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Technical Note
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Technical Note
Gross Domestic Product
Second Quarter of 2004 (Advance)
July 30, 2004
This technical note provides background information about the source data and estimating
methods used to produce the estimates presented in the GDP news release. The complete
set of estimates for the second quarter is available on BEA's Web site <www.bea.gov>;
a brief summary of "highlights" is also posted on the Web site. In a few weeks, the
estimates will be published in BEA's monthly journal, the Survey of Current Business,
along with a more detailed analysis of the estimates ("The Business Situation").
Source Data for the Advance Estimate
The advance GDP estimate for the second quarter of 2004 is based on source data that
are incomplete and subject to revision. Three months of source data were available for
consumer spending on goods; shipments of capital equipment other than aircraft; motor
vehicle sales and inventories; manufacturing durables inventories; federal government
outlays; and consumer, producer, and international prices. Only two months of data were
available for most other key data sources; BEA's assumptions for the third month are
shown in table A. The following assumptions were made for the third month of the
quarter:
. an increase in nondurable manufacturing inventories,
. an increase in non-motor-vehicle merchant wholesale and retail inventories,
. a small decrease in exports of goods, excluding gold, and
. an increase in imports of goods, excluding gold.
Annual Revision
Today's GDP news release presents results from the regular annual revision of the national
income and product accounts. This year's revision, as usual, covers the estimates from
the most recent three years. The revision incorporates source data that are more
complete, more detailed, and otherwise more appropriate than those previously available.
A detailed discussion of the results will be published in the August issue of the Survey.
In general, revisions to year-to-year growth rates were small; none exceeded 0.3
percentage point. For 2000-2003, real GDP grew at an average annual rate of 1.9
percent, the same as in the previously published estimates. For 2000-2003:
. real personal consumption expenditures grew at an average annual rate of 3.0
percent, the same as the previously published estimate;
. real nonresidential fixed investment declined at an average annual rate of 3.4
percent, compared with the previously published estimate of 3.0 percent; the
downward revisions were primarily to software, reflecting data from the Census
Bureau's annual survey of services for 2002 and 2003, and to communication
equipment, reflecting preliminary shipments data from the 2002 Economic Census;
. real residential investment increased at an average annual rate of 4.6 percent, 0.4
percentage point more than the previously published estimate; the upward revision
was primarily to single-family structures, reflecting Census Bureau value of
construction put-in-place data for 2003;
. real inventories of private businesses decreased $57.3 billion, compared with the
previously published estimate of $57.2 billion;
. real exports decreased at an average annual rate of 2.0 percent, compared with the
previously published estimate of 1.9 percent; real imports increased at a rate of 1.7
percent, 0.2 percentage more than the previously published estimate; both these
revisions were primarily to services, reflecting the annual revision of BEA's
international transactions accounts that was released in June.
. real government consumption expenditures and gross investment increased at an
average annual rate of 3.5 percent, 0.2 percentage point more than the previously
published estimate; the upward revision was to state and local government
spending, reflecting Census Bureau Government Finances data for 2001 and 2002.
Some of the revisions to the quarterly growth rates of GDP were more sizeable. The
largest revision to a quarterly growth rate was for the second quarter of 2001; the revised
estimate for that quarter shows an increase in real GDP of 1.2 percent (annual rate),
compared with the previously published estimate that showed a decrease of 0.6 percent.
(The revision was mainly to inventories and reflected revised data on motor vehicle
inventories from trade sources.)
Price Index for Market-Based Personal Consumption Expenditures
Recently there has been considerable interest in a supplementary price index that BEA
introduced on its Web site last December. The price index for "market-based" personal
consumption expenditures covers household purchases of goods and services for which
explicit prices are charged. Thus, the index excludes most implicit prices (for example,
the implicit price of bank services that are furnished without payment) and the expenses
of nonprofit institutions. This index has been revised for 2001 through the first quarter of
2004 and is presented in table B of this technical note.
