International Financial Law Prof Blog

Editor: William Byrnes
Texas A&M University
School of Law

Saturday, August 4, 2018

National Income and Product Accounts Gross Domestic Product: Second Quarter 2018 (Advance Estimate), and Comprehensive Update

Real gross domestic product increased at an annual rate of 4.1 percent in the second quarter of 2018
(table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first
quarter, real GDP increased 2.2 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see "Source Data for the
Advance Estimate" on page 2). The "second" estimate for the second quarter, based on more complete
data, will be released on August 29, 2018.

The increase in real GDP in the second quarter reflected positive contributions from personal
consumption expenditures (PCE), exports, nonresidential fixed investment, federal government
spending, and state and local government spending that were partly offset by negative contributions
from private inventory investment and residential fixed investment. Imports, which are a subtraction in
the calculation of GDP, increased (table 2).
 
Real GDP: Percent Change from Preceding Quarter
BOX._______

                Comprehensive Update of the National Income and Product Accounts

The estimates released today also reflect the results of the 15th comprehensive update of the National
Income and Product Accounts (NIPAs). The updated estimates reflect previously announced improvements,
and include the introduction of new not seasonally adjusted estimates for GDP, GDI, and their major
components. For more information, see the Technical Note. Revised NIPA table stubs, initial results, and
background materials are available on the BEA Web site.

END BOX.______

The acceleration in real GDP growth in the second quarter reflected accelerations in PCE and in exports,
a smaller decrease in residential fixed investment, and accelerations in federal government spending
and in state and local spending. These movements were partly offset by a downturn in private inventory
investment and a deceleration in nonresidential fixed investment. Imports decelerated.

Current-dollar GDP increased 7.4 percent, or $361.5 billion, in the second quarter to a level of $20.4
trillion. In the first quarter, current-dollar GDP increased 4.3 percent, or $209.2 billion (table 1 and table
3A).

The price index for gross domestic purchases increased 2.3 percent in the second quarter, compared
with an increase of 2.5 percent in the first quarter (table 4). The PCE price index increased 1.8 percent,
compared with an increase of 2.5 percent. Excluding food and energy prices, the PCE price index
increased 2.0 percent, compared with an increase of 2.2 percent (table 4).


Personal Income (table 8)

Current-dollar personal income increased $183.7 billion in the second quarter, compared with an
increase of $215.8 billion in the first quarter. Decelerations in wages and salaries, government social
benefits, personal interest income, and nonfarm proprietors' income were partly offset by accelerations
in personal dividend income and rental income, a deceleration in contributions for government social
insurance (a subtraction in the calculation of personal income), and an upturn in farm proprietors’
income.

Disposable personal income increased $167.5 billion, or 4.5 percent, in the second quarter, compared
with an increase of $256.7 billion, or 7.0 percent, in the first quarter. Real disposable personal income
increased 2.6 percent, compared with an increase of 4.4 percent.

Personal saving was $1,051.1 billion in the second quarter, compared with $1094.1 billion in the first
quarter. The personal saving rate -- personal saving as a percentage of disposable personal income --
was 6.8 percent in the second quarter, compared with 7.2 percent in the first quarter.

Updates for the first quarter of 2018

For the first quarter of 2018, real GDP is now estimated to have increased 2.2 percent (table 1); in the
previously published estimates, first-quarter GDP was estimated to have increased 2.0 percent. The 0.2-
percentage point upward revision to the percent change in first-quarter real GDP primarily reflected
upward revisions to private inventory investment, nonresidential fixed investment, and federal
government spending that were partly offset by downward revisions to PCE and residential fixed
investment. Imports were revised down.

Real GDI is now estimated to have increased 3.9 percent in the first quarter (table 1); in the previously
published estimates, first-quarter GDI was estimated to have increased 3.6 percent.

First Quarter 2018

Previous Estimate Revised
(Percent change from preceding quarter)
Real GDP 2.0 2.2
Current-dollar GDP 4.2 4.3
Real GDI 3.6 3.9
Average of Real GDP and GDI 2.8 3.1
Gross domestic purchases price index 2.7 2.5
PCE price index 2.5 2.5

 

Summary of historical updates

The picture of the economy presented in the updated estimates is very similar to the picture presented
in the previously published estimates.

