Archive for the 'National' Category

GDP Growth Slows in First Quarter

Published June 28, 2012 BEA News , GDP , National Leave a Comment
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Real gross domestic product (GDP) rose 1.9 percent in the first quarter of 2012 after rising 3.0 percent in the fourth quarter, according to estimates released by the Bureau of Economic Analysis. The first-quarter growth rate was unchanged from the second estimate released in May.

GDP highlights
Net exports increased (after decreasing in the fourth quarter), consumer spending accelerated, and residential housing investment picked up in the first quarter. These positive economic contributions, however, were more than offset by a slowdown in inventory investment.

The slowdown in inventory investment reflected a sharp downturn in the manufacturing and wholesale industries. In contrast, retail inventory investment turned up, especially by motor vehicles dealers.

Revisions to GDP
For the third estimate of first-quarter real GDP growth, upward revisions to net exports and business investment in structures were offset by downward revisions to consumer spending, inventory investment, and state and local government spending.

Disposable income and saving
Real disposable personal income—which adjusts personal income for taxes and inflation—rose 0.7 percent in the first quarter, compared with 0.2 percent in the fourth quarter. The personal saving rate—saving as a percentage of disposable personal income—was 3.7 percent, compared with 4.2 percent in the fourth quarter. The personal saving rate has declined for six quarters in a row.

Corporate profits
First-quarter corporate profits fell 0.3 percent at a quarterly rate following a 0.9 percent rise in the fourth quarter. First-quarter nonfinancial profits rose 1.4 percent after rising 2.6 percent, and financial profits rose 5.7 percent after rising 7.0 percent. Profits from the rest of the world fell 11.8 percent after declining 9.2 percent.

The first-quarter decline reflected a 2.2 percent drop in receipts from abroad and a 15.9 percent rise in payments to entities abroad.

To learn more about gross domestic product, read the full report.

What is the Value of Household Work?

Published June 11, 2012 BEA News , National Leave a Comment
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The Nobel Prize winner Simon Kuznets presented an original set of estimates to Congress in 1934 that contained a number of caveats about what was omitted from the calculation of national income (and later from the calculation of gross domestic product) that made it an imperfect measure of welfare. One of the principal omissions that he cited was the “services of housewives and other members of the family.” Although the hours men contribute to “household production” have risen, while those of women have declined, it is still true that the exclusion of household production—of men or women—causes a significant understatement in the level of domestic production. Turns out, Mr. Kuznets was correct. New research by the Bureau of Economic Analysis has found that if the value of household production were included in gross domestic product (GDP), it would add approximately $3.8 trillion to the U.S. economy in 2010.

A research paper published in the May issue of the Survey of Current Business found that if “home production”—the value of the time spent cooking, cleaning, watching the kids, and so forth—were counted, it would raise the level of nominal GDP nearly 26 percent in 2010. Back in 1965, when fewer women were in the formal labor force and more were working in the nonmarket sector, GDP would have been raised by 39 percent. Because the inclusion of “home production” would add more to the level of GDP in 1965 than in 2010, factoring in the value of these nonmarket activities was found to reduce the average annual growth rate of GDP over this period.

The paper also found that in 1965, men and women spent an average of 27 hours a week involved in “home production” activities, such as housework, cooking, odds jobs, gardening, shopping, child care, and domestic travel. By 2010, they spent 22 hours a week on such activities.

The overall decline in hours occurred as the amount of time women spent on household activities fell to 26 hours a week in 2010, from 40 hours in 1965, as more and more women took jobs outside the home. While women’s hours have dramatically dropped over that period, men’s hours dedicated to household activities rose slightly to 17 hours a week, from 14, over that same period.

Interestingly, the 2007—2009 recession had little impact on the number of hours U.S. households spent on cooking, cleaning, and other home activities, despite the fact that the number of unemployed people increased during that time.

The paper also found that accounting for household production reduces income inequality because the amount of household production is fairly constant across all households. Since there is little difference in time spent on household activities between lower and higher income households, the effect of accounting for household production is that it raises the incomes of low-income households proportionally more than high-income households.

To learn more, read the full paper called “Accounting for Household Production in the National Accounts, 1965–2010.”

GDP Growth Moderates in First Quarter

Published May 31, 2012 BEA News , GDP , National Leave a Comment
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Real gross domestic product (GDP) rose 1.9 percent in the first quarter of 2012 after rising 3.0 percent in the fourth quarter, according to the second estimate released today by the Bureau of Economic Analysis. The first-quarter growth rate was 0.3 percentage point less than the “advance” estimate released in April.

Over the past 4 quarters, real GDP grew 2.0 percent.

First-quarter highlights
An acceleration in consumer spending in the first quarter was more than offset by a slowdown in inventory investment.

Consumer spending was strong in the first quarter, rising 2.7 percent after rising 2.1 percent in the fourth quarter. The first-quarter increase was the largest since the fourth quarter of 2010. Spending on services and nondurable goods accelerated, more than offsetting a slowdown in spending on durable goods (mainly motor vehicles and parts).

