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Thursday, December 21, 2023 Contact: Connie O’Connell, (301) 278-9003 Gross Domestic Product (Third Estimate) Corporate Profits (Revised Estimate) and GDP by Industry, Third Quarter 2023 Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, according to the “third” estimate. In the second quarter, real GDP increased 2.1 percent. The increase in the third quarter primarily reflected increases in consumer spending and inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. Contributions to Percent Change in Real GDP, Third Quarter 2023 Real GDP increased 4.9 percent Percentage point contributions 5.00 4.00 3.00 2.00 1.00 0.00 -1.00 Real GDP, percent change Consumer spending Inventory investment * Exports State and Federal Housing Business local government investment investment government spending spending Imports Note. Imports are a subtraction in the calculation of GDP; thus, an increase in imports results in a negative contribution to GDP. U.S. Bureau of Economic Analysis Seasonally adjusted annual rates • The increase in consumer spending reflected increases in both goods and services. Within goods, the leading contributors to the increase were recreational goods and vehicles as well as other nondurable goods (led by pharmaceutical products). Within services, the leading contributors were housing and utilities, food services and accommodations, and health care. • The increase in inventory investment primarily reflected increases in manufacturing, wholesale trade, and retail trade. Compared to the second quarter, the acceleration in GDP in the third quarter primarily reflected an upturn in exports and accelerations in consumer spending and inventory investment. These movements were partly offset by a deceleration in business investment. Imports turned up. BEA data—including GDP, personal income, the balance of payments, foreign direct investment, the input-output accounts, and regional economic data—are available at www.bea.gov. Email alerts are also available. The “advance” estimate of GDP for the fourth quarter of 2023 and year 2023 will be released on January 25, 2024. Updates to GDP The update from the “second” estimate reflected downward revisions to consumer spending, inventory investment, and exports that were partly offset by upward revisions to state and local government, business investment, housing investment, and federal government spending. Imports were revised down. For additional details on the estimates, refer to the Technical Note. Prices Gross domestic purchases prices, the prices of goods and services purchased by U.S. residents, increased 2.9 percent in the third quarter after increasing 1.4 percent in the second quarter. Excluding food and energy, prices increased 2.5 percent after increasing 2.1 percent. Percent Quarter-to-Quarter Change in Prices Gross Domestic Purchases Price Index 8.0 Gross Domestic Purchases, Excluding Food and Energy PCE Price Index PCE, Excluding Food and Energy 6.0 4.0 2.0 0.0 2022:Q2 2022:Q3 2022:Q4 2023:Q1 U.S. Bureau of Economic Analysis 2023:Q2 2023:Q3 Seasonally adjusted annual rates Personal consumption expenditures (PCE) prices increased 2.6 percent in the third quarter after increasing 2.5 percent in the second quarter. Excluding food and energy, the PCE “core” price index increased 2.0 percent after increasing 3.7 percent. Personal income and saving Real disposable personal income (DPI)—personal income adjusted for taxes and inflation—increased 0.3 percent in the third quarter after increasing 3.3 Quarter-to-Quarter Change in Disposable Personal Income Percent percent in the second quarter. Real DPI (chained) Current-Dollar DPI Change 16.0 Current-dollar DPI increased 2.9 percent in the third quarter, following an increase of 5.8 percent in the second quarter. The increase in the third quarter reflected increases in compensation, proprietors’ income, and rental income of persons that were partly offset by a decrease in personal current transfer receipts. Personal current taxes, a subtraction in the calculation of DPI, increased in the third quarter. 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 2022:Q4 2023:Q1 Personal saving as a percentage of DPI was 4.2 U.S. Bureau of Economic Analysis percent in the third quarter, compared with 5.1 percent in the second quarter. 2023:Q2 2023:Q3 Seasonally adjusted annual rates Page 2 of 4 Corporate profits from current production Profits increased 3.4 percent at a quarterly rate in the third quarter after increasing 0.2 percent in the second quarter. Percent Change • Profits of domestic financial corporations increased 2.0 percent after decreasing 10.9 percent. • Profits of domestic nonfinancial corporations increased 4.1 percent after increasing 1.8 percent. • Profits from the rest of the world (net) increased 1.7 percent after increasing 4.5 percent. Quarter-to-Quarter Change in Corporate Profits 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 -1.0 -2.0 -3.0 -4.0 2022:Q2 2022:Q3 2022:Q4 U.S. Bureau of Economic Analysis 2023:Q1 2023:Q2 2023:Q3 Seasonally adjusted quarterly rates Corporate profits decreased 0.6 percent in the third quarter from one year ago. Real gross domestic product by industry In the third quarter, the value added of private goods-producing industries increased 10.2 percent, private services-producing industries increased 4.1 percent, and government increased 2.0 percent. Overall, 14 of 22 industry groups contributed to the third-quarter increase in real GDP. • • Within private goods-producing industries, the increase was led by nondurable goods manufacturing and construction. Within private services-producing industries, the increase was led by retail trade, information, and finance and insurance. Partly offsetting these increases was a decrease in utilities. Percent Change 12.0 Real GDP by Industry GDP Private Goods Private Services Government 9.0 6.0 3.0 0.0 -3.0 • The increase in government reflected an increase in state and local government that was partly offset by a decrease in federal government. 2022:Q3 2022:Q4 U.S. Bureau of Economic Analysis 2023:Q1 2023:Q2 2023:Q3 Seasonally adjusted annual rates Page 3 of 4 Contributions to Percent Change in Real GDP by Industry Group, 2023:Q3 Real GDP increased 4.9 percent Private goods Retail trade Information Nondurable goods manufacturing Construction Finance and insurance Real estate and rental and leasing Professional, scientific, and technical services Health care and social assistance State and local government Durable goods manufacturing Mining Transportation and warehousing Management of companies and enterprises Accommodation and food services Educational services Federal government Administrative and waste management services Agriculture, forestry, fishing, and hunting Arts, entertainment, and recreation Other services, except government Wholesale trade Utilities Private services -0.50 Government -0.01 -0.02 -0.05 -0.06 -0.08 -0.12 -0.15 0.44 0.39 0.32 0.28 0.26 0.22 0.16 0.14 0.11 0.06 0.75 0.70 0.65 1.36 Percentage points U.S. Bureau of Economic Analysis Seasonally adjusted annual rates Page 4 of 4