Technical Note
Gross Domestic Product and Corporate Profits
Third Quarter of 2008 (Final)
December 23, 2008

*See the navigation bar at the right side of the technical note text for supplementary materials.

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; 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

Real GDP decreased 0.5 percent (annual rate) in the third quarter (that is, from the
second quarter to the third), the same decrease as in the preliminary estimate.  An
upward revision to investment in nonresidential structures was offset by a downward
revision to equipment and software investment:

*	The upward revision to nonresidential structures reflected revised Census
        construction spending data for August and September.
*	The downward revision to equipment and software was primarily to prepackaged
        software, reflecting newly available Census Bureau quarterly services survey
        data for the third quarter.

The price index for gross domestic purchases—the prices paid by U.S. residents for
goods and services, wherever produced—increased 4.5 percent in the third quarter, 0.2
percentage point less than the preliminary estimate.  The revision reflected downward
revisions to the price indexes for personal consumption expenditures (PCE) and for
residential investment.  The downward revision to PCE prices primarily reflected a
downward revision to the price for banking services that was based on newly available
FDIC tabulations of Call Report data for the third quarter.  The downward revision to
residential investment prices reflected a revised Census Bureau price index for single-
family houses under construction.

Corporate Profits

Profits from current production decreased $18.5 billion, or 1.2 percent (quarterly rate), in
the third quarter, compared with a decrease of $14.6 billion in the preliminary estimate.
The revision to profits reflected new and revised source data, which include preliminary
tabulations of Census quarterly financial reports, regulatory agency reports, and
compilations of publicly available corporate financial statements.  Domestic profits of
financial corporations decreased $75.5 billion, domestic profits of nonfinancial
corporations increased $52.1 billion, and rest-of-the-world profits increased $4.9 billion in
the third quarter.  The increase in nonfinancial corporate profits reflected increases in
petroleum and coal products manufacturing and in wholesale trade.

Effective with today’s release, the estimates of real gross value added of nonfinancial
corporate business were revised, beginning with 2005, reflecting the use of a revised
deflator for nonfinancial industries from the annual revision of the GDP-by-industry

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