Technical Note

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Technical Note
Gross Domestic Product
First Quarter of 2006 (Preliminary)
May 25, 2006

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 first quarter is available on BEA's Web site at
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 ("GDP and the
Economy").

Sources of Revision to Real GDP

The real GDP growth rate in the first quarter was revised from 4.8 percent to 5.3 percent.

. Inventory investment was revised up, reflecting newly available Census Bureau
inventory data for March.
. Exports of goods and services were revised up, reflecting newly available
Census goods data for March.

These upward revisions were partly offset by downward revisions:

. Personal consumption expenditures for services were revised down, reflecting
newly available electricity and natural gas usage data for February from the
Energy Information Administration.
. Investment in equipment and software was revised down, reflecting revised
Census shipments data for January, February, and March from the benchmarked
Manufacturers' Shipments, Inventories, and Orders survey, which were
incorporated on a best-change basis.

Corporate Profits

Profits from current production increased $116.5 billion, or 7.9 percent, in the first
quarter, after increasing $185.8 billion, or 14.4 percent, in the fourth.

Fourth-quarter profits from current production were reduced by $22.9 billion (at an
annual rate) because of Hurricane Wilma, reflecting the net benefits paid by domestic
insurance companies and the uninsured losses of corporate property. Third-quarter
profits were reduced by $165.3 billion because of Hurricanes Katrina and Rita. For
further information on the treatment of the hurricanes in the national accounts, see the
FAQs available on BEA's Web site, www.bea.gov.

Revisions to Wages and Salaries and Disposable Personal Income

In addition to presenting preliminary estimates for the first quarter, today's news release
also presents revised fourth-quarter estimates of wages and salaries, personal taxes,
and contributions for government social insurance that are based on preliminary data
from the Bureau of Labor Statistics quarterly census of employment and wages. Wage
and salary disbursements are now estimated to have increased $22.3 billion in the fourth
quarter, a downward revision of $45.5 billion.

The estimate of personal current taxes for the first quarter was also revised, reflecting
newly available data on Federal nonwithheld income taxes from the Monthly Treasury
Statement through April and from the Daily Treasury Statement through mid-May.
Personal current taxes are now estimated to have increased $59.0 billion in the first
quarter, an upward revision of $20.5 billion.

Real disposable personal income is now estimated to have increased 5.1 percent in the
fourth quarter and to have increased 2.1 percent in the first. (By comparison, the
estimates that were available last month showed an increase of 6.7 percent in the fourth
quarter and an increase of 3.2 percent in the first.)

Brent R. Moulton
Associate Director for National Economic Accounts
Bureau of Economic Analysis
(202) 606-9606

Table A.--SOURCE DATA FOR THE ADVANCE AND PRELIMINARY
ESTIMATES OF GDP FOR THE FIRST QUARTER OF 2006

This table shows the actual data used for the preliminary estimate of GDP for the first quarter of
2006. For these key series, actual data for March were not available in time for inclusion in the
advance GDP estimate released on April 28, 2006, and BEA made assumptions for these source
data. The numbers in brackets show the March values that had been assumed for the advance
estimate. For most series, the data incorporated for February and, in some cases, for January,
were preliminary, and the numbers shown in brackets are the values used last month.

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.

2005 2006
Oct. Nov. Dec. Jan. Feb. Mar.

Private fixed investment:
Nonresidential structures:
1 Value of new total private
construction put in place less
residential (inc. improvements). 249.5 253.1 260.1 265.3 268.3 267.9
{263.3} {265.3} {264.3}
Equipment and software:
2 Manufacturers' shipments of
complete aircraft............. 27.8 26.5 26.3 33.9 43.4 34.6
{43.4} {34.6}
Residential structures:
Value of new residential
construction put in place:
3 Single family................... 439.8 445.9 450.3 451.6 456.8 459.2
{452.6} {458.5} {457.8}

4 Multifamily..................... 49.1 49.1 50.3 52.3 53.1 54.0
{50.5} {50.4} {50.3}
Change in private inventories:
5 Change in inventories for nondurable 20.8 -12.1 26.5 35.1 -10.1 13.1
manufacturing................... {17.0} {-7.6} {29.4} {26.8} {-6.7} {5.6}

5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment. 4.0 31.1 63.5 22.0 32.4 34.1
{24.5} {13.1}
Net exports:
Exports of goods:
6 U.S. exports of goods,
international-transactions-
accounts basis.............. 900.7 925.7 949.3 979.2 964.5 985.3
{965.5} {966.6}
6a Excluding gold.................. 894.6 919.9 943.8 971.6 957.8 976.9
{958.7} {958.7}
Imports of goods:
7 U.S. imports of goods,
international-transactions-
accounts basis............... 1776.0 1757.9 1791.0 1861.7 1802.3 1785.9
{1806.4} {1791.7}
7a Excluding gold................. 1770.8 1752.6 1785.2 1855.7 1797.0 1780.0
{1801.1} {1786.1}

8 Net exports of goods............... -875.3 -832.2 -841.7 -882.5 -837.8 -800.6
{-840.9} {-825.1}
8a Excluding gold................. -876.2 -832.7 -841.4 -884.1 -839.3 -803.2
{-842.4} {-827.3}
Government:
State and local:
Structures:
9 Value of new construction put
in place.................... 232.7 234.8 235.6 237.7 238.5 238.6
{236.0} {235.1} {235.6}