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Gross Domestic Product
Fourth Quarter of 2019 (Third Estimate)
March 26, 2020
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. BEA's source data and assumptions for the "third" estimate are shown in a "Key
Source Data and Assumptions" table on the BEA Web site. In a few weeks, the Survey of Current
Business, BEA’s online monthly journal, will publish a more detailed analysis of the estimates ("GDP and
the Economy").
Sources of Revision to Real GDP
Real GDP increased 2.1 percent (annual rate) in the fourth quarter of 2019, the same as in the “second”
estimate. The updated estimates primarily reflected an upward revision to consumer spending, that was
largely offset by downward revisions to federal government spending and nonresidential fixed
investment.
•
Within consumer spending, an upward revision to services was partly offset by a downward
revision to goods. Within services, the largest contributors to the upward revision were health
care and recreation services based on new and revised fourth-quarter Census Bureau Quarterly
Services Report (QSR) data. The largest contributor to the downward revision to goods was
gasoline, based on new and revised Energy Information Administration data.
•
Within federal government spending, the largest contributor to the downward revision was
investment in defense equipment, notably aircraft, based on the latest Department of Defense
federal budget reports.
•
Within nonresidential fixed investment, a downward revision to intellectual property products
(IPP) was partially offset by an upward revision to structures. Within IPP, a downward revision to
research and development was partially offset by an upward revision to software, reflecting new
and revised QSR data. Within structures, the upward revisions reflected revised Census
construction spending data. These revisions were largely offset by a downward revision to
mining exploration, shafts, and wells, based on revised drilling footage data from the American
Petroleum Institute.
Real final sales to private domestic purchasers, which measures private demand in the domestic
economy and is derived as the sum of consumer spending and private fixed investment, increased 1.3
percent in the fourth quarter, the same as in the second estimate.
Prices
BEA's featured measure of inflation in the U.S. economy, the price index for gross domestic purchases,
increased 1.4 percent in the fourth quarter, the same as in the second estimate.
The price index for personal consumption expenditures (PCE) increased 1.4 percent, an upward revision
of 0.1 percentage point. Excluding food and energy prices, the PCE price index increased 1.3 percent, an
upward revision of 0.1 percentage point.
Gross Domestic Income and Corporate Profits
Real gross domestic income (GDI), which measures the output of the economy as the incomes earned
and costs incurred in the production of goods and services (as measured by GDP), increased 2.6 percent
in the fourth quarter. The average of real GDP and real GDI increased 2.4 percent.
Profits from current production increased $53.0 billion, or 2.6 percent (quarterly rate), in the fourth
quarter, in contrast to a decrease of $4.7 billion, or 0.2 percent, in the third quarter. Domestic profits of
financial corporations increased $0.7 billion, domestic profits of nonfinancial corporations increased
$53.7 billion, and rest-of-the-world profits decreased $1.4 billion.
Estimates of corporate profits were affected by legal settlements in the third quarter. The national
income and product accounts record these settlements on an accrual basis in the quarter when the
settlement is finalized, regardless of when they are recorded on a company's financial statement. The
fourth-quarter increase in nonfinancial corporate profits were affected by a legal settlement paid by
Facebook that reduced third-quarter profits by $5.0 billion ($20.0 billion at an annual rate).
BEA’s profits measure that is conceptually most similar to S&P 500 profits—national after-tax profits
without inventory valuation and capital consumption adjustments—increased $67.2 billion in the fourth
quarter. Fourth-quarter national after-tax profits (shown in line 11 of table 9 of the GDP news release)
increased 4.1 percent from the same quarter one year ago.
Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612
-2-
@FedFRASER