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U.S. First Quarter Advance Gross Domestic Product (Text)

April 26, 2013

Following is the text of the Gross Domestic Product report from the Commerce Department.

GROSS DOMESTIC PRODUCT: FIRST QUARTER 2013 (ADVANCE 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 2.5 percent in the first quarter of 2013 (that is, from the fourth quarter to the first quarter), according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.4 percent.

The Bureau emphasized that the first-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and “Comparisons of Revisions to GDP” on page 5). The “second” estimate for the first quarter, based on more complete data, will be released on May 30, 2013.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, residential investment, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased.

Comprehensive Revision of the National Income and Product Accounts

BEA plans to 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痴 Web site at www.bea.gov/gdp-revisions, including a link to an article in the March 2013 issue of the Survey of Current Business that discusses the upcoming changes in definitions and presentations, including capitalizing spending on research and development and on entertainment originals and measuring transactions of defined benefit pension plans on an accrual accounting basis. An article in the May Survey will describe changes in statistical methods, and an article in the September Survey will describe the estimates in detail. Revised NIPA table stubs and news release stubs will be available in June.

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 www.bea.gov along with the Technical Note (www.bea.gov/newsreleases/national/gdp/2013/tech1q13_adv .htm) and highlights (www.bea.gov/newsreleases/national/gdp/2013/pdf/gdp1q13_ adv_fax.pdf) related to this release. ___________________________

The acceleration in real GDP in the first quarter primarily reflected an upturn in private inventory investment, an acceleration in PCE, an upturn in exports, and a smaller decrease in federal government spending that were partly offset by an upturn in imports and a deceleration in nonresidential fixed investment.

Motor vehicle output added 0.24 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 subtracted 0.01 percentage point from 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 1.1 percent in the first quarter, compared with an increase of 1.6 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent in the first quarter, compared with an increase of 1.2 percent in the fourth.

Real personal consumption expenditures increased 3.2 percent in the first quarter, compared with an increase of 1.8 percent in the fourth. Durable goods increased 8.1 percent, compared with an increase of 13.6 percent. Nondurable goods increased 1.0 percent, compared with an increase of 0.1 percent. Services increased 3.1 percent, compared with an increase of 0.6 percent.

Real nonresidential fixed investment increased 2.1 percent in the first quarter, compared with an increase of 13.2 percent in the fourth. Nonresidential structures decreased 0.3 percent, in contrast to an increase of 16.7 percent. Equipment and software increased 3.0 percent, compared with an increase of 11.8 percent. Real residential fixed investment increased 12.6 percent, compared with an increase of 17.6 percent.

Real exports of goods and services increased 2.9 percent in the first quarter, in contrast to a decrease of 2.8 percent in the fourth. Real imports of goods and services increased 5.4 percent, in contrast to a decrease of 4.2 percent.

Real federal government consumption expenditures and gross investment decreased 8.4 percent in the first quarter, compared with a decrease of 14.8 percent in the fourth. National defense decreased 11.5 percent, compared with a decrease of 22.1 percent. Nondefense decreased 2.0 percent, in contrast to an increase of 1.7 percent. Real state and local government consumption expenditures and gross investment decreased 1.2 percent, compared with a decrease of 1.5 percent.

The change in real private inventories added 1.03 percentage points to the first-quarter change in real GDP after subtracting 1.52 percentage points from the fourth-quarter change. Private businesses increased inventories $50.3 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 1.5 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 2.9 percent in the first quarter; it was unchanged in the fourth quarter.

Disposition of personal income

Current-dollar personal income decreased $109.1 billion (3.2 percent) in the first quarter, in contrast to an increase of $262.3 billion (8.1 percent) in the fourth. The downturn in personal income primarily reflected a sharp downturn in personal dividend income and a sharp acceleration in contributions for government social insurance -- a subtraction in the calculation of personal income. Fourth-quarter personal dividend income was boosted by the payment of accelerated and special dividends. The acceleration in contributions for government social insurance in the first quarter resulted from the expiration of the “payroll tax holiday.”

Personal current taxes increased $27.2 billion in the first quarter, compared with an increase of $34.3 billion in the fourth.

Disposable personal income decreased $136.3 billion (4.4 percent) in the first quarter, in contrast to an increase of $228.0 billion (7.9 percent) in the fourth. Real disposable personal income decreased 5.3 percent, in contrast to an increase of 6.2 percent.

Personal outlays increased $116.3 billion (4.1 percent) in the first quarter, compared with an increase of $97.0 billion (3.4 percent) in the fourth. Personal saving -- disposable personal income less personal outlays -- was $313.3 billion in the first quarter, compared with $566.0 billion in the fourth.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was 2.6 percent in the first quarter, compared with 4.7 percent in the fourth. For a comparison of personal saving in BEA痴 national income and product accounts with personal saving in the Federal Reserve Board痴 flow of funds accounts and data on changes in net worth, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation’s output of goods and services -- increased 3.7 percent, or $146.1 billion, in the first quarter to a level of $16,010.2 billion. In the fourth quarter, current-dollar GDP increased 1.3 percent, or $53.1 billion.