* For 1929–2012, the average annual growth rate of real GDP was 3.2 percent, unrevised from the
previously published estimates. For the more recent period, 2007–2017, the growth rate was
1.5 percent, 0.1 percentage point higher than in the previously published estimates.

* For 2012–2017, the average annual growth rate of real GDP was 2.2 percent, the same as in the
previously published estimates. The percent change in real GDP was unrevised for 2012; revised
up 0.1 percentage point for 2013; revised down 0.1 percentage point for 2014; unrevised for
2015; revised up 0.1 percentage point for 2016; and revised down 0.1 percentage point for
2017.

* For 2012–2017, the average rate of change in the prices paid by U.S. residents, as measured by
the gross domestic purchasers’ price index, was 1.2 percent, 0.1 percentage point lower than in
the previously published estimates.

* For the period of contraction from the fourth quarter of 2007 to the second quarter of 2009,
real GDP decreased at an average annual rate of 2.7 percent; in the previously published
estimates, it decreased 2.8 percent.

* For the period of expansion from the second quarter of 2009 to the first quarter of 2018, real
GDP increased at an average annual rate of 2.2 percent, the same as previously published.

 

Real GDP (Table 1A)

The updated statistics largely reflect the incorporation of newly available and revised source data (see
the box below) and improvements to existing methodologies.

*	From 2012 to 2017, real GDP increased at an average annual rate of 2.2 percent, the same as
previously published. From the fourth quarter of 2012 to the first quarter of 2018, real GDP
increased at an average annual rate of 2.3 percent, the same as in the previously published
estimates.

Real GDP: Percent Change from Preceding Quarter
o	For 2012, real GDP growth was unrevised. Upward revisions to nonresidential fixed
investment and inventory investment were offset by an upward revision to imports and
by a downward revision to state and local government spending.

o	For 2013, real GDP growth was revised up 0.1 percentage point. Upward revisions to
nonresidential fixed investment, state and local government spending, inventory
investment, and federal government spending were partly offset by an upward revision
to imports.

o	For 2014, real GDP growth was revised down 0.1 percentage point. An upward revision
to imports and downward revisions to inventory investment and state and local
government spending were partly offset by upward revisions to nonresidential fixed
investment.

o	For 2015, real GDP growth was unrevised. Upward revisions to state and local
government spending, personal consumption expenditures (PCE), exports, and
inventory investment were offset by an upward revision to imports and by a downward
revision to nonresidential fixed investment.

o	For 2016, real GDP growth was revised up 0.1 percentage point. Upward revisions to
nonresidential fixed investment, state and local government spending, residential
investment, exports, and federal government spending were partly offset by a
downward revision to inventory investment and by an upward revision to imports.

o	For 2017, real GDP growth was revised down 0.1 percentage point. A downward
revision to PCE, an upward revision to imports, and downward revisions to state and
local government spending and exports were partly offset by upward revisions to
inventory investment, nonresidential fixed investment, residential investment, and
federal government spending.

*	From the first quarter of 2012 through the fourth quarter of 2017, the average revision (without
regard to sign) in the percent change in real GDP was 0.4 percentage point. The revisions did not
change the direction of the change in real GDP (increase or decrease) for any of these quarters.

*	Current-dollar GDP was revised up for all years from 2012 to 2017: by $41.8 billion, or 0.3
percent, for 2012; $93.3 billion, or 0.6 percent, for 2013; $94.1 billion, or 0.5 percent, for 2014,
$98.6 billion, or 0.5 percent, for 2015, $82.7 billion, or 0.4 percent, for 2016, and $94.8 billion,
or 0.5 percent, for 2017.


Gross domestic income (GDI) and the statistical discrepancy (Table 1A)

*	From 2012 to 2017, real GDI increased at an average annual rate of 2.0 percent, unrevised from
the previous estimate. From the fourth quarter of 2012 to the fourth quarter of 2017, real GDI
increased at an average annual rate of 2.1 percent; in the previously published estimates, real
GDI increased at an average annual rate of 2.0 percent.

*	The statistical discrepancy as a percentage of GDP was revised from -1.3 percent to -1.5 percent
for 2012; was revised from -0.8 percent to -1.0 percent for 2013; was revised from -1.3 percent
to -1.7 percent for 2014; was unrevised at -1.4 percent for 2015; was revised from -0.8 percent
to -0.7 percent for 2016; and was revised from -0.2 percent to -0.7 percent for 2017.

