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Gross Domestic Product (Second Estimate)
Corporate Profits (Preliminary Estimate)
Second Quarter 2022
August 25, 2022
This technical note provides background information about the source data and estimating methods
used to produce the estimates presented in the GDP news release; a brief summary of "highlights" is
available on BEA's website at www.bea.gov.
Economic Factors and Second-Quarter 2022 GDP
Real GDP decreased 0.6 percent at an annual rate (0.1 percent at a quarterly rate1) in the second quarter
of 2022, following a decrease of 1.6 percent at an annual rate (0.4 percent at a quarterly rate) in the first
quarter. The second-quarter decrease occurred amid continued inflation, low unemployment, ongoing
supply-chain challenges, and rising interest rates. The economic effects of these factors cannot be
quantified in the GDP estimate for the second quarter of 2022 because the impacts are generally
embedded in source data and cannot be separately identified. For more information about COVID-19
impacts, refer to Federal Recovery Programs and BEA Statistics on our website. Real GDP for the second
quarter of 2022 is 2.6 percent above the level of real GDP for the fourth quarter of 20192.
The decrease in real GDP for the second quarter reflected decreases in private inventory investment,
residential fixed investment, federal government spending, and state and local government spending
that were partly offset by increases in exports and consumer spending. Imports, which are a subtraction
in the calculation of GDP, increased.
Sources of Revision to Real GDP
The decrease in second-quarter real GDP was revised up 0.3 percentage point from the “advance”
estimate, primarily reflecting upward revisions to consumer spending, private inventory investment, and
state and local government spending that were partly offset by downward revisions to residential fixed
investment, federal government spending, and exports. Imports were revised down.
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Within consumer spending, an upward revision to goods was partly offset by a downward
revision to services.
1 Percent changes in quarterly seasonally adjusted series are displayed at annual rates, unless otherwise specified. For more
information, refer to the FAQ Why does BEA publish percent changes in quarterly series at annual rates?.
2 The fourth quarter of 2019 was the most recent quarter prior to the onset of the COVID-19 pandemic. Calculated as the
percent change from the fourth quarter of 2019 to the second quarter of 2022 in news release table 3, line 1.
o
Within goods, both durable and nondurable goods were revised up, based on updated
Census Bureau Monthly Retail Trade Survey data. Within durable goods, the leading
contributor to the upward revision was recreational goods and vehicles (mainly
information processing equipment). Within nondurable goods, the revision was led by
"other" nondurable goods (notably, newspapers and periodicals, personal care
products, and recreational items).
o
Within services, revisions primarily reflected new second-quarter Census Quarterly
Services Survey (QSS) data, led by a downward revision to health care (notably,
nonprofit hospital services).
•
Within private inventory investment, upward revisions to retail trade and manufacturing were
partly offset by a downward revision to wholesale trade, based primarily on new and revised
Census Bureau inventory data.
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The revision to state and local government spending primarily reflected an upward revision to
structures investment based on new June and revised April and May Census Value of
Construction Put in Place (VPIP) data.
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The revision to residential fixed investment primarily reflected downward revisions to singlefamily structures, based on new and updated VPIP data, and improvements, based on Bureau of
Labor Statistics (BLS) remodelers’ payroll data.
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Within federal government spending, the downward revision was led by defense consumption
expenditures, notably compensation, based on new employment data from the Department of
Defense.
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For both exports and imports, the downward revisions were led by goods, based primarily on
new and updated Census trade in goods data for June.
o
Within exports, the downward revision to goods was led by nonautomotive capital
goods. An upward revision to services (notably travel) was partly offsetting, based on
updated data from BEA’s International Transactions Accounts.
o
Within imports, the downward revision to goods was led by durable consumer goods.
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 0.2
percent in the second quarter, an upward revision of 0.2 percentage point, primarily reflecting the
upward revision to consumer spending.
Prices
BEA's featured measure of inflation in the U.S. economy, the price index for gross domestic purchases,
increased 8.4 percent in the second quarter, an upward revision of 0.2 percentage point from the
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advance estimate. Excluding food and energy, gross domestic purchases prices increased 6.8 percent, an
upward revision of 0.2 percentage point. The leading contributors to the upward revision were state and
local government compensation, primarily reflecting new BLS Employment Cost Index data for state and
local government employees, and residential investment, primarily reflecting a revised price index for
new single-family houses under construction from the Census Bureau.
The price index for personal consumption expenditures (PCE) increased 7.1 percent in the second
quarter, unrevised from the advance estimate. Excluding food and energy, the “core” PCE price index
increased 4.4 percent, also unrevised. For a comparison of PCE prices to BLS consumer price indexes,
refer to NIPA Table 9.1U. Reconciliation of Percent Change in the CPI with Percent Change in the PCE
Price Index.
