EconoIndicators

Gross Domestic Product (GDP) At a Glance
Final 2nd Quarter Figures

• Real Annual Growth Rate: 3.9%
• Previous Quarter Rate: 3.8%
• Current Dollar GDP Growth: 4.7%
• GDP Implicit Price Deflator: 0.7%

Technorati Tags: Gross Domestic Product, GDP, GNP

GROSS DOMESTIC PRODUCT: THIRD QUARTER 2007 (ADVANCE)

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 3.9 percent in the third quarter of 2007,
according to advance estimates released by the Bureau of Economic Analysis. In the second quarter,
real GDP increased 3.8 percent.

The Bureau emphasized that the third-quarter “advance” estimates are based on source data that
are incomplete or subject to further revision by the source agency (see the box on page 3). The third-
quarter “preliminary” estimates, based on more comprehensive data, will be released on November 29,
2007.

The increase in real GDP in the third quarter reflected positive contributions from personal
consumption expenditures (PCE), exports, federal government spending, equipment and software,
nonresidential structures, private inventory investment, 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 slight acceleration in real GDP growth in the third quarter primarily reflected accelerations in
PCE and in exports 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 0.29 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
0.33 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 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 1.6 percent in the third quarter, compared with an increase of 3.8 percent in the second.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.7 percent in
the third quarter, compared with an increase of 1.5 percent in the second.

Real personal consumption expenditures increased 3.0 percent in the third quarter, compared with
an increase of 1.4 percent in the second. Durable goods increased 4.4 percent, compared with an
increase of 1.7 percent. Nondurable goods increased 2.7 percent, in contrast to a decrease of 0.5
percent. Services expenditures increased 2.9 percent, compared with an increase of 2.3 percent.

Real nonresidential fixed investment increased 7.9 percent in the third quarter, compared with an
increase of 11.0 percent in the second. Nonresidential structures increased 12.3 percent, compared with
an increase of 26.2 percent. Equipment and software increased 5.9 percent, compared with an increase
of 4.7 percent. Real residential fixed investment decreased 20.1 percent, compared with a decrease of
11.8 percent.

Real exports of goods and services increased 16.2 percent in the third quarter, compared with an
increase of 7.5 percent in the second. Real imports of goods and services increased 5.2 percent, in
contrast to a decrease of 2.7 percent.

Real federal government consumption expenditures and gross investment increased 6.8 percent in
the third quarter, compared with an increase of 6.0 percent in the second. National defense increased 9.7
percent, compared with an increase of 8.5 percent. Nondefense increased 0.9 percent, the same increase
as in the second. Real state and local government consumption expenditures and gross investment
increased 2.0 percent, compared with an increase of 3.0 percent.

The real change in private inventories added 0.36 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 $15.7 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 3.5
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 2.8 percent in the third quarter, compared with an increase of 2.4 percent in the
second.

Disposition of personal income

Current-dollar personal income increased $165.2 billion (5.8 percent) in the third quarter,
compared with an increase of $150.0 billion (5.3 percent) in the second.

Personal current taxes increased $14.0 billion in the third quarter, compared with an increase of
$30.9 billion in the second.

Disposable personal income increased $151.2 billion (6.1 percent) in the third quarter, compared
with an increase of $119.1 billion (4.8 percent) in the second. Real disposable personal income
increased 4.4 percent, compared with an increase of 0.6 percent.

Personal outlays increased $129.1 billion (5.2 percent) in the third quarter, compared with an
increase of $151.7 billion (6.3 percent) in the second. Personal saving — disposable personal income
less personal outlays — was $86.5 billion in the third quarter, compared with $64.4 billion in the second.
The personal saving rate — saving as a percentage of disposable personal income — was 0.8 percent in
the third quarter, compared with 0.6 percent in the second. Saving from current income may be near
zero or negative when outlays are financed by borrowing (including borrowing financed through credit
cards or home equity loans), by selling investments or other assets, or by using savings from previous
periods. For more information, see the FAQs on “Personal Saving” on BEA’s Web site. For a
comparison of personal saving in BEA’s national income and product accounts with personal saving in
the Federal Reserve Board’s flow of funds accounts, go to

http://www.bea.gov/bea/dn/nipaweb/Nipa-Frd.asp.

Current-dollar GDP

Current-dollar GDP — the market value of the nation’s output of goods and services — increased
4.7 percent, or $157.9 billion, in the third quarter to a level of $13,926.7 billion. In the second quarter,
current-dollar GDP increased 6.6 percent, or $216.9 billion.

BOX
Information on the assumptions used for unavailable source data 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. In the middle of each month, an
analysis of the current quarterly estimates of GDP and related series is made available on the Web site;
click on Survey of Current Business, “GDP and the Economy.”

* * *

BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA’s Web site at www.bea.gov. By visiting
the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.

* * *

Next release — November 29, 2007, at 8:30 A.M. EST for:
Gross Domestic Product: Third Quarter 2007 (Preliminary)
Corporate Profits: Third Quarter 2007

Comparisons of Revisions to GDP

Quarterly estimates of GDP are released on the following schedule: “Advance” estimates, based on source data
that are incomplete or subject to further revision by the source agency, are released near the end of the first month
after the end of the quarter; as more detailed and more comprehensive data become available, “preliminary” and
“final” estimates are released near the end of the second and third months, respectively. The “latest” estimates reflect
the results of both annual and comprehensive revisions.

Annual revisions, which cover the quarters of the 3 most recent calendar years, are usually carried out each
summer and incorporate newly available major annual source data. Comprehensive (or benchmark) revisions
are carried out at about 5-year intervals and incorporate major periodic source data, as well as improvements in
concepts and methods that update the accounts to portray more accurately the evolving U.S. economy.

The table below shows comparisons of the revisions between quarterly percent changes of current-dollar and
real GDP for the different vintages of the estimates. From the advance estimate to the preliminary estimate (one
month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the advance
estimate to the final estimate (two months later), it is 0.6 percentage point. From the advance estimate to the latest
estimate, the average revision without regard to sign is 1.2 percentage points. The average revision (with regard to
sign) from the advance estimate to the latest estimate is 0.3 percentage point, which is larger than the average
revisions from the advance estimate to the preliminary or to the final estimates. The larger average revisions to the
latest estimate reflect the fact that comprehensive revisions include major improvements such as the introduction of
chain indexes and the capitalization of software. The current quarterly estimates correctly indicate the direction of change of
real GDP 98 percent of the time, correctly indicate whether it is accelerating or decelerating 74 percent of the time,
and correctly indicate whether real GDP growth is above, near, or below trend growth more than three-fifths of the
time.

Gross Domestic Product (GDP) 3rd Quarter 2007 (Advance) [PDF]

Gross Domestic Product (GDP) 3rd Quarter 2007 (Advance) Tables [Excel]

Source: Department of Commerce, Bureau of Economic Analysis