International Financial Law Prof Blog

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

Friday, August 5, 2016

GDP at 1.2% for Second Quarter 2016 (Advance Estimate)

Real gross domestic product increased at an annual rate of 1.2 percent in the second quarter of 2016 Bureau Econ Analysis
(table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first
quarter, real GDP increased 0.8 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 26, 2016.

The increase in real GDP in the second quarter reflected positive contributions from personal
consumption expenditures (PCE) and exports that were partly offset by negative contributions from
private inventory investment, nonresidential fixed investment, residential fixed investment, and state
and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Real GDP: Percent Change from Preceding Quarter
                    Annual Update of the National Income and Product Accounts

The estimates released today reflect the results of the annual update of the national income and
product accounts (NIPAs) in conjunction with the "advance" estimate of GDP for the second quarter of
2016. The update covers the first quarter of 2013 through the first quarter of 2016. For more
information, see "Information on the 2016 Annual Update" on BEA’s Web site. Additionally, the August
Survey of Current Business will contain an article that describes the results in detail.
_______


The acceleration in real GDP growth in the second quarter reflected an acceleration in PCE, an upturn in
exports, and smaller decreases in nonresidential fixed investment and in federal government spending.
These were partly offset by a larger decrease in private inventory investment, and downturns in
residential fixed investment and in state and local government spending.

Current-dollar GDP increased 3.5 percent (table 1), or $155.9 billion, in the second quarter to a level of
$18,437.6 billion (table 3A). In the first quarter, current dollar GDP increased 1.3 percent (revised), or
$58.9 billion.

The price index for gross domestic purchases increased 2.0 percent in the second quarter, compared
with an increase of 0.2 percent in the first (revised) (table 4). The PCE price index increased 1.9 percent,
compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index
increased 1.7 percent, compared with an increase of 2.1 percent (Appendix table A).


Disposition of personal income (table 10)

Current-dollar personal income increased $111.4 billion in the second quarter, compared with an
increase of $52.8 billion in the first (revised). The acceleration in personal income primarily reflected
upturns in wages and salaries, personal dividend income, and farm proprietors’ income that were offset
by slowdowns in personal current transfer receipts.

Disposable personal income increased $106.3 billion, or 3.1 percent, in the second quarter, compared
with an increase of $83.4 billion, or 2.5 percent, in the first (revised). Real disposable personal income
increased 1.2 percent, compared with an increase of 2.2 percent.

Personal saving was $763.1 billion in the second quarter, compared with $847.8 billion in the first
(revised). The personal saving rate -- personal saving as a percentage of disposable personal income --
was 5.5 percent in the second quarter, compared with 6.1 percent in the first.


Source Data for the Advance Estimate

Information on the assumptions used for unavailable source data in the advance estimate is provided in
a Technical Note that is posted with the news release on BEA’s Web site. Within a few days after the
release, a detailed "Key Source Data and Assumptions" file is posted on the Web site. For information on
updates to GDP, see the “Additional Information” page at the back of this release.


Revisions for the first quarter of 2016

For the first quarter of 2016, real GDP is now estimated to have increased 0.8 percent; in the previously
published estimates, first-quarter GDP was estimated to have increased 1.1 percent. The 0.3-percentage
point downward revision to the percent change in first-quarter real GDP primarily reflected downward
revisions to residential fixed investment, to private inventory investment, and to exports that were
partly offset by upward revisions to nonresidential fixed investment, to PCE, to state and local
government spending, to imports, and to federal government spending.



                                         First Quarter 2016
                                Previous Estimate       Revised
                            (Percent change from preceding quarter)
Real GDP                               1.1                0.8
Current-dollar GDP                     1.4                1.3
Real GDI                               2.9                0.9
Average of GDP and GDI                 2.0                0.9
Gross domestic purchases price index   0.2                0.2
PCE price index                        0.2                0.3


                     Annual Update of the National Income and Product Accounts


Updated estimates of the national income and product accounts (NIPAs), which are usually made each
July, incorporate newly available and more comprehensive source data, as well as improved estimation
methodologies. This year, the notable revisions primarily reflect the incorporation of newly available
and revised source data. The timespan of the revisions is the first quarter of 2013 through the first
quarter of 2016. The reference year remains 2009.

With the release of the updated statistics, select NIPA tables will be available on BEA’s Web site
(www.bea.gov).  Shortly after the GDP release, BEA will post a table on its Web site showing the major
current-dollar revisions and their sources for each component of GDP, national income, and personal
income.  Additionally, the August 2016 Survey of Current Business will contain an article describing these
revisions.


Real GDP (Tables 1A, 1B, and 2A)

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 2015, real GDP increased at an average annual rate of 2.2 percent; in the
  previously published estimates, real GDP had increased at an average annual rate of 2.1 percent.
  From the fourth quarter of 2012 to the first quarter of 2016, real GDP increased at an average
  annual rate of 2.2 percent, the same as previously published.

