The U.S. Economy Real Gross Domestic Product (GDP) Grew Only 1.8% (Third Estimate) Not 2.4% (Second Estimate) in First Quarter of 2013 — Videos
|1||Gross domestic product||0.1||2.5||1.3||4.1||2.0||1.3||3.1||0.4||1.8|
|2||Personal consumption expenditures||3.1||1.0||1.7||2.0||2.4||1.5||1.6||1.8||2.6|
|7||Gross private domestic investment||-5.3||12.5||5.9||33.9||6.1||0.7||6.6||1.3||7.4|
|11||Equipment and software||11.1||7.8||18.3||8.8||5.4||4.8||-2.6||11.8||4.1|
|13||Change in private inventories||—||—||—||—||—||—||—||—||—|
|14||Net exports of goods and services||—||—||—||—||—||—||—||—||—|
|21||Government consumption expenditures and gross investment||-7.0||-0.8||-2.9||-2.2||-3.0||-0.7||3.9||-7.0||-4.8|
|25||State and local||-4.7||-3.2||-2.0||-0.7||-2.2||-1.0||0.3||-1.5||-2.1|
|26||Gross domestic product, current dollars||2.2||5.2||4.3||4.2||4.2||2.8||5.9||1.3||3.1|
US first-quarter growth was 1.8%, not 2.4% – economy
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Gross Domestic Product, 1st quarter 2013 (third estimate);
Corporate Profits, 1st quarter 2013 (revised 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 1.8 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the "third" 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 "second" estimate issued last month. In the second estimate, real GDP increased 2.4 percent. With the third estimate for the first quarter, the increase in personal consumption expenditures (PCE) was less than previously estimated, and exports and imports are now estimated to have declined (for more information, see "Revisions" on page 3). The increase in real GDP in the first quarter primarily reflected positive contributions from PCE, private inventory investment, and residential fixed investment that were partly offset by negative contributions from federal government spending, state and local government spending, and exports. Imports, which are a subtraction in the calculation of GDP, decreased. BOX._____________ Comprehensive Revision of the National Income and Product Accounts BEA will 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. Revised NIPA table stubs and news release stubs are also available on the Web site. An article in the September Survey will describe the estimates in detail. ________________ 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 (2005) dollars. Price indexes are chain-type measures. This news release is available on BEA’s Web site along with the Technical Note and Highlights related to this release. For information on revisions, see "Revisions to GDP, GDI, and Their Major Components". _________________ The acceleration in real GDP in the first quarter primarily reflected an upturn in private inventory investment, an acceleration in PCE, and smaller decreases in federal government spending and in exports that were partly offset by a deceleration in nonresidential fixed investment and a smaller decrease in imports. Motor vehicle output added 0.33 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 0.09 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, unrevised from the second estimate; this index increased 1.6 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.5 percent in the first quarter, compared with an increase of 1.2 percent in the fourth. Real personal consumption expenditures increased 2.6 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 7.6 percent, compared with an increase of 13.6 percent. Nondurable goods increased 2.8 percent, compared with an increase of 0.1 percent. Services increased 1.7 percent, compared with an increase of 0.6 percent. Real nonresidential fixed investment increased 0.4 percent in the first quarter, compared with an increase of 13.2 percent in the fourth. Nonresidential structures decreased 8.3 percent, in contrast to an increase of 16.7 percent. Equipment and software increased 4.1 percent, compared with an increase of 11.8 percent. Real residential fixed investment increased 14.0 percent, compared with an increase of 17.6 percent. Real exports of goods and services decreased 1.1 percent in the first quarter, compared with a decrease of 2.8 percent in the fourth. Real imports of goods and services decreased 0.4 percent, compared with 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 12.0 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 2.1 percent, compared with a decrease of 1.5 percent. The change in real private inventories added 0.57 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 $36.7 billion in the first quarter, following 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 1.2 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 1.8 percent in the first quarter; it was unchanged in the fourth. Gross national product Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- increased 1.2 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 $17.7 billion in the first quarter after increasing $19.2 billion in the fourth; in the first quarter, receipts decreased $16.3 billion, and payments increased $1.4 billion. Current-dollar GDP Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 3.1 percent, or $120.0 billion, in the first quarter to a level of $15,984.1 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 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 downward revision to the percent change in real GDP primarily reflected downward revisions to personal consumption expenditures, to exports, and to nonresidential fixed investment that were partly offset by a downward revision to imports. Advance Estimate Second Estimate Third Estimate (Percent change from preceding quarter) Real GDP...................................... 2.5 2.4 1.8 Current-dollar GDP............................ 3.7 3.6 3.1 Gross domestic purchases price index.......... 1.1 1.2 1.2 Corporate Profits Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $28.0 billion in the first quarter, in contrast to an increase of $45.4 billion in the fourth quarter. Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- increased $125.6 billion in the first quarter, in contrast to a decrease of $89.8 billion in the fourth. Taxes on corporate income decreased $10.5 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 $17.5 billion in the first quarter, in contrast to an increase of $49.8 billion in the fourth. Dividends decreased $103.5 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 $85.8 billion, in contrast to a decrease of $74.3 billion. Domestic profits of financial corporations decreased $3.4 billion in the first quarter, compared with a decrease of $3.5 billion in the fourth. Domestic profits of nonfinancial corporations decreased $5.0 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 $19.6 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 larger decrease in receipts than in payments. Profits before tax with inventory valuation adjustment is the best available measure of industry profits because estimates of the capital consumption adjustment by industry do not exist. This measure reflects depreciation-accounting practices used for federal income tax returns. According to this measure, domestic profits of both financial and nonfinancial corporations decreased. The decrease in nonfinancial corporations primarily reflected decreases in "other" nonfinancial and in manufacturing that were partly offset by increases in information and in wholesale trade. Within manufacturing, the largest decreases were in petroleum and coal products and in machinery. Profits before tax decreased $34.7 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 $12.5 billion in the first quarter (from -$199.5 billion to -$187.0 billion), compared with an increase of $0.5 billion in the fourth. The inventory valuation adjustment decreased $5.8 billion (from -$9.2 billion to -$15.0 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?" * * * 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 -- July 31, 2013, at 8:30 A.M. EDT for: Gross Domestic Product: Second Quarter 2013 (Advance Estimate) Comprehensive Revision of the National Income and Product Accounts (1929 through First Quarter 2013)
Real GDP Per Capita: Another Perspective On The Economy
Earlier Friday we learned that the Advance Estimate for Q1 2013 real GDP came in at 2.5 percent, up from 0.4 percent in Q4 2012. Let’s now review the numbers on a per-capita basis.
For an alternate historical view of the economy, here is a chart of real GDP per-capita growth since 1960. For this analysis I’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence my 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.
I’ve drawn an exponential regression through the data using the Excel GROWTH() function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than long-term trend. In fact, the current GDP per-capita is 11.6% below the regression trend.
The real per-capita series gives us a better understanding of the depth and duration of GDP contractions. As we can see, since our 1960 starting point, the recession that began in December 2007 is associated with a deeper trough than previous contractions, which perhaps justifies its nickname as the Great Recession. In fact, at this point, 20 quarters beyond the 2007 GDP peak, real GDP per capita is still 1.04% off the all-time high following the deepest trough in the series.
Here is a more revealing snapshot of real GDP per capita, specifically illustrating the percent off the most recent peak across time, with recessions highlighted. The underlying calculation is to show peaks at 0% on the right axis. The callouts shows the percent off real GDP per-capita at significant troughs as well as the current reading for this metric.