Brent R. Moulton
Associate Director for National Economic Accounts
Bureau of Economic Analysis
(202) 606-9606
July 30, 2004
Table A. KEY ASSUMPTIONS FOR THE ADVANCE ESTIMATE OF GDP
FOR THE SECOND QUARTER OF 2004
For many of the key series used to prepare the advance estimate of GDP, including retail sales, unit
automobile and truck sales and inventories, manufacturers' shipments of nondefense capital goods (other
than aircraft), manufacturers' inventories of durable goods, federal defense spending, and consumer,
producer, and international price indexes, actual data are available for all months of the quarter.
For the key series shown in this table, actual data for the third month of the quarter usually are not available
in time for inclusion in the advance GDP estimate. BEA makes assumptions for the source data that are not
yet available; assumptions for June 2004 are shown in the last column of the table. For most series shown,
the data for May are preliminary and subject to further revision. Occasionally, the data for earlier months
are also subject to revision.
All series shown in the table are in billions of dollars, seasonally adjusted at annual rates, and are published
by the Bureau of the Census.
2004
Jan. Feb. Mar. Apr. May Jun.*
Private fixed investment:
Nonresidential structures:
1 Value of new total private
construction put in place less
residential (inc. improvements)... 210.1 215.7 216.5 219.7 218.9 219.3
Equipment and software:
2 Manufacturers' shipments of
complete aircraft.................. 26.8 26.6 27.7 24.6 31.3 23.7
Residential structures:
Value of new residential
construction put in place:
3 Single family.................... 348.0 348.1 353.5 360.1 364.9 361.3
4 Multifamily...................... 35.6 36.8 37.6 37.5 37.7 37.4
Change in private inventories:
5 Change in inventories for nondurable
manufacturing................... 13.4 17.9 8.7 6.3 10.5 11.9
5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment. 1.0 53.0 41.0 34.9 60.8 36.2
Net exports:
Exports of goods:
6 U.S. exports of goods,
international-transactions-
accounts basis...................... 740.2 779.2 807.6 791.4 824.5 822.6
6a Excluding gold.................... 735.1 775.3 803.5 787.9 820.8 819.0
Imports of goods:
7 U.S. imports of goods,
international-transactions-
accounts basis...................... 1335.3 1376.4 1424.5 1427.2 1434.2 1452.7
7a Excluding gold.................... 1331.2 1372.0 1420.7 1423.4 1431.4 1449.1
8 Net exports of goods..................... -595.1 -597.2 -616.9 -635.9 -609.7 -630.0
8a Excluding gold................... -596.2 -596.7 -617.3 -635.5 -610.6 -630.0
Government:
State and local:
Structures:
9 Value of new construction put
in place............................ 205.4 204.5 218.1 219.9 219.7 219.8
____________
*Assumption.
Table B. Price Index for Market-Based Personal Consumption Expenditures
Market-based PCE Market-based PCE
less food and energy
Index Percent Index Percent
[2000=100 change [2000=100 change
2001 101.941 1.9 101.668 1.7
2002 103.113 1.1 103.185 1.5
2003 105.040 1.9 104.388 1.2
[Seasonally adjusted at annual rates]
2001:I 101.479 2.8 101.072 2.1
2001:II 102.003 2.1 101.408 1.3
2001:III 102.205 0.8 101.890 1.9
2001:IV 102.079 -0.5 102.304 1.6
2002:I 102.242 0.6 102.560 1.0
2002:II 102.966 2.9 103.011 1.8
2002:III 103.424 1.8 103.449 1.7
2002:IV 103.820 1.5 103.722 1.1
2003:I 104.601 3.0 103.952 0.9
2003:II 104.768 0.6 104.238 1.1
2003:III 105.294 2.0 104.572 1.3
2003:IV 105.496 0.8 104.790 0.8
2004:I 106.334 3.2 105.261 1.8
2004:II 107.315 3.7 105.818 2.1
NOTE. -- The price index for "market-based" personal consumption expenditures (PCE)
is a supplemental measure prepared by the Bureau of Economic Analysis that is based
on household expenditures for which there are observable price measures. It excludes
most implicit prices (for example, the services furnished without payment by financial
intermediaries) and the expenses of nonprofit institutions. More information is
available on BEA's Web site at http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=83.
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