note provides background information about the source data and estimating methods used to produce the estimates presented in the GDP news release. The complete set of estimates for the fourth quarter is available on BEA's Web site at; a brief summary of "highlights" is also posted on the Web site. In a few weeks, the estimates will be published in BEA's monthly journal, the Survey of Current Business, along with a more detailed analysis of the estimates ("GDP and the Economy").

Real GDP

Real GDP increased 3.2 percent (annual rate) in the fourth quarter of 2010, following an increase of 2.6 percent in the third quarter. The acceleration in real GDP in the fourth quarter reflected a downturn in imports, an acceleration in consumer spending, and an upturn in residential investment that more than offset downturns in inventory investment and in federal government spending and a deceleration in nonresidential fixed investment.

Source data for the advance estimate

The advance GDP estimate for the fourth quarter of 2010 is based on source data that are incomplete and subject to revision. Three months of source data were available for consumer spending on goods; shipments of capital equipment other than aircraft; motor vehicle sales and inventories; manufacturing durables inventories; federal government outlays; and consumer, producer, and international prices. Only two months of data were available for most other key data sources; BEA's assumptions for the third month are shown in table A. Among those assumptions are the following:

*an increase in nondurable manufacturing inventories, *an increase in non-motor-vehicle merchant wholesale and retail trade inventories, *an increase in exports of goods, excluding gold, and *an increase in imports of goods, excluding gold.


The price index for gross domestic purchases increased 2.1 percent in the fourth quarter, following an increase of 0.7 percent in the third. Excluding food and energy, the price index for gross domestic purchases increased 1.1 percent in the fourth quarter, following an increase of 0.4 percent in the third.

American Recovery and Reinvestment Act of 2009

BEA's national accounts reflect the effects of the federal outlays and tax cuts included in the American Recovery and Reinvestment Act of 2009. Most of the effects of ARRA on GDP show up indirectly through the effects on GDP components such as consumer spending, residential investment, and state and local government spending. Thus, BEAÆs accounts do not directly identify the portion of GDP expenditures that is funded by ARRA. It is possible, however, to identify the effects of ARRA on selected federal government transactions.

During the fourth quarter of 2010, ARRA provisions lowered personal taxes about $120 billion (annual rate) and raised government social benefits to persons about $60 billion, thus raising disposable personal income (income after taxes) about $180 billion. In addition, ARRA funded about $94 billion in current grants to state and local governments (such as Medicaid and education grants); about $30 billion in capital transfers to state and local governments, to home buyers, and to businesses; about $23 billion in federal consumption expenditures and gross investment; and about $3 billion in subsidies for housing and energy. Further information, including quarterly estimates of the effects of ARRA beginning with 2009, is available at

Brent R. Moulton Associate Director for National Economic Accounts Bureau of Economic Analysis (202) 606-9606

SOURCE: U.S. Commerce Department,

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