U.S. GDP Grows 1.8 Percent in Q3
Final sales of domestic products grows 3.2 percent.
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 third quarter of 2011 (that is, from the second quarter to the third quarter), 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 2.0 percent.
The increase in real GDP in the third quarter primarily reflected positive contributions from nonresidential fixed investment, personal consumption expenditures (PCE), exports, and federal government spending that were partly offset by negative contributions from private inventory investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the third quarter primarily reflected accelerations in PCE, in nonresidential fixed investment, and in exports, and a smaller decrease in state and local government spending that were partly offset by a larger decrease in private inventory investment.
Final sales of computers added 0.22 percentage point to the third-quarter change in real GDP after adding 0.07 percentage point to the second-quarter change. Motor vehicle output added 0.12 percentage point to the third-quarter change in real GDP after subtracting 0.10 percentage point from the second-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.0 percent in the third quarter, 0.1 percentage point more than the second estimate; this index increased 3.3 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.8 percent in the third quarter, compared with an increase of 2.7 percent in the second.
Real personal consumption expenditures increased 1.7 percent in the third quarter, compared with an increase of 0.7 percent in the second. Durable goods increased 5.7 percent, in contrast to a decrease of 5.3 percent. Nondurable goods decreased 0.5 percent, in contrast to an increase of 0.2 percent. Services increased 1.9 percent, the same increase as in the second.
Real nonresidential fixed investment increased 15.7 percent, compared with an increase of 10.3 percent. Nonresidential structures increased 14.4 percent, compared with an increase of 22.6 percent. Equipment and software increased 16.2 percent, compared with an increase of 6.2 percent. Real residential fixed investment increased 1.3 percent, compared with an increase of 4.2 percent.
Real exports of goods and services increased 4.7 percent in the third quarter, compared with an increase of 3.6 percent in the second. Real imports of goods and services increased 1.2 percent, compared with an increase of 1.4 percent.
Real federal government consumption expenditures and gross investment increased 2.1 percent in the third quarter, compared with an increase of 1.9 percent in the second. National defense increased 5.0 percent, compared with an increase of 7.0 percent. Nondefense decreased 3.8 percent, compared with a decrease of 7.6 percent.
Real state and local government consumption expenditures and gross investment decreased 1.6 percent, compared with a decrease of 2.8 percent.
The change in real private inventories subtracted 1.35 percentage points from the third-quarter change in real GDP, after subtracting 0.28 percentage point from the second-quarter change. Private businesses decreased inventories $2.0 billion in the third quarter, following increases of $39.1 billion in the second quarter and $49.1 billion in the first.
Real final sales of domestic product -- GDP less change in private inventories -- increased 3.2 percent in the third quarter, compared with an increase of 1.6 percent in the second.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.3 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 1.9 percent in the third quarter, compared with an increase of 2.2 percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $3.9 billion in the third quarter after increasing $28.0 billion in the second; in the third quarter, receipts decreased $13.3 billion, and payments decreased $17.2 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 4.4 percent, or $163.3 billion, in the third quarter to a level of $15,176.1 billion. In the second quarter, current-dollar GDP increased 4.0 percent, or $145.0 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 0.2 percent in the third quarter, the same increase as 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.
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $32.5 billion in the third quarter, compared with an increase of $61.2 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 $35.8 billion in the third quarter, compared with an increase of $86.2 billion in the second.
Taxes on corporate income decreased $9.1 billion in the third quarter, compared with a decrease of $1.8 billion in the second. Profits after tax with inventory valuation and capital consumption adjustments increased $41.6 billion in the third quarter, compared with an increase of $63.0 billion in the second. Dividends increased $14.0 billion, compared with an increase of $13.6 billion; current production undistributed profits increased $27.7 billion, compared with an increase of $49.3 billion.
Domestic profits of financial corporations increased $9.2 billion in the third quarter, in contrast to a decrease of $54.2 billion in the second. Domestic profits of nonfinancial corporations increased $17.9 billion in the third quarter, compared with an increase of $80.8 billion in the second. In the third quarter, real gross value added of nonfinancial corporations decreased, and profits per unit of real value added increased. The increase in unit profits reflected an increase in unit prices that was partly offset by increases in both the unit labor and unit nonlabor costs corporations incurred.
The rest-of-the-world component of profits increased $5.4 billion in the third quarter, compared with an increase of $34.6 billion in the second. The third-quarter increase was accounted for by a larger decrease 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 both financial and nonfinancial corporations increased. The increase in nonfinancial corporations reflected increases in manufacturing, in “other” nonfinancial industries, and in transportation and warehousing that were partly offset by decreases in information, in wholesale trade,
and in utilities. Within manufacturing, the largest increase was in “other” durable goods.
Profits before tax increased $22.3 billion in the third quarter, compared with an increase of $13.5 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 decreased $4.6 billion in the third quarter (from $107.3 billion to $102.7 billion), compared
with a decrease of $8.1 billion in the second. The inventory valuation adjustment increased $14.9 billion (from -$60.4 billion to -$45.5 billion), compared with an increase of $55.6 billion.
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