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 3.1 percent in the third quarter of 2012, according to the “third” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 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, the increase in real GDP was 2.7 percent (see “Revisions” on page 3). The third estimate has not greatly changed the general picture of the economy for the third quarter except that personal consumption expenditures (PCE) is now showing a modest pickup, and imports is now showing a downturn.
The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The acceleration in real GDP in the third quarter primarily reflected upturns in private inventory investment and in federal government spending, a downturn in imports, an upturn in state and local government spending, and an acceleration in residential fixed investment that were partly offset by a downturn in nonresidential fixed investment and a deceleration in exports.
Final sales of computers added 0.11 percentage point to the third-quarter change in real GDP after subtracting 0.10 percentage point from the second-quarter change. Motor vehicle output subtracted 0.25 percentage point from the third-quarter change in real GDP after adding 0.20 percentage point to the second-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.4 percent in the third quarter, the same increase as in the second estimate; this index increased 0.7 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.2 percent in the third quarter, compared with an increase of 1.4 percent in the second.
Real personal consumption expenditures increased 1.6 percent in the third quarter, compared with an increase of 1.5 percent in the second. Durable goods increased 8.9 percent, in contrast to a decrease of 0.2 percent. Nondurable goods increased 1.2 percent, compared with an increase of 0.6 percent. Services increased 0.6 percent, compared with an increase of 2.1 percent.
Real nonresidential fixed investment decreased 1.8 percent in the third quarter, in contrast to an increase of 3.6 percent. Nonresidential structures was unchanged in the third quarter; in the second quarter, structures increased 0.6 percent. Equipment and software decreased 2.6 percent in the third quarter, in contrast to an increase of 4.8 percent in the second. Real residential fixed investment increased 13.5 percent, compared with an increase of 8.5 percent.
Real exports of goods and services increased 1.9 percent in the third quarter, compared with an increase of 5.3 percent in the second. Real imports of goods and services decreased 0.6 percent, in contrast to an increase of 2.8 percent.
Real federal government consumption expenditures and gross investment increased 9.5 percent in the third quarter, in contrast to a decrease of 0.2 percent in the second. National defense increased 12.9 percent, in contrast to a decrease of 0.2 percent. Nondefense increased 3.0 percent, in contrast to a decrease of 0.4 percent. Real state and local government consumption expenditures and gross investment increased 0.3 percent, in contrast to a decrease of 1.0 percent.
The change in real private inventories added 0.73 percentage point to the third-quarter change in real GDP, after subtracting 0.46 percentage point from the second-quarter change. Private businesses increased inventories $60.3 billion in the third quarter, following increases of $41.4 billion in the second and $56.9 billion in the first.
Real final sales of domestic product — GDP less change in private inventories — increased 2.4 percent in the third quarter, compared with an increase of 1.7 percent in the second.
Gross domestic purchases
Real gross domestic purchases — purchases by U.S. residents of goods and services wherever produced — increased 2.6 percent in the third quarter, compared with an increase of 1.0 percent in the second.
Gross national product
Real gross national product — the goods and services produced by the labor and property supplied by U.S. residents — increased 2.9 percent in the third quarter, compared with an increase of 2.1 percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which decreased $4.7 billion in the third quarter after increasing $27.4 billion in the second; in the third quarter, receipts decreased $2.0 billion, and payments increased $2.7 billion.
Current-dollar GDP
Current-dollar GDP — the market value of the nation’s output of goods and services — increased 5.9 percent, or $225.4 billion, in the third quarter to a level of $15,811.0 billion. In the second quarter, current-dollar GDP increased 2.8 percent, or $107.3 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 1.4 percent in the third quarter, in contrast to a decrease of 0.7 percent in the second. 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 “third” estimate of the third-quarter percent change in real GDP is 0.4 percentage point, or $14.4 billion, more than the “second” estimate issued last month, primarily reflecting an upward revision to personal consumption expenditures, a downward revision to imports, and upward revisions to exports and to state and local government spending.
Advance Est. Second Est. Third Est
(Percent change from preceding quarter)
Real GDP…………………………. 2.0 2.7 3.1
Current-dollar GDP………………… 5.0 5.5 5.9
Gross domestic purchases price index… 1.5 1.4 1.4
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $45.7 billion in the third quarter, compared with an increase of $21.8 billion in the second quarter. Current-production cash flow (net cash flow with inventory valuation adjustment) — the internal funds available to corporations for investment — increased $32.5 billion in the third quarter, compared with an increase of $6.0 billion in the second.
Taxes on corporate income increased $9.1 billion in the third quarter, in contrast to a decrease of $10.3 billion in the second. Profits after tax with inventory valuation and capital consumption adjustments increased $36.7 billion in the third quarter, compared with an increase of $31.9 billion in the second. Dividends increased $12.8 billion, compared with an increase of $20.4 billion; current-production undistributed profits increased $23.8 billion, compared with an increase of $11.6 billion.
Domestic profits of financial corporations increased $68.1 billion in the third quarter, in contrast to a decrease of $39.7 billion in the second. Domestic profits of nonfinancial corporations decreased $14.1 billion in the third quarter, in contrast to an increase of $27.8 billion in the second. In the third quarter, real gross value added of nonfinancial corporations decreased, and profits per unit of real value added was unchanged, reflecting an increase in unit prices that was offset by increases in both the unit labor costs and unit nonlabor costs corporations incurred.
The rest-of-the-world component of profits decreased $8.2 billion in the third quarter, in contrast to an increase of $33.6 billion in the second. 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 third-quarter decrease was accounted for by a larger increase in payments than in receipts.
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 financial corporations increased. The increase in profits of financial corporations was more than accounted for by an increase in “other” financial industries. Domestic profits of nonfinancial corporations decreased, primarily reflecting decreases in wholesale trade and in manufacturing that were partly offset by an increase in “other” nonfinancial industries. Within
manufacturing, durable goods industries accounted for most of the decrease. However, within nondurable goods, a notable decrease in chemical products was largely offset by increases in “other” nondurable goods and in petroleum and coal products.
Profits before tax increased $86.2 billion in the third quarter, in contrast to a decrease of $16.3 billion in the second. 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 $2.4 billion in the third quarter (from -$202.4 billion to -$200.0 billion), in contrast to a decrease of $1.7 billion in the second. The inventory valuation adjustment decreased $42.8 billion (from $16.0 billion to -$26.8 billion), in contrast to an increase of $39.7 billion.
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