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Technical Note
Gross Domestic Product
Third Quarter of 2008 (Advance)
October 30, 2008
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 third 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 0.3 percent (annual rate) in the third quarter, following an
increase of 2.8 percent in the second quarter. The downturn in real GDP growth
reflected a downturn in consumer spending, a smaller decrease in imports, and a
deceleration in exports, which were partly offset by an upturn in inventory
investment and an acceleration in federal government spending.
Source Data for the Advance Estimate
The advance GDP estimate for the third 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:
•
•
•
•
•
a decrease in manufacturers’ shipments of complete aircraft, reflecting the
effects of a strike by machinists that began on September 6,
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 increased 4.8 percent in the third
quarter after increasing 4.2 percent in the second quarter. Excluding food and
energy prices, the price index for gross domestic purchases increased 3.1
percent in the third quarter, after increasing 2.2 percent in the second.
Disposable Personal Income
Real disposable personal income (DPI) decreased 8.7 percent in the third
quarter, following an increase of 11.9 percent in the second. Current-dollar DPI
decreased 3.7 percent, following an increase of 16.7 percent. The downturn in
third-quarter DPI reflected the pattern of the rebate payments to individuals from
the Economic Stimulus Act of 2008. Excluding the rebate payments, real DPI
increased 0.3 percent in the third quarter after decreasing 0.4 percent in the
second. The rebate payments added $61.5 billion (annual rate) to third quarter
DPI, of which $4.4 billion is shown as an increase in personal current transfer
receipts and $57.0 billion is shown as a reduction in personal current taxes. In
comparison, the rebate payments added $311.6 billion to second quarter DPI—
an increase in personal current transfer receipts of $112.3 billion and a reduction
in personal current taxes of $199.4 billion.
Hurricane Ike
During the third quarter, Hurricane Ike struck the Gulf Coast region, especially
impacting coastal Texas and Louisiana. Because the effects of storms are not
separately identified in BEA’s source data, it is not possible to estimate their
overall effect on GDP, but their impact is included in the GDP estimates. In
particular, disruptions to oil and gas extraction and to petroleum and
petrochemical production are reflected in BEA’s estimates for inventory change
in the nondurable manufacturing and wholesale trade industries.
The estimates of personal income also reflect some of the effects of the
hurricane. Proprietors’ income was reduced $2.9 billion (annual rate) and rental
income of persons was reduced $8.9 billion, reflecting uninsured damages to
fixed assets. Personal current transfer receipts were raised $9.0 billion,
reflecting benefits paid to individuals for the loss of personal property, such as
motor vehicles and household furnishings and equipment. The net effect of these
adjustments was to lower third quarter personal income $2.8 billion.
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 THIRD 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 September 2008 are shown in the last column of the
table. For most series shown, the data for August 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
Apr.
May
Jun.
Jul.
Aug.
Sep.*
400.2
412.8
424.0
419.3
416.0
415.6
Equipment and software:
Manufacturers' shipments of
complete aircraft…………………..
41.6
45.9
41.9
41.9
47.9
14.0
Residential structures:
Value of new residential
construction put in place:
3
Single family………………………..
203.6
198.2
191.4
184.7
176.9
168.4
4
44.3
45.8
45.7
46.6
44.6
42.4
Change in private inventories:
5 Change in inventories for nondurable
manufacturing………………………..
-24.0
20.1
49.2
4.6
10.3
-42.0
5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment…
80.0
39.8
54.6
91.3
31.7
-8.2
Net exports:
Exports of goods:
6 U.S. exports of goods,
international-transactionsaccounts basis……………………
1320.7
1332.0
1395.1
1450.0
1411.7
1331.7
6a
1296.1
1312.7
1381.8
1427.8
1400.4
1309.5
2196.1
2197.3
2250.3
2339.4
2262.5
2167.9
Excluding gold……………………..
2177.3
2187.7
2240.8
2325.9
2255.6
2151.9
8 Net exports of goods………………….
-875.4
-865.3
-855.2
-889.4
-850.8
-836.2
8a
-881.2
-875.0
-859.0
-898.1
-855.1
-842.5
278.9
281.5
283.3
286.2
288.5
287.3
Private fixed investment:
Nonresidential structures:
1 Value of new nonresidential
construction put in place………..
2
7
Multifamily…………………………..
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.