Home > News Release: Gross Domestic Product (GDP) and Corporate Profits
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, THURSDAY, JUNE 25, 2009
BEA 09-29


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Lisa Mataloni : (202) 606-5304 (GDP)
Greg Key (202) 606-5564 (Profits)
Recorded message: (202) 606-5306  
Gross Domestic Product, 1st quarter 2009 (final)
Corporate Profits, 1st quarter 2009 (revised)
	Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- decreased at an annual rate of 5.5 percent in the first quarter of 2009,
(that is, from the fourth quarter to the first quarter), according to final estimates released by the
Bureau of Economic Analysis.  In the fourth quarter, real GDP decreased 6.3 percent.

 	The GDP estimates released today are based on more complete source data than were available for
the preliminary estimates issued last month.  In the preliminary estimates, the decrease in real GDP was
5.7 percent (see "Revisions" on page 3).

	The decrease in real GDP in the first quarter primarily reflected negative contributions from
exports, equipment and software, private inventory investment, nonresidential structures, and residential
fixed investment that were partly offset by a positive contribution from personal consumption
expenditures (PCE).  Imports, which are a subtraction in the calculation of GDP, decreased.

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BOX.--
                   Comprehensive Revision of the National Income and Product Accounts

          BEA plans to release the results of the 13th comprehensive (or benchmark) revision of the national
income and product accounts (NIPAs), as part of the annual revision on July 31, 2009.  More
information on the revision is available on BEA’s Web site at www.bea.gov/national/an1.htm, including
a link to an article in the March 2009 issue of the Survey of Current Business that discussed the changes
in definitions and presentation that will be implemented in the revision and a link to an article in the
May Survey that described the changes in statistical methods.  The September Survey will contain an
article that describes the results of the revision in detail.  The Web site also contains links to redesigned
PCE table stubs and other revised NIPA table stubs.
_____________________________
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 along with the Technical Note and Highlights
related to this release.
_____________________________

        The smaller decrease in real GDP in the first quarter than in the fourth primarily reflected an
upturn in PCE and a larger decrease in imports that were partly offset by larger decreases in private
inventory investment and in nonresidential structures.

	Motor vehicle output subtracted 1.26 percentage points from the first-quarter change in real GDP
after subtracting 2.01 percentage points from the fourth-quarter change.  Final sales of computers added
0.09 percentage point to the first-quarter change in real GDP after subtracting 0.02 percentage point
from the fourth-quarter change.

	The price index for gross domestic purchases, which measures prices paid by U.S. residents,
decreased 1.0 percent in the first quarter, the same as in the preliminary estimate; this index decreased
3.9 percent in the fourth quarter.  Excluding food and energy prices, the price index for gross domestic
purchases increased 1.4 percent in the first quarter, also the same as in the preliminary.  The federal pay
raise for civilian and military personnel added 0.3 percentage point to the change in the first-quarter
gross domestic purchases price index, which is treated as an increase in the prices of employee services
purchased by the federal government.

	Real personal consumption expenditures increased 1.4 percent in the first quarter, in contrast to a
decrease of 4.3 percent in the fourth.  Real nonresidential fixed investment decreased 37.3 percent,
compared with a decrease of 21.7 percent.  Nonresidential structures decreased 42.9 percent, compared
with a decrease of 9.4 percent.  Equipment and software decreased 33.7 percent, compared with a
decrease of 28.1 percent.  Real residential fixed investment decreased 38.8 percent, compared with a
decrease of 22.8 percent.

	Real exports of goods and services decreased 30.6 percent in the first quarter, compared with a
decrease of 23.6 percent in the fourth.  Real imports of goods and services decreased 36.4 percent,
compared with a decrease of 17.5 percent.

	Real federal government consumption expenditures and gross investment decreased 4.5 percent in
the first quarter, in contrast to an increase of 7.0 percent in the fourth.  National defense decreased 6.8
percent, in contrast to an increase of 3.4 percent.  Nondefense increased 0.6 percent, compared with an
increase of 15.3 percent.  Real state and local government consumption expenditures and gross
investment decreased 2.2 percent, compared with a decrease of 2.0 percent.