Gross Domestic Income and Corporate Profits
Real gross domestic income (GDI), which measures output of the economy as the costs incurred and the
incomes earned in the production of goods and services (as measured by GDP), increased 1.4 percent at
an annual rate (0.3 percent at a quarterly rate) in the second quarter following an increase of 1.8
percent at an annual rate (0.4 percent at a quarterly rate) in the first quarter. The average of real GDP
and real GDI increased 0.4 percent at an annual rate (0.1 percent at a quarterly rate) in the second
quarter, following an increase of 0.1 percent at an annual rate (less than 0.1 percent at a quarterly rate)
in the first quarter.
The increase in current-dollar GDI for the second quarter primarily reflected increases in compensation,
based primarily on employment, hours, and earnings data from the BLS Current Employment Statistics,
and corporate profits, based primarily on preliminary Census Quarterly Financial Report data and
tabulations of publicly traded companies’ earnings reports.
Profits from current production increased $175.2 billion, or 6.1 percent (quarterly rate), in the second
quarter. Domestic profits of financial corporations decreased $24.2 billion, domestic profits of
nonfinancial corporations increased $173.9 billion, and rest-of-the-world profits increased $25.5 billion.
Estimates of corporate profits were affected by legal settlements in the second quarter. Settlements are
recorded in the national income and product accounts (NIPAs) on an accrual basis in the quarter when
the settlement is finalized, regardless of when they are recorded on a company's financial statement.
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In May 2022, Allianz Global Investors U.S. LLC agreed to pay approximately $6 billion in fines and
restitution to the U.S. Securities and Exchange Commission and investors.
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In June 2022, a settlement of approximately $1 billion was reached between insurance
companies and victims of the Surfside, Florida condominium collapse.
These legal settlements paid by domestic corporations reduced financial corporate profits for the
second quarter by $7.0 billion ($27.9 billion at an annual rate). The estimate of GDI was not impacted
because the settlements were recorded in the NIPAs as business current transfer payments to
government and to persons, which offset the reductions to corporate profits.
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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 $284.9 billion in the
second quarter. Second-quarter national after-tax profits (shown in line 11 of table 9 of the GDP news
release) increased 11.9 percent from the same quarter one year ago.
Second-Quarter 2022 Capital Transfers to State and Local Governments
Capital transfers received by state and local government are presented in NIPA table 5.11U. Typically,
these transactions reflect federal capital grants (which includes investment grants and other capital
transfers for transportation, housing and community services, and general public service), disaster
related insurance benefits, and other specified transfers. In the second quarter of 2022, capital transfers
to state and local government increased $468.1 billion (annual rate), primarily reflecting increases in
capital grants from federal government and “other” capital transfers.
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Capital grants from federal government (presented on line 42 of 5.11U) increased $363.9 billion
(annual rate) in the second quarter, primarily reflecting distributions from the Coronavirus State
and Local Fiscal Recovery Funds program funded by the American Rescue Plan that support
future capital expenditures, including investments in property, facilities, or equipment. More
information can be found in the FAQ “How was federal assistance to the states authorized by
the American Rescue Plan recorded in the NIPAs?”
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The increase in “other” capital transfers (line 43) reflects the National Opioid Settlement, a legal
settlement between state and local governments and four U.S. corporations, drug distributors
Cardinal Health, McKesson, and AmerisourceBergen, and drug manufacturer Johnson &
Johnson, that provides $26.0 billion ($104.0 billion at an annual rate) for opioid epidemic
remediation. Settlements are recorded in the NIPAs on an accrual basis in the quarter when the
settlement is finalized. The settlement was classified as a capital transfer from corporate
business to state and local government. More information can be found in the FAQ “How does
the 2022 national opioid settlement impact the NIPAs?
Updates to First-Quarter Wages and Salaries
BEA’s standard practice for first quarter estimates of wages and salaries is to incorporate data from the
Bureau of Labor Statistics’ Quarterly Census of Employment and Wages (QCEW) program with the
publication of the annual update. For the first quarter of 2022, new QCEW data will be incorporated into
next month's release of the 2022 Annual Update of the National Economic Accounts (refer to “Looking
Ahead” for details).
Looking Ahead: 2022 Annual Update of the National Economic Accounts
BEA will release results from the 2022 annual update of the National Economic Accounts, which includes
the National Income and Product Accounts as well as the Industry Economic Accounts, on September 29,
2022. The update will present revised statistics for GDP, GDP by Industry, and gross domestic income
that cover the first quarter of 2017 through the first quarter of 2022. For details, refer to Information on
Updates to the National Economic Accounts.
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More Information
The complete set of statistics for the second quarter is available on BEA's website, along with a table
presenting the "Key Source Data and Assumptions" that underlie the statistics. In a few weeks, the
Survey of Current Business, BEA’s online monthly journal, will present a more detailed analysis of the
estimates ("GDP and the Economy").
Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612
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@FedFRASER