Technical Note

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Technical Note
Gross Domestic Product
Third Quarter of 2006 (Preliminary)
November 29, 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 third 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 third quarter was revised from 1.6 percent to 2.2
percent (annual rate).

. Imports were revised down, reflecting newly available Census goods data for
September and revised data for August.
. Inventory investment was revised up, reflecting newly available Census Bureau
inventory data for September and revised data for August.

Corporate Profits

Profits from current production increased $66.2 billion, or 4.2 percent (quarterly rate), in
the third quarter, after increasing $22.7 billion, or 1.4 percent, in the second. Compared
to the same quarter a year ago, profits increased 30.9 percent. The strong year-over-
year growth in profits reflected the effects of Hurricanes Katrina and Rita, which reduced
profits for the third quarter of 2005 about $165 billion.

Revisions to Wages and Salaries and Disposable Personal Income

In addition to presenting preliminary estimates for the third quarter, today?s news release
also presents revised estimates of second-quarter wages and salaries, personal taxes,
and contributions for government social insurance. Wage and salary disbursements are
now estimated to have increased $10.8 billion in the second quarter, a downward
revision of $100.3 billion. These estimates reflect newly available wage-and-salary
tabulations for the second quarter from the Bureau of Labor Statistics quarterly census
of employment and wages. These data are more comprehensive than the monthly
employment and earnings data that were used for the earlier estimates?they include
the pay of supervisors and irregular pay, such as bonuses and gains from the exercise
of stock options. Real disposable personal income is now estimated to have decreased
1.5 percent in the second quarter and to have increased 3.7 percent in the third. (By
comparison, the estimates that were available last month showed an increase of 1.7
percent in the second quarter and an increase of 3.7 percent in the third.)

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 THIRD QUARTER OF 2006

This table shows the actual data used for the preliminary estimate of GDP for the third quarter of
"2006. For these key series, actual data for September were not available in time for inclusion in the"
"advance GDP estimate released on October 27, 2006, and BEA made assumptions for these source"
data. The numbers in brackets show the September values that had been assumed for the advance
"estimate. For most series, the data incorporated for August and, in some cases, for July, 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.

2006
Apr. May Jun. Jul. Aug. Sep.

Private fixed investment:
Nonresidential structures:
1 Value of new nonresidential
construction put in place..... 290.7 292.0 297.8 303.0 312.3 312.7
{301.7} {312.0} {309.9}
Equipment and software:
2 Manufacturers' shipments of
complete aircraft............. 27.0 34.0 37.7 30.6 34.8 34.5
{34.8} {34.7}
Residential structures:
Value of new residential
construction put in place:
3 Single family................... 446.5 435.5 424.2 411.3 400.1 390.1
{411.5} {400.3} {394.5}

4 Multifamily..................... 56.1 55.0 54.7 55.4 56.4 57.7
{55.5} {55.7} {54.9}
Change in private inventories:
5 Change in inventories for nondurable 14.3 16.1 23.4 7.5 9.3 -0.5
manufacturing................... {12.3} {6.4}

5a Change in inventories for merchant
wholesale and retail industries other
than motor vehicles and equipment.. 48.2 76.5 57.6 49.8 83.7 37.2
{76.7} {34.5}
Net exports:
Exports of goods:
"6 U.S. exports of goods,"
international-transactions-
accounts basis................ 982.0 1008.7 1043.5 1025.5 1056.3 1063.5
{1055.7} {1069.2}
6a Excluding gold................... 975.1 999.3 1033.2 1017.8 1046.0 1052.7
{1045.4} {1060.2}
Imports of goods:
"7 U.S. imports of goods,"
international-transactions-
accounts basis................ 1816.8 1860.9 1883.6 1906.9 1954.7 1904.8
{1962.2} {1915.1}
7a Excluding gold.................. 1811.4 1853.9 1877.5 1900.9 1949.7 1899.1
{1957.2} {1909.6}

8 Net exports of goods................ -834.8 -852.2 -840.2 -881.4 -898.4 -841.4
{-906.5} {-845.8}
8a Excluding gold.................. -836.4 -854.6 -844.3 -883.1 -903.8 -846.4
{-911.9} {-849.4}
Government:
State and local:
Structures:
9 Value of new construction put
in place.................... 247.6 252.3 254.8 252.2 253.3 256.1
{251.1} {254.7} {252.9}