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Technical Note
Gross Domestic Product
First Quarter of 2009 (Advance)
April 29, 2009
This technical note provides background information about the source data and
estimating methods used to produce the estimates presented in the GDP news
release. The complete set of estimates for the first quarter is available on BEA's
Web site at www.bea.gov; a brief summary of "highlights" is also posted on the
Web site. In a few weeks, the estimates will be published in BEA's monthly
journal, the Survey of Current Business, along with a more detailed analysis of
the estimates ("GDP and the Economy").
Real GDP
Real GDP decreased 6.1 percent (annual rate) in the first quarter, following a
decrease of 6.3 percent in the fourth quarter. The slightly smaller decrease in
real GDP in the first quarter than in the fourth reflected an upturn in consumer
spending for goods and a larger decrease in imports that were mostly offset by
larger decreases in inventory investment and in nonresidential structures and a
downturn in federal government spending. The larger decrease in nonresidential
structures reflected a sharp downturn in oil and natural gas drilling activity, based
on source data from the American Petroleum Institute, and larger decreases in
commercial and healthcare, power and communication, and other nonresidential
structures reflecting Census Bureau value-put-in-place data.
Source Data for the Advance Estimate
The advance GDP estimate for the first quarter of 2009 is based on source data
that are incomplete and subject to revision. Three months of source data were
available for consumer spending on goods; shipments of capital equipment other
than aircraft; motor vehicle sales and inventories; manufacturing durables
inventories; federal government outlays; and consumer, producer, and
international prices. Only two months of data were available for most other key
data sources; BEA’s assumptions for the third month are shown in table A.
Among those assumptions are the following:
•
•
•
•
a decrease in nondurable manufacturing inventories,
a large decrease in non-motor-vehicle merchant wholesale and retail
inventories, reflecting the sharp drop in February imports,
a decrease in exports of goods, excluding gold, and
a slight increase in imports of goods, excluding gold.
Prices
The price index for gross domestic purchases decreased 1.0 percent in the first
quarter after decreasing 3.9 percent in the fourth quarter. Excluding food and
energy prices, the price index for gross domestic purchases increased 1.4
percent in the first quarter, after increasing 1.2 percent in the fourth. The federal
pay raise for civilian and military personnel, which is treated as an increase in the
price of employee services purchased by the federal government, added about
0.3 percentage point to the change in the first quarter gross domestic purchases
price index.
American Recovery and Reinvestment Act of 2009
The American Recovery and Reinvestment Act of 2009 (ARRA) was signed into
law on February 17, 2009. Frequently referred to as the “stimulus bill,” the ARRA
is estimated by the Congressional Budget Office to cost about $787 billion over
the next 10 years. These costs are split between about $575 billion in additional
spending and about $212 billion in reduced revenues.
Because the effects of the bill will be spread across several sectors (federal
government, state and local government, and individual and business taxpayers)
and may be intermingled with other spending in the source data, BEA does not
expect to be able to separately identify the total quarterly or annual effect of the
ARRA on GDP. Given the timing of the passage of ARRA, however, it is likely
that the effect on first quarter GDP was small.
Also, many ARRA-funded transactions, such as grants and tax cuts, are not
directly included in GDP; the only government spending that is counted in GDP is
spending on goods and services. Information on grants, transfers, and taxes,
however, is included in BEA’s personal income and government sector
estimates. In the first quarter, federal grants-in-aid to state and local
governments were boosted $9.3 billion ($37.3 billion at an annual rate), primarily
in Medicaid grants. Another provision of ARRA—the “Making Work Pay” tax
credit—provides a tax credit of $400 per person ($800 for married couples filing
jointly) subject to income limitations. While employers were required to adjust
employee withholding by April 1, BEA’s estimates of disposable personal income
reflect an assumption that a small impact of $0.9 billion ($3.7 billion at an annual
rate) was included in March federal tax withholdings.
Troubled Asset Relief Program and Assistance to Government Sponsored
Enterprises
The Emergency Economic Stabilization Act of 2008 established the Troubled
Asset Relief Program (TARP), which authorized the Department of Treasury to
purchase or insure up to $700 billion in assets to relieve the financial crisis. The
Housing and Economic Recovery Act of 2008 provided authorization to assist the
government sponsored enterprises (GSE) Fannie Mae and Freddie Mac; that
assistance is being provided through the purchase of preferred stock in those
enterprises. Federal spending associated with these programs has no direct
impact on GDP, but is reflected in NIPA measures of capital transfers and
government sector net lending and borrowing.
