2nd Quarter GDP Advance Estimate At a Glance
- Real Annual Growth Rate: 4.0%
- Previous Quarter Rate: 0.6%
- Current Dollar GDP Growth: 6.7%
- GDP Implicit Price Deflator: 2.7%
Technorati Tags: Gross Domestic Product, GDP, GNP, Corporate Profits
GROSS DOMESTIC PRODUCT: SECOND QUARTER 2007 (PRELIMINARY)
CORPORATE PROFITS: SECOND QUARTER 2007 (PRELIMINARY)
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 4.0 percent in the second quarter of 2007,
according to preliminary estimates released by the Bureau of Economic Analysis. In the first quarter,
real GDP increased 0.6 percent.
The GDP estimates released today are based on more complete source data than were available for
the advance estimates issued last month. In the advance estimates, the increase in real GDP was 3.4
percent (see “Revisions” on page 3).
The increase in real GDP in the second quarter primarily reflected positive contributions from
personal consumption expenditures (PCE) for services, exports, nonresidential structures, federal
government spending, state and local government spending, and equipment and software that were
partly offset by a negative contribution from residential fixed investment. Imports, which are a
subtraction in the calculation of GDP, decreased.
The acceleration in real GDP growth in the second quarter primarily reflected a downturn in
imports, upturns in federal government spending and in private inventory investment, accelerations in
exports and in nonresidential structures, and a smaller decrease in residential fixed investment that were
partly offset by a notable deceleration in PCE.
Final sales of computers contributed 0.21 percentage point to the second-quarter growth in real
GDP after subtracting 0.01 percentage point from the first-quarter growth. Motor vehicle output
contributed 0.02 percentage point to the second-quarter growth in real GDP after contributing 0.18
percentage point to the first-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 are 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 3.8 percent in the second quarter, 0.1 percentage point less than in the advance estimate; this
index also increased 3.8 percent in the first quarter. Excluding food and energy prices, the price index
for gross domestic purchases increased 1.6 percent in the second quarter, compared with an increase of
3.1 percent in the first.
Real personal consumption expenditures increased 1.4 percent in the second quarter, compared
with an increase of 3.7 percent in the first. Real nonresidential fixed investment increased 11.1 percent,
compared with an increase of 2.1 percent. Nonresidential structures increased 27.7 percent, compared
with an increase of 6.4 percent. Equipment and software increased 4.3 percent, compared with an
increase of 0.3 percent. Real residential fixed investment decreased 11.6 percent, compared with a
decrease of 16.3 percent.
Real exports of goods and services increased 7.6 percent in the second quarter, compared with an
increase of 1.1 percent in the first. Real imports of goods and services decreased 3.2 percent, in contrast
to an increase of 3.9 percent.
Real federal government consumption expenditures and gross investment increased 5.9 percent in
the second quarter, in contrast to a decrease of 6.3 percent in the first. National defense increased 8.6
percent, in contrast to a decrease of 10.8 percent. Nondefense increased 0.5 percent, compared with an
increase of 3.8 percent. Real state and local government consumption expenditures and gross
investment increased 3.0 percent, the same increase as in the first.
The real change in private inventories added 0.21 percentage point to the second-quarter change in
real GDP, after subtracting 0.65 percentage point from the first-quarter change. Private businesses
increased inventories $5.4 billion in the second quarter, following increases of $0.1 billion in the first
quarter and $17.4 billion in the fourth.
Real final sales of domestic product — GDP less change in private inventories — increased 3.7
percent in the second quarter, compared with an increase of 1.3 percent in the first.
Gross domestic purchases
Real gross domestic purchases — purchases by U.S. residents of goods and services wherever
produced — increased 2.4 percent in the second quarter, compared with an increase of 1.1 percent in the
first.
Gross national product
Real gross national product — the goods and services produced by the labor and property supplied
by U.S. residents — increased 4.0 percent in the second quarter, compared with an increase of 0.7
percent in the first. GNP includes, and GDP excludes, net receipts of income from the rest of the world,
which increased $0.6 billion in the second quarter after increasing $1.8 billion in the first; in the second
quarter, receipts increased $34.9 billion, and payments increased $34.3 billion.
Current-dollar GDP
Current-dollar GDP — the market value of the nation’s output of goods and services — increased
6.7 percent, or $222.8 billion, in the second quarter to a level of $13,774.7 billion. In the first quarter,
current-dollar GDP increased 4.9 percent, or $159.6 billion.
Revisions
The preliminary estimate of the second-quarter increase in real GDP is 0.6 percentage point, or
$15.9 billion, more than the advance estimate issued last month. The upward revision to the percentage
change in real GDP primarily reflected upward revisions to nonresidential structures, to equipment and
software investment, to exports, and a downward revision to imports that were partly offset by a
downward revision to residential fixed investment.
Advance Preliminary
(Percent change from preceding quarter)
Real GDP…………………………. 3.4 4.0
Current-dollar GDP………………… 6.2 6.7
Gross domestic purchases price index… 3.9 3.8
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $98.3 billion in the second quarter, compared with an increase of
$16.5 billion in the first quarter. Current-production cash flow (net cash flow with inventory valuation
and capital consumption adjustments) — the internal funds available to corporations for investment —
increased $40.6 billion in the second quarter, compared with an increase of $0.2 billion in the first.
Taxes on corporate income increased $39.4 billion in the second quarter, compared with an
increase of $0.1 billion in the first. Profits after tax with inventory valuation and capital consumption
adjustments increased $58.9 billion in the second quarter, compared with an increase of $16.4 billion in
the first. Dividends increased $24.7 billion, compared with an increase of $23.0 billion; current-
production undistributed profits increased $34.2 billion, in contrast to a decrease of $6.6 billion.
Domestic profits of financial corporations increased $56.7 billion in the second quarter, in contrast
to a decrease of $26.9 billion in the first. Domestic profits of nonfinancial corporations increased $25.3
billion in the second quarter, compared with an increase of $23.2 billion in the first. In the second
quarter, real gross corporate value added increased, and profits per unit of real value added increased.
The increase in profits per unit reflected an increase in unit prices that was partly offset by an increase in
unit labor costs; unit nonlabor costs decreased slightly.
The rest-of-the-world component of profits increased $16.2 billion in the second quarter,
compared with an increase of $20.1 billion in the first. 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 second-quarter
increase was accounted for by a larger increase in receipts than in payments.
Profits before tax increased $120.0 billion in the second quarter, compared with an increase of
$26.6 billion in the first. 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 $7.8 billion in the second quarter (from -$227.9 billion to -$235.7 billion), in
contrast to an increase of $9.1 billion in the first. The inventory valuation adjustment decreased $13.9
billion (from -$40.2 billion to -$54.1 billion), compared with a decrease of $19.2 billion.
Current dollar and real GDP 2nd quarter 2007 [Excel]
Source: Bureau of Economic Analysis
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