The slowdown in inventory investment reflected a sharp downturn in inventory investment by nondurable goods wholesalers and manufacturers. A slowdown in business investment, mainly in industrial equipment and in computers and software, also contributed to the slowdown in economic growth.

Revisions to GDP
The downward revision of real GDP growth for the first quarter was largely accounted for by a downward revision to inventory investment; manufacturing, wholesale, and retail inventories were all revised down. In addition, imports was revised up. Partly offsetting these revisions, business investment and exports were revised up.

Corporate profits
BEA released its first estimate of first-quarter corporate profits.

Profits increased 0.6 percent at a quarterly rate, following a 0.9 percent increase in the fourth quarter of 2011. Nonfinancial profits rose 0.6 percent, while financial profits rose 4.5 percent. Profits from the rest of the world fell 3.8 percent.

Over the last 4 quarters, corporate profits increased 6.5 percent.

What is the U.S. Bureau of Economic Analysis?

Published May 22, 2012 BEA News , GDP , Industry , International , National , Regional , Survey of Current Business Leave a Comment
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The U.S. Bureau of Economic Analysis, a unit of the U.S. Department of Commerce, is the federal agency responsible for measuring the U.S. economy, or as some say, BEA is the nation’s accountant. It is responsible for measuring what is produced, what is earned, and how it is spent.  BEA is well known as one of the world’s premier economic statistical agencies, producing some of the most closely watched economic indicators and leading the way in cutting-edge macroeconomic measurement.

Each month, the Bureau pulls together a wealth of data from the public and private sector to provide a comprehensive and consistent picture of economic activity for the nation as a whole and for its various sectors. In addition, the Bureau produces data on U.S. economic interactions with the rest of the world, such as trade and international investment.  These data are considered among the most timely, relevant, and accurate in the world.

BEA is somewhat unique among federal agencies in that it is made up of, and lead by, an entirely career staff; it employs no political appointees. This is done, in part, to ensure the integrity and the perception of the integrity of the nation’s key economic indicators.

The data that BEA produces allow businesses, agencies, researchers, and the American people to better understand what is going on in the U.S. economy. That information is used by people to make financial decisions like whether to buy a home, while businesses rely on the data to make decisions about capital investments and hiring.
  
BEA produces a wide variety of economic statistics through its national, international, regional, and industry accounts. Probably the most common and one of the most important is gross domestic product, or GDP.  GDP is the measure of the total value of all final goods and services produced within the United States during a given period of time. It looks at the activity of consumers, businesses, government agencies, and imports and exports. It is the primary measure of growth in the economy. In the first quarter of 2012, GDP exceeded $15 trillion. (Adjusted for inflation, GDP topped $13.5 trillion.)  
GDP and the related BEA accounts are used for a wide variety of economic policy purposes. 

For example:

  • GDP accounts are used by the Administration and Congress to prepare the federal budget projections.  
  • GDP accounts are used by the Federal Reserve Board to formulate monetary policy. Two of the most important variables guiding monetary policy are real GDP growth and inflation as measured by BEA’s personal consumption expenditures price index.
  • BEA regional data are used to distribute more than $327 billion in federal funds for Medicaid, Title I Education Grants, the Children’s Health Insurance Program, and other programs to state and local governments.

In addition to GDP, BEA produces other economic indicators and posts them on its Web site.  You can explore these statistics through the interactive data tables or through the archive of the Survey of Current Business, the Bureau’s monthly journal.

Tracking Foreigners’ Spending in the United States

Published May 15, 2012 National Leave a Comment
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Have you ever wondered what foreigners spend their money on while visiting the United States or what Americans buy while overseas? BEA is often asked for this information, but until recently, didn’t have the means to fully respond. So, we embarked on a research project aimed at finding the answers.

BEA put its estimates of consumer spending under the microscope to try to identify differences in spending by foreign visitors and U.S. residents for the various goods and services consumed in the United States as well as to gain a better understanding of how U.S. residents spend their money when traveling abroad.

Recently released tables that cover 2002 to 2008 show that foreign visitors in the United States spent almost a fifth of their foreign travel money on lodging services, another fifth on restaurant meals and beverages, and slightly more than a fifth on nondurable goods, which include food and beverages purchased from grocery stores, clothing and footwear, and gasoline. The results also show that overall, foreigners spent more in the United States than U.S. residents spent abroad, resulting in a trade surplus on travel-related goods and services.

BEA knew that both foreigners in the United States and Americans abroad purchase things like airfares, hotels, clothing, jewelry, restaurant meals, and entertainment, as well as education and medical treatments. However, the source data used to estimate consumer spending are based mostly on revenue reported by businesses in the United States and do not allow us to easily identify whether their customers are U.S. residents or foreign visitors. This is particularly important because BEA measures consumer spending by foreigners visiting the United States and includes spending by U.S. residents traveling abroad. Thanks to the newly available estimates, BEA is now able to show these breakouts.

To learn more about how foreign visitors spend their money in the United States and how U.S. consumers spend their money while traveling abroad, read the full report.

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