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Technical Note
Gross Domestic Product
First Quarter of 2010 (Third Estimate)
June 25, 2010
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 first 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").
Sources of Revision to Real GDP
Real GDP growth in the first quarter was 2.7 percent (annual rate), which was 0.3
percentage point less than last month’s estimate. The downward revision to
GDP reflected an upward revision to imports and a downward revision to
consumer spending that were partly offset by upward revisions to exports and to
inventory investment.
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The upward revisions to exports and to imports reflected the incorporation
of the annual revision of the international transactions accounts on a bestchange basis.
The downward revision to consumer spending reflected widespread
downward revisions within services. The revisions primarily reflected the
incorporation of newly available quarterly services survey data for the first
quarter from the Census Bureau and newly available natural gas usage
and unit value data for March from the Energy Information Administration.
The upward revision to private inventory investment reflected revised
Census inventory data for March.
The price index for gross domestic purchases—the prices paid by U.S. residents
for goods and services, wherever produced—increased 1.7 percent in the first
quarter, the same increase as in the “second” estimate.
Corporate Profits
Profits from current production increased $116.9 billion, or 8.0 percent (quarterly
rate), in the first quarter. Domestic profits of financial corporations increased
$11.2 billion, domestic profits of nonfinancial corporations increased $79.6 billion,
and rest-of-the-world profits increased $26.1 billion in the first quarter.
Annual Revision Scheduled for July 30
The GDP news release on July 30 will present the regular annual revision of the
national income and product accounts. In addition to presenting the advance
estimate of GDP for the second quarter of 2010, most estimates, including GDP,
national income, personal income, and their components, will be revised from the
first quarter of 2007 through the first quarter of 2010. The revised estimates will
incorporate source data that are more complete and more detailed than those
previously available, including:
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Census Bureau annual surveys of manufactures, of merchant wholesale
trade, of retail trade, of services, and of state and local governments;
BEA international transactions accounts data;
Federal government budget data;
Internal Revenue Service tabulations of tax returns for corporations and
for sole proprietorships and partnerships; and
Department of Agriculture farm income statistics.
The annual revision will also incorporate refinements to estimating
methodologies, including the following:
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Data from the Census Bureau’s expanded quarterly services survey
(QSS) will be incorporated in the quarterly estimates of personal
consumption expenditures (PCE) categories for health care,
transportation, recreation, and other services. The percentage of quarterly
PCE services that will be based on the QSS will increase from 16 percent
to 39 percent.
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Newly available quality-adjusted communications equipment price indexes
from the Federal Reserve Board (specifically, indexes for enterprise and
home voice equipment; for transmission, local loop, and legacy central
office equipment; and for wireless system equipment) will be incorporated
into the estimates of communication equipment within private fixed
investment and into the estimates of “other” capital goods within exports
and imports of goods. In addition, the Federal Reserve Board’s price
index for data networking equipment, which is currently used in the
estimates of communication equipment within private fixed investment, will
be incorporated into the estimates of “other” capital goods within exports
and imports of goods.
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A new methodology and presentation for the purchasing power of GDP
and gross national product (known as “command-basis” GDP and GNP)
will be introduced in NIPA tables 1.8.3 and 1.8.6. These measures adjust
for the effects of changes in export and import prices (that is, the “terms of
trade”) on the purchasing power of the nation’s income from current
production. The gross domestic purchases price index will be used as the
deflator for these calculations, and the revised methodology and tables will
be carried back to 1929. These changes will provide an improved
measure for assessing economic well-being and will enhance consistency
with similar measures produced by other countries.
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The NIPA measures of saving and investment will be improved. Migrants’
transfers will be excluded from the capital account beginning with 1982,
which is the first year that these transactions were recognized. (This
definitional change is consistent with the change made in the annual
revision of BEA’s international transactions accounts that was released on
June 17.) NIPA table 5.1 will be expanded to provide additional detail on
national saving and investment, such as estimates of net lending and
borrowing by sector. In addition, new “underlying” tables will provide
quarterly estimates of net investment.
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Other definitional changes in the international transactions accounts, such
as the reclassification of certain goods and services, will be incorporated
in the NIPAs on a best-level basis beginning with 2007. These
reclassifications have little effect on overall GDP, though they affect the
goods and services composition of exports and imports.
Draft versions of the revised NIPA table formats are available on BEA’s Web site:
www.bea.gov/National/nipaweb2010/index.asp.
Brent R. Moulton
Associate Director for National Economic Accounts
Bureau of Economic Analysis
(202) 606-9606
@FedFRASER