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Gross Domestic Product
Second Quarter of 2018 (Second Estimate)
August 29, 2018
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 second 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 "second" 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 4.2 percent (annual rate) in the second quarter of 2018, an upward revision of 0.1
percentage point from the "advance" estimate. The revision primarily reflected higher nonresidential
fixed investment and lower imports of goods. Consumer spending for goods was lower than previously
estimated.
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The upward revision to nonresidential fixed investment was mostly accounted for by investment
in software, based on new data from the Census Bureau Advance Quarterly Services Report.
Imports, which are a subtraction in the calculation of GDP, were revised down, primarily
reflecting a downward revision to imported goods. Within goods, the downward revision was
widespread, the largest contributor was petroleum. The updated estimates reflected updated
data from the joint BEA/Census monthly U.S. International Trade in Goods and Services Report.
A downward revision to consumer spending for goods reflecting widespread downward
revisions among the components of spending partly offset the upward revisions to real GDP.
Prices
The price index for gross domestic purchases, which measures the prices of final goods and services
purchased by U.S. residents, increased 2.3 percent in the second quarter, unchanged from the advance
estimate. The PCE price index increased 1.9 percent, revised up 0.1 percentage point. Excluding food
and energy prices, the PCE price index increased 2.0 percent, unchanged from the advance estimate.
Gross Domestic Income and Corporate Profits
Real gross domestic income (GDI), which measures output of the economy as the incomes earned and
costs incurred in the production of goods and services (as measured by GDP), increased 1.8 percent in
the second quarter. For a given quarter, the estimates of GDP and GDI may differ for a variety of
reasons, including the incorporation of largely independent source data. However, over longer time
spans, the estimates of GDP and GDI tend to follow similar patterns of change. The average of real GDP
and real GDI increased 3.0 percent.
Profits from current production increased $72.4 billion, or 3.3 percent (quarterly rate), in the second
quarter, and increased 7.7 percent from the same quarter one year ago. Domestic profits of financial
corporations increased $16.8 billion, domestic profits of nonfinancial corporations increased $63.6
billion, and rest-of-the-world profits decreased $8.0 billion.
National after-tax profits without inventory valuation and capital consumption adjustments (shown in
line 11 of table 9 of the GDP news release), conceptually closest to S&P 500 profits, increased $69.5
billion in the second quarter, following a $148.1 billion increase in the first. Second quarter national
after-tax profits increased 6.7 percent from the same quarter one year ago.
Revisions to Wages and Salaries in the First Quarter
In addition to presenting revised estimates for the second quarter, today's release presents revised
estimates of first-quarter wages and salaries, personal taxes, and contributions for government social
insurance. Wages and salaries are now estimated to have increased $122.5 billion in the first quarter of
2018, an upward revision of $0.4 billion. These estimates reflect revised wage and salary tabulations for
the first quarter from the BLS Quarterly Census of Employment and Wages (QCEW). In the first quarter,
real GDI increased 3.9 percent, unrevised from last month’s estimate.
Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612
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