EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, THURSDAY, DECEMBER 20, 2007
BEA 07-59
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| Virginia H. Mannering: | (202) 606-5304 | (GDP) |
| Andrew Hodge: | (202) 606-5564 | (Profits) |
| Recorded message: | (202) 606-5306 |
GROSS DOMESTIC PRODUCT: THIRD QUARTER 2007 (FINAL)
CORPORATE PROFITS: THIRD QUARTER 2007 (REVISED)
CORPORATE PROFITS: THIRD QUARTER 2007 (REVISED)
Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 4.9 percent in the third quarter of 2007,
according to final estimates released by the Bureau of Economic Analysis. In the second quarter, real
GDP increased 3.8 percent.
The GDP estimates released today are based on more complete source data than were available for
the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was
also 4.9 percent (see "Revisions" on page 3).
The increase in real GDP in the third quarter primarily reflected positive contributions from
exports, personal consumption expenditures (PCE), private inventory investment, nonresidential
structures, federal government spending, equipment and software, and state and local government
spending that were partly offset by a negative contribution from residential fixed investment. Imports,
which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP growth in the third quarter primarily reflected accelerations in
exports, in PCE, and in private inventory investment that were partly offset by an upturn in imports, a
larger decrease in residential fixed investment, and a deceleration in nonresidential structures.
Final sales of computers contributed 0.28 percentage point to the third-quarter growth in real GDP
after contributing 0.21 percentage point to the second-quarter growth. Motor vehicle output contributed
0.36 percentage point to the third-quarter growth in real GDP after contributing 0.03 percentage point to
the second-quarter growth.
FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and annualized. "Real" estimates are in chained (2000)
dollars. Price indexes are chain-type measures.
This news release is available on BEA's Web site at www.bea.gov/newsreleases/rels.htm.
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.8 percent in the third quarter, 0.2 percentage point more than the preliminary estimate; this
index increased 3.8 percent in the second quarter. Excluding food and energy prices, the price index for
gross domestic purchases increased 1.9 percent in the third quarter, compared with an increase of 1.5
percent in the second.
Real personal consumption expenditures increased 2.8 percent in the third quarter, compared with
an increase of 1.4 percent in the second. Real nonresidential fixed investment increased 9.3 percent,
compared with an increase of 11.0 percent. Nonresidential structures increased 16.4 percent, compared
with an increase of 26.2 percent. Equipment and software increased 6.2 percent, compared with an
increase of 4.7 percent. Real residential fixed investment decreased 20.5 percent, compared with a
decrease of 11.8 percent.
Real exports of goods and services increased 19.1 percent in the third quarter, compared with an
increase of 7.5 percent in the second. Real imports of goods and services increased 4.4 percent, in
contrast to a decrease of 2.7 percent.
Real federal government consumption expenditures and gross investment increased 7.1 percent in
the third quarter, compared with an increase of 6.0 percent in the second. National defense increased
10.1 percent, compared with an increase of 8.5 percent. Nondefense increased 1.1 percent, compared
with an increase of 0.9 percent. Real state and local government consumption expenditures and gross
investment increased 1.9 percent, compared with an increase of 3.0 percent.
The real change in private inventories added 0.89 percentage point to the third-quarter change in
real GDP, after adding 0.22 percentage point to the second-quarter change. Private businesses increased
inventories $30.6 billion in the third quarter, following increases of $5.8 billion in the second quarter
and $0.1 billion in the first.
Real final sales of domestic product -- GDP less change in private inventories -- increased 4.0
percent in the third quarter, compared with an increase of 3.6 percent in the second.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 3.3 percent in the third quarter, compared with an increase of 2.4 percent in the
second.
Gross national product
Real gross national product -- the goods and services produced by the labor and property supplied
by U.S. residents -- increased 5.8 percent in the third quarter, compared with an increase of 4.0 percent
in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the world,
which increased $25.9 billion in the third quarter after increasing $5.8 billion in the second; in the third
quarter, receipts increased $32.0 billion, and payments increased $6.1 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
6.0 percent, or $201.7 billion, in the third quarter to a level of $13,970.5 billion. In the second quarter,
current-dollar GDP increased 6.6 percent, or $216.9 billion.
Revisions
The final estimate of the third-quarter increase in real GDP is the same as the preliminary
estimate, primarily reflecting a small upward revision to personal consumption expenditures that was
offset by a small downward revision to private nonfarm inventory investment.
Advance Preliminary Final
(Percent change from preceding quarter)
Real GDP............................... 3.9 4.9 4.9
Current-dollar GDP..................... 4.7 5.9 6.0
Gross domestic purchases price index... 1.6 1.6 1.8
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) decreased $20.5 billion in the third quarter, in contrast to an increase of $94.7
billion in the second quarter. Current-production cash flow (net cash flow with inventory valuation and
capital consumption adjustments) -- the internal funds available to corporations for investment --
decreased $21.1 billion in the third quarter, in contrast to an increase of $37.4 billion in the second.
Taxes on corporate income decreased $20.7 billion in the third quarter, in contrast to an increase
of $37.6 billion in the second. Profits after tax with inventory valuation and capital consumption
adjustments increased $0.3 billion in the third quarter, compared with an increase of $57.0 billion in the
second. Dividends increased $23.5 billion, compared with an increase of $24.8 billion; current-
production undistributed profits decreased $23.3 billion, in contrast to an increase of $32.2 billion.
Domestic profits of financial corporations decreased $32.5 billion in the third quarter, in contrast
to an increase of $52.7 billion in the second. Domestic profits of nonfinancial corporations decreased
$14.4 billion in the third quarter, in contrast to an increase of $25.3 billion in the second. In the third
quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real
product decreased. The decrease in unit profits reflected a decrease in unit prices and an increase in unit
labor costs that were partly offset by a decrease in unit nonlabor costs.
The rest-of-the-world component of profits increased $26.4 billion in the third quarter, compared
with an increase of $16.7 billion in the second. This measure is calculated as (1) receipts by U.S.
residents of earnings from their foreign affiliates plus dividends received by U.S. residents from
unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign
parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The third-quarter
increase was accounted for by a larger increase in receipts than in payments.
Profits before tax with inventory valuation adjustment is the best available measure of industry
profits because estimates of the capital consumption adjustment by industry do not exist. This measure
reflects depreciation-accounting practices used for federal income tax returns. According to this
measure, domestic profits of financial and nonfinancial corporations decreased in the third quarter. The
decrease in nonfinancial corporations reflected a decrease in manufacturing that was partly offset by
increases in all the other industries shown. Within manufacturing, the decrease was more than
accounted for by petroleum.
Profits before tax decreased $51.8 billion in the third quarter, in contrast to an increase of $115.7
billion in the second. The before-tax measure of profits does not reflect, as does profits from current
production, the capital consumption and inventory valuation adjustments. These adjustments convert
depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to
the current-cost measures used in the national income and product accounts. The capital consumption
adjustment decreased $3.0 billion in the third quarter (from -$234.4 billion to -$237.4 billion), compared
with a decrease of $6.5 billion in the second. The inventory valuation adjustment increased $34.4
billion (from -$54.7 billion to -$20.3 billion), in contrast to a decrease of $14.5 billion.
* * *
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Next release -- January 30, 2008 at 8:30 A.M. EST for:
Gross Domestic Product: Fourth Quarter 2007 (Advance)