* The percent change in real GDP was revised up 0.2 percentage point for 2013, was the same as
  previously published for 2014, and was revised up 0.2 percentage point for 2015.

     o  For 2013, upward revisions to inventory investment, exports, and residential and
        nonresidential fixed investment were partly offset by a downward revision to personal
        consumption expenditures (PCE).

     o  For 2014, a downward revision to inventory investment, an upward revision to imports,
        and a downward revision to state and local government spending were offset by
        upward revisions to exports, PCE, and residential fixed investment.

     o  For 2015, upward revisions to state and local government spending and to residential
        fixed investment, a downward revision to imports, and an upward revision to PCE were
        partly offset by downward revisions to exports and nonresidential fixed investment.

* The revisions to the annual estimates typically reflect partly offsetting revisions to the quarters
  within the year.

     o  For 2013, the annual rate of change in GDP was revised up 0.9 percentage point for the
        first quarter, 0.1 percentage point for the third quarter, and 0.2 percentage point for the
        fourth quarter; these upward revisions were partly offset by a downward revision of 0.3
        percentage point for the second quarter.

     o  For 2014, upward revisions of 0.7 percentage point for the third quarter and 0.2
        percentage point for the fourth quarter were offset by downward revisions of 0.3
        percentage point for the first quarter and 0.6 percentage point for the second quarter.

     o  For 2015, an upward revision of 1.4 percentage point for the first quarter was partly
        offset by downward revisions of 1.3 percentage point for the second quarter and 0.5
        percentage point for the fourth quarter; the growth rate for the third quarter was the
        same as previously published.

* For the first quarter of 2013 through the first quarter of 2016, the average revision (without
  regard to sign) in the percent change in real GDP was 0.5 percentage point.  The revisions did
  not change the direction of the change in real GDP (increase or decrease) for any of the
  quarters.

* For the period of economic expansion from the second quarter of 2009 to the first quarter of
  2016, real GDP increased at an average annual rate of 2.1 percent, the same as previously
  published.

* Current-dollar GDP was revised up for all 3 years:  $28.4 billion, or 0.2 percent, for 2013; $45.0
  billion, or 0.3 percent, for 2014; and $89.7 billion, or 0.5 percent, for 2015.


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

* From 2012 to 2015, real GDI increased at an average annual rate of 2.3 percent; in the
  previously published estimates, real GDI had increased at an average annual rate of 2.1 percent.
  From the fourth quarter of 2012 to the first quarter of 2016, real GDI increased at an average
  annual rate of 2.1 percent; in the previously published estimates, real GDI had increased at an
  average annual rate of 2.2 percent.

* 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.

* The statistical discrepancy as a percentage of GDP was revised up from -1.1 percent to -0.8
  percent for 2013, was revised down from -1.2 percent to -1.5 percent for 2014, and was revised
  down from -1.2 percent to -1.4 percent for 2015.

* 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 2.2 percent from
  2012 to 2015, an upward revision of 0.1 percentage point.


Price measures

* Gross domestic purchases - From the fourth quarter of 2012 to the first quarter of 2016, the
  average annual rate of increase in the price index for gross domestic purchases was 1.0 percent,
  the same as previously published.

* Personal consumption expenditures - From the fourth quarter of 2012 to the first quarter of
  2016, the average annual rate of increase in the price index for PCE was 0.9 percent, the same
  as previously published; the increase in the “core” PCE price index (which excludes food and
  energy) was 1.5 percent, the same as previously published.


Income and saving measures (Table 1B)

* National income was revised down $13.5 billion, or 0.1 percent, for 2013, was revised up $77.4
  billion, or 0.5 percent, for 2014, and was revised up $119.0 billion, or 0.8 percent, for 2015.

     o For 2013, downward revisions to net interest and corporate profits were partly offset by
       an upward revision to rental income of persons.

     o For 2014, upward revisions to corporate profits, business current transfer payments,
       and supplements to wages and salaries were partly offset by downward revisions to
       farm proprietors’ income and to rental income of persons.

     o For 2015, upward revisions to corporate profits, business current transfer payments,
       wages and salaries, nonfarm proprietors’ income, and supplements to wages and
       salaries, were partly offset by a downward revision to farm proprietors’ income.

* Corporate profits was revised down $4.5 billion, or -0.2 percent, for 2013, was revised up $79.1
  billion, or 3.8 percent, for 2014, and was revised up $79.1 billion, or 3.9 percent, for 2015.

* Personal income was revised up $5.3 billion, or less than 0.1 percent, for 2013, was revised up
  $115.5 billion, or 0.8 percent, for 2014, and was revised up $107.8 billion, or 0.7 percent, for
  2015.

* From 2012 to 2015, the average annual rate of growth of real disposable personal income was
  revised up 0.2 percentage point from 1.6 percent to 1.8 percent.

* The personal saving rate (personal saving as a percentage of disposable personal income) was
  revised up from 4.8 percent to 5.0 percent for 2013, was revised up from 4.8 percent to 5.6
  percent for 2014, and was revised up from 5.1 percent to 5.8 percent for 2015.

 

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