GDP & Corporate profits - 8:30

Full report here EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, TUESDAY, DECEMBER 22, 2009 BEA 09-57 * See the navigation bar at the right side of the news release text for links to data tables,contact personnel and their telephone numbers, and supplementary materials. GROSS DOMESTIC PRODUCT: THIRD QUARTER 2009 (THIRD ESTIMATE) CORPORATE PROFITS: THIRD QUARTER 2009 (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 2.2 percent in the third quarter of 2009, (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 decreased 0.7 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 2.8 percent (see "Revisions" on page 3). The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, federal government spending, and residential fixed investment that were partly offset by a negative contribution from nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased. The upturn in real GDP in the third quarter primarily reflected upturns in PCE, in exports, in private inventory investment, and in residential fixed investment and a smaller decrease in nonresidential fixed investment that were partly offset by an upturn in imports, a downturn in state and local government spending, and a deceleration in federal government spending. _______________ 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. _______________ Motor vehicle output added 1.45 percentage points to the third-quarter change in real GDP after adding 0.19 percentage point to the second-quarter change. Final sales of computers subtracted 0.08 percentage point from the third-quarter change in real GDP after subtracting 0.04 percentage point from the second-quarter change. The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.3 percent in the third quarter, 0.1 percentage point less than the second estimate; this index increased 0.5 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.3 percent in the third quarter, compared with an increase of 0.8 percent in the second. Real personal consumption expenditures increased 2.8 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. Real nonresidential fixed investment decreased 5.9 percent,compared with a decrease of 9.6 percent. Nonresidential structures decreased 18.4 percent, compared with a decrease of 17.3 percent. Equipment and software increased 1.5 percent, in contrast to a decrease of 4.9 percent. Real residential fixed investment increased 18.9 percent, in contrast to a decrease of 23.3 percent. Real exports of goods and services increased 17.8 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second. Real imports of goods and services increased 21.3 percent, in contrast to a decrease of 14.7 percent. Real federal government consumption expenditures and gross investment increased 8.0 percent in the third quarter, compared with an increase of 11.4 percent in the second. National defense increased 8.4 percent, compared with an increase of 14.0 percent. Nondefense increased 7.0 percent, compared with an increase of 6.1 percent. Real state and local government consumption expenditures and gross investment decreased 0.6 percent, in contrast to an increase of 3.9 percent. The change in real private inventories added 0.69 percentage point to the third-quarter change in real GDP, after subtracting 1.42 percentage points from the second-quarter change. Private businesses decreased inventories $139.2 billion in the third quarter, following decreases of $160.2 billion in the second quarter and $113.9 billion in the first. Real final sales of domestic product -- GDP less change in private inventories -- increased 1.5 percent in the third quarter, compared with an increase of 0.7 percent in the second. Gross domestic purchases Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 3.0 percent in the third quarter, in contrast to a decrease of 2.3 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 3.0 percent in the third quarter, in contrast to a decrease of 1.0 percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $25.7 billion in the third quarter after decreasing $7.4 billion in the second; in the third quarter, receipts increased $15.7 billion, and payments decreased $10.0 billion. Current-dollar GDP Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 2.6 percent, or $90.9 billion, in the third quarter to a level of $14,242.1 billion. In the second quarter, current-dollar GDP decreased 0.8 percent, or $26.8 billion. Revisions The "third" estimate of the third-quarter increase in real GDP is 0.6 percentage point, or $17.3 billion, lower than the second estimate issued last month, primarily reflecting downward revisions to nonresidential fixed investment, to private inventory investment, and to personal consumption expenditures. Advance Estimate Second Estimate Third Estimate (Percent change from preceding quarter) Real GDP................... 3.5 2.8 2.2 Current-dollar GDP......... 4.3 3.3 2.6 Gross domestic purchases price index. 1.6 1.4 1.3 Corporate Profits Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $132.4 billion in the third quarter, compared with an increase of $43.8 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 $28.4 billion in the third quarter, in contrast to a decrease of $30.5 billion in the second. Taxes on corporate income increased $15.1 billion in the third quarter, compared with an increase of $35.6 billion in the second. Profits after tax with inventory valuation and capital consumption adjustments increased $117.3 billion in the third quarter, compared with an increase of $8.2 billion in the second. Dividends decreased $6.1 billion, compared with a decrease of $62.1 billion; current- production undistributed profits increased $123.5 billion, compared with an increase of $70.3 billion. Domestic profits of financial corporations increased $82.8 billion in the third quarter, compared with an increase of $28.5 billion in the second. Domestic profits of nonfinancial corporations increased $27.6 billion in the third quarter, compared with an increase of $29.8 billion in the second. In the third quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value added increased. The increase in unit profits reflected decreases in both unit nonlabor and labor costs that more than offset a decrease in unit prices. The rest-of-the-world component of profits increased $22.0 billion in the third quarter, in contrast to a decrease of $14.6 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 increase was accounted for by a larger increase 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 increased in the third quarter. The increase in nonfinancial corporations reflected increases in utilities, information, "other" nonfinancial, retail trade, and transportation and warehousing that were partly offset by decreases in wholesale trade and manufacturing. Within manufacturing, the largest decrease was in “other” durable goods, and the largest increase was in motor vehicles. Profits before tax increased $157.9 billion in the third quarter, compared with an increase of $90.6 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 $9.7 billion in the third quarter (from -$128.6 billion to -$118.9 billion), compared with an increase of $16.3 billion in the second. The inventory valuation adjustment decreased $35.2 billion (from $18.1 billion to -$17.1 billion), compared with a decrease of $63.0 billion. * * * 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 -- January 29, 2010, at 8:30 A.M. EST for: Gross Domestic Product: Fourth Quarter 2009 (Advance Estimate)