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Technical Note
Gross Domestic Product
Fourth Quarter of 2008 (Advance)
January 30, 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 fourth 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 3.8 percent (annual rate) in the fourth quarter, following a
decrease of 0.5 percent in the third quarter. The larger decrease in real GDP
reflected a downturn in exports and a much larger decrease in business
investment in structures, equipment, and software.
Source Data for the Advance Estimate
The advance GDP estimate for the fourth quarter of 2008 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:
•
•
•
•
•
an increase in manufacturers’ shipments of complete aircraft, reflecting a
rebound from the effects of the machinists strike,
a decrease in nondurable manufacturing inventories,
a decrease in non-motor-vehicle merchant wholesale and retail
inventories,
a decrease in exports of goods, excluding gold, and
a decrease in imports of goods, excluding gold.
Prices
The price index for gross domestic purchases decreased 4.6 percent in the fourth
quarter after increasing 4.5 percent in the third quarter. Excluding food and
energy prices, the price index for gross domestic purchases increased 1.2
percent in the fourth quarter, after increasing 2.8 percent in the third.
Troubled Asset Relief Program
In October 2008, the Emergency Economic Stabilization Act of 2008 established
the Troubled Asset Relief Program (TARP). Among its provisions, the act
authorized the Department of the Treasury to purchase or insure up to $700
billion in assets to alleviate the financial crisis. By the end of the fourth quarter,
the program had disbursed $243 billion to banks and other institutions in
exchange for shares of preferred stock and warrants. The program also
disbursed a $4 billion loan to General Motors in the fourth quarter.
Purchases of financial assets are generally not recorded in the GDP accounts
(though they appear in the Federal Reserve’s flow of funds accounts). However,
when the Treasury purchases a financial asset (other than a loan) at more
favorable terms than are available in private markets, 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. For the fourth
quarter, in most cases BEA’s estimates of these capital transfers are based on
Congressional Budget Office estimates, which are prepared on a net present
value basis. The recording of a capital transfer in the GDP accounts does not
affect GDP or net government saving, but does reduce net government lending
or borrowing.
The data on capital transfer payments do not appear in the GDP news release
tables, but will be presented on BEA’s Web site in NIPA tables 3.1 and 3.2 and in
underlying detail table 5.10U.
For further information on the treatment of federal government activities related
to 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 FOURTH QUARTER OF 2008
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 December 2008 are shown in the last column of the
table. For most series shown, the data for November 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.
2008
Jul.
Private fixed investment:
Nonresidential structures:
1 Value of new nonresidential
construction put in place………..
Aug.
Sep.
Oct.
Nov.
Dec.*
417.0
416.1
426.9
425.1
428.2
426.6
Equipment and software:
Manufacturers' shipments of
complete aircraft…………………..
41.9
47.9
24.6
16.7
14.3
39.6
Residential structures:
Value of new residential
construction put in place:
3
Single family………………………..
185.1
177.6
169.6
161.9
151.2
138.5
47.1
44.0
44.5
44.4
43.5
39.9
4.6
10.4
-62.2
-57.0
-40.7
-69.6
91.3
20.5
-4.8
-66.7
-82.3
-119.9
Net exports:
Exports of goods:
6 U.S. exports of goods,
international-transactionsaccounts basis……………………
1450.0
1414.6
1293.8
1257.6
1166.6
1141.8
6a
1427.8
1403.3
1274.1
1243.2
1153.3
1131.0
2339.4
2267.3
2128.2
2086.1
1795.9
1698.6
Excluding gold……………………..
2325.9
2260.3
2110.6
2077.7
1789.2
1694.1
8 Net exports of goods………………….
-889.4
-852.7
-834.4
-828.6
-629.3
-556.8
8a
-898.1
-856.9
-836.5
-834.5
-635.9
-563.1
284.6
291.4
288.7
292.3
295.2
293.7
2
4
Multifamily…………………………..
Change in private inventories:
5 Change in inventories for nondurable
manufacturing………………………..
5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment…
7
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.