In both of these programs, the federal government purchased assets at prices
that were higher than what would have been available in the private markets.
For this reason, BEA records a portion of the purchase as a capital transfer,
calculated as the difference between the actual price paid for the financial asset
and an estimate of its market value. This treatment is consistent with the
recommendations of the newly updated international guidelines, System of
National Accounts, 2008. BEA measures these transactions similarly to the
methods used by the Congressional Budget Office; however, BEA’s measures do
not reflect holding gains or losses that occur after the transaction takes place.
For the first quarter, Treasury provided $41.2 billion of capital to financial
institutions; BEA recorded $14.4 billion ($57.7 billion at an annual rate) as a
capital transfer. In addition, Treasury provided $46 billion of capital to Fannie
Mae and Freddie Mac; BEA recorded $41.4 billion ($165.6 billion at an annual
rate) as a capital transfer.
For further information on the treatment of federal government activities related
to the financial crisis, see the FAQ section of BEA’s Web site, www.bea.gov.
Brent R. Moulton
Associate Director for National Economic Accounts
Bureau of Economic Analysis
(202) 606-9606
Table A. KEY ASSUMPTIONS FOR THE ADVANCE ESTIMATE OF GDP
FOR THE FIRST QUARTER OF 2009
For many of the key series used to prepare the advance estimate of GDP, including retail sales,
unit automobile and truck sales and inventories, manufacturers' shipments of nondefense
capital goods (other than aircraft), manufacturers' inventories of durable goods, federal defense
spending, and consumer, producer, and international price indexes, actual data are available for all
months of the quarter.
For the key series shown in this table, actual data for the third month of the quarter usually are not
available in time for inclusion in the advance GDP estimate. BEA makes assumptions for the source
data that are not yet available; assumptions for March 2009 are shown in the last column of the
table. For most series shown, the data for February are preliminary and subject to further revision.
Occasionally, the data for earlier months are also subject to revision.
All series shown in the table are in billions of dollars, seasonally adjusted at annual rates, and are
published by the Bureau of the Census.
Oct.
Private fixed investment:
Nonresidential structures:
1 Value of new nonresidential
construction put in place………..
2008
Nov.
Dec.
Jan.
2009
Feb.
Mar.*
423.1
413.9
406.9
389.5
390.7
390.1
Equipment and software:
Manufacturers' shipments of
complete aircraft…………………..
16.7
16.5
44.9
50.6
32.8
37.9
Residential structures:
Value of new residential
construction put in place:
3
Single family………………………..
162.0
151.8
138.7
125.9
112.1
103.5
43.7
41.9
40.1
39.8
39.0
36.0
Change in private inventories:
5 Change in inventories for nondurable
manufacturing………………………..
-57.0
-45.9
-137.7
-28.8
-30.8
-33.6
5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment…
-53.2
-106.2
-122.8
-53.5
-54.3
-109.0
Net exports:
Exports of goods:
6 U.S. exports of goods,
international-transactionsaccounts basis……………………
1256.5
1164.5
1065.1
986.9
1016.3
975.0
6a
1242.2
1151.2
1052.5
971.3
1004.3
961.8
2091.3
1804.0
1680.2
1550.0
1458.6
1460.1
Excluding gold……………………..
2082.8
1797.3
1675.5
1544.4
1451.4
1451.7
8 Net exports of goods………………….
-834.8
-639.6
-615.1
-563.1
-442.3
-485.1
8a
-840.6
-646.1
-623.0
-573.1
-447.0
-489.9
290.3
290.1
279.1
273.6
275.9
274.7
2
4
7
Multifamily…………………………..
Excluding gold………………………
Imports of goods:
U.S. imports of goods,
international-transactionsaccounts basis...............…..…....
7a
Excluding gold……………………..
Government:
State and local:
Structures:
9
Value of new construction put
in place……………………………..
____________
*Assumption.
@FedFRASER