BOX_____________________

Information on the assumptions used for unavailable source data is provided in a technical note that is posted with the news release on BEA’s Web site. Within a few days after the release, a detailed “Key Source Data and Assumptions” file is posted on the Web site. In the middle of each month, an analysis of the current quarterly estimate of GDP and related series is made available on the Web site; click on Survey of Current Business, “GDP and the Economy.” For information on revisions, see “Revisions to GDP, GDI, and Their Major Components.” ________________________

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 -- May 30, 2013, at 8:30 A.M. EDT for:

Gross Domestic Product: First Quarter 2013 (Second Estimate)

Corporate Profits: First Quarter 2013 (Preliminary Estimate)

Comparisons of Revisions to GDP

Quarterly estimates of GDP are released on the following schedule: the “advance” estimate, based on source data that are incomplete or subject to further revision by the source agency, is released near the end of the first month after the end of the quarter; as more detailed and more comprehensive data become available, the “second” and “third” estimates are released near the end of the second and third months, respectively. The “latest“・estimate reflects the results of both annual and comprehensive revisions.

Annual revisions, which generally cover the quarters of the 3 most recent calendar years, are usually carried out each summer and incorporate newly available major annual source data. Comprehensive (or benchmark) revisions are carried out at about 5-year intervals and incorporate major periodic source data, as well as improvements in concepts and methods that update the accounts to portray more accurately the evolving U.S. economy.

The table below shows comparisons of the revisions between quarterly percent changes of current-dollar and of real GDP for the different vintages of the estimates. From the advance estimate to the second estimate (one month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the advance estimate to the third estimate (two months later), it is 0.6 percentage point. From the advance estimate to the latest estimate, the average revision without regard to sign is 1.3 percentage points. The average revision (with regard to sign) from the advance estimate to the latest estimate is 0.2 percentage point, which is larger than the average revisions from the advance estimate to the second or to the third estimates. The larger average revisions to the latest estimate reflect the fact that comprehensive revisions include major improvements, such as the incorporation of BEA痴 latest benchmark input-output accounts. The quarterly estimates correctly indicate the direction of change of real GDP 97 percent of the time, correctly indicate whether GDP is accelerating or decelerating 72 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend growth more than four-fifths of the time.

Explanatory Note: NIPA Measures of Quantities and Prices

Current-dollar GDP is a measure of the market value of goods, services, and structures produced in the economy in a particular period. Changes in current- dollar GDP can be decomposed into quantity and price components. Quantities, or 途eal・measures, and prices are expressed as index numbers with the reference year -- at present, the year 2005 -- equal to 100.

Annual changes in quantities and prices are calculated using a Fisher formula that incorporates weights from two adjacent years. (Quarterly changes in quantities and prices are calculated using a Fisher formula that incorporates weights from two adjacent quarters; quarterly indexes are adjusted for consistency to the annual indexes before percent changes are calculated.) For example, the 2007-08 annual percent change in real GDP uses prices for 2007 and 2008 as weights, and the 2007-08 annual percent change in GDP prices uses quantities for 2007 and 2008 as weights. These annual changes are 田hained・(multiplied) together to form time series of quantity and price indexes. Percent changes in Fisher indexes are not affected by the choice of reference year. (BEA also publishes a measure of the price level known as the implicit price deflator (IPD), which is calculated as the ratio of the current-dollar value to the corresponding chained-dollar value, multiplied by 100. The values of the IPD are very close to the values of the corresponding “chain-type” price index.)

Index numbers of quantity and price indexes for GDP and its major components are presented in this release in tables 5 and 6. Percent changes from the preceding period are presented in tables 1, 4, 7, 8, and appendix table A. Contributions by major components to the percent change in real GDP are presented in table 2.

Measures of real GDP and its major components are also presented in dollar-denominated form, designated “chained (2005) dollar estimates.” For most series, these estimates, which are presented in table 3, are computed by multiplying the current-dollar value in 2005 by a corresponding quantity index number and then dividing by 100. For example, if a current-dollar GDP component equaled $100 in 2005 and if real output for this component increased 10 percent in 2006, then the chained (2005) dollar value of this component in 2006 would be $110 (= $100 x 110 / 100). Percent changes calculated from chained-dollar estimates and from chain-type quantity indexes are the same; any differences will be small and due to rounding.

Chained-dollar values for the detailed GDP components will not necessarily sum to the chained- dollar estimate of GDP (or to any intermediate aggregate). This is because the relative prices used as weights for any period other than the reference year differ from those of the reference year. A measure of the extent of such differences is provided by a 途 esidual・line, which indicates the difference between GDP (or other major aggregate) and the sum of the most detailed components in the table. For periods close to the reference year, when there usually has not been much change in the relative prices that are used as weights, the residuals tend to be small, and the chained-dollar estimates can be used to approximate the contributions to growth and to aggregate the detailed estimates. For periods further from the reference year, the residuals tend to be larger, and the chained-dollar estimates are less useful for analyses of contributions to growth. Thus, the contributions to percent change shown in table 2 provide a better measure of the composition of GDP growth. In particular, for components for which relative prices are changing rapidly, calculation of contributions using chained-dollar estimates may be misleading even just a few years from the reference year. SOURCE: U.S. Commerce Department, http://www.bea.gov.

To contact the reporter on this story: Ainhoa Goyeneche in Washington at agoyenechecu@bloomberg.net

To contact the editor responsible for this story: Marco Babic at mbabic@bloomberg.net


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