*	The average of GDP and GDI is a supplemental measure of U.S. economic activity. In real, or
inflation-adjusted, terms this measure increased at an average annual rate of 2.1 percent from
2012 to 2017, the same as previously published.


Price measures (Table 4)

*	Gross domestic purchases - From the fourth quarter of 2012 to the fourth quarter of 2017, the
average annual rate of increase in the price index for gross domestic purchases was 1.2 percent,
0.1 percentage point lower than the previously published estimates.

*	Personal consumption expenditures - From the fourth quarter of 2012 to the fourth quarter of
2017, the average annual rate of increase in the price index for PCE was 1.2 percent, the same
as previously published. The increase in the “core” PCE price index, which excludes food and
energy, was 1.6 percent, 0.1 percentage point higher than previously published.


Income and saving measures (Table 1A)

*	National income was revised up $32.8 billion, or 0.2 percent, for 2012; was revised up $49.9
billion, or 0.3 percent, for 2013; was revised up $101.4 billion, or 0.7 percent, for 2014; was
revised up $43.4 billion, or 0.3 percent, for 2015; was revised up $6.9 billion, or less than 0.1
percent, for 2016; and was revised up $146.2 billion, or 0.9 percent, for 2017.

o	For 2012, an upward revision to proprietors’ income was partly offset by downward
revisions to supplements to wages and salaries and to net interest.

o	For 2013, upward revisions to proprietors’ income and to taxes on production and
imports were partly offset by downward revisions to net interest, corporate profits, and
rental income.

o	For 2014, upward revisions to proprietors’ income and to taxes on production and
imports were partly offset by downward revisions to corporate profits and net interest.

o	For 2015, upward revisions to proprietors’ income and to taxes on production and
imports were partly offset by downward revisions to corporate profits and rental
income.

o	For 2016, upward revisions to proprietors’ income and to taxes on production and
imports were partly offset by downward revisions to corporate profits, net interest,
supplements to wages and salaries and rental income.

Footnote 2. The statistical discrepancy is current dollar GDP less current dollar GDI. GDP measures
final expenditures -- the sum of consumer spending, private investment, net exports, and government
spending. GDI measures the incomes earned in the production of GDP. In concept, GDP is equal to GDI.
In practice, they differ because they are estimated using different source data and different methods.


o	For 2017, upward revisions to proprietors’ income, wages and salaries, and taxes on
production and imports were partly offset by downward revisions to corporate profits,
rental income, and net interest.

*	Corporate profits was revised down $0.8 billion, or less than 0.1 percent, for 2012; was revised
down $22.2 billion, or 1.1 percent, for 2013; was revised down $21.7 billion, or 1.0 percent, for
2014; was revised down $60.2 billion, or 2.8 percent, for 2015; was revised down $38.5 billion,
or 1.9 percent, for 2016; and revised down $65.4 billion, or 3.0 percent, for 2017.

*	Personal income was revised up $95.0 billion, or 0.7 percent, for 2012; was revised up $107.4
billion, or 0.8 percent, for 2013; was revised up $173.6 billion, or 1.2 percent, for 2014; was
revised up $166.6 billion, or 1.1 percent, for 2015;  was revised up $196.4 billion, or 1.2 percent,
for 2016; and was revised up $401.9 billion, or 2.4 percent, for 2017.

*	From 2012 to 2017, the average annual rate of growth of real disposable personal income was
revised up 0.4 percentage point from 1.8 percent to 2.2 percent.

*	The personal saving rate (personal saving as a percentage of disposable personal income) was
revised up from 7.6 percent to 8.9 percent for 2012; was revised up from 5.0 percent to 6.4
percent for 2013; was revised up from 5.7 percent to 7.3 percent for 2014; was revised up from
6.1 percent to 7.6 percent for 2016; was revised up from 4.9 percent to 6.7 percent for 2016;
and was revised up from 3.4 percent to 6.7 percent for 2017.

 
Real GDP: Percent Change from Preceding Quarter
 

http://lawprofessors.typepad.com/intfinlaw/2018/08/national-income-and-product-accounts-gross-domestic-product-second-quarter-2018-advance-estimate-and-comprehensive-update.html

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