	The real change in private inventories subtracted 2.20 percentage points from the first-quarter
change in real GDP, after subtracting 0.11 percentage point from the fourth-quarter change.  Private
businesses decreased inventories $87.1 billion in the first quarter, following a decrease of $25.8 billion
in the fourth quarter and a decrease of $29.6 billion in the third.

     Real final sales of domestic product -- GDP less change in private inventories -- decreased 3.3
percent in the first quarter, compared with a decrease of 6.2 percent in the fourth.


Gross domestic purchases

	Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- decreased 7.5 percent in the first quarter, compared with a decrease of 5.9 percent in the
fourth.


Gross national product

	Real gross national product -- the goods and services produced by the labor and property supplied
by U.S. residents -- decreased 5.6 percent in the first quarter, the same as in the fourth.  GNP includes,
and GDP excludes, net receipts of income from the rest of the world, which decreased $5.8 billion in the
first quarter after increasing $21.3 billion in the fourth; in the first quarter, receipts decreased $107.9
billion, and payments decreased $102.0 billion.

Current-dollar GDP

	Current-dollar GDP -- the market value of the nation's output of goods and services -- decreased
2.9 percent, or $103.1 billion, in the first quarter to a level of $14,097.2 billion.  In the fourth quarter,
current-dollar GDP decreased 5.8 percent, or $212.5 billion.


Revisions

	The final estimate of the first-quarter change in real GDP is 0.2 percentage point, or $6.8 billion,
less of a decrease than the preliminary estimate issued last month.  The upward revision to the percent
change in real GDP primarily reflected a downward revision to imports and an upward revision to
private nonfarm inventory investment that were partly offset by downward revisions to exports and to
personal consumption expenditures for services.


                                                   Advance    Preliminary       Final
                                                (Percent change from preceding quarter)

Real GDP...............................             -6.1          -5.7          -5.5
Current-dollar GDP.....................             -3.5          -3.1          -2.9
Gross domestic purchases price index...             -1.0          -1.0          -1.0



                                           Corporate Profits

	Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $48.1 billion in the first quarter, in contrast to a decrease of $250.3
billion in the fourth quarter.  Current-production cash flow (net cash flow with inventory valuation and
capital consumption adjustments) -- the internal funds available to corporations for investment --
increased $60.4 billion in the first quarter, in contrast to a decrease of $97.0 billion in the fourth.

	 Taxes on corporate income increased $34.4 billion in the first quarter, in contrast to a decrease of
$130.3 billion in the fourth.  Profits after tax with inventory valuation and capital consumption
adjustments increased $13.8 billion in the first quarter, in contrast to a decrease of $120.1 billion in the
fourth.  Dividends decreased $42.0 billion compared with a decrease of $32.8 billion; current-production
undistributed profits increased $55.8 billion, in contrast to a decrease of $87.4 billion.

	Domestic profits of financial corporations increased $113.7 billion in the first quarter, in contrast
to a decrease of $178.7 billion in the fourth.  Domestic profits of nonfinancial corporations decreased
$49.0 billion in the first quarter, compared with a decrease of $89.1 billion in the fourth.  In the first
quarter, real gross value added of nonfinancial corporate business decreased, and profits per unit of real
value added decreased.  The decrease in unit profits reflected increases in unit prices that were more
than offset by increases in both unit labor and nonlabor costs that corporations incurred.

	The rest-of-the-world component of profits decreased $16.6 billion in the first quarter, in contrast
to an increase of $17.5 billion in the fourth.  This measure is calculated as (1) receipts by U.S. residents
of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated
foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus
dividends paid by U.S. corporations to unaffiliated foreign residents.  The first-quarter decrease was
accounted for by a larger decrease in receipts than in payments.

	Profits before tax with inventory valuation adjustment is the best available measure of industry
profits because estimates of the capital consumption adjustment by industry do not exist.  This measure
reflects depreciation-accounting practices used for federal income tax returns.  According to this
measure, domestic profits of both financial and nonfinancial corporations increased.  The small increase
in nonfinancial corporations reflected increases in information, in "other" nonfinancial, in retail trade,
and in utilities that were mostly offset by decreases in wholesale trade, in manufacturing, and in
transportation and warehousing.  Within manufacturing, the largest decrease was in petroleum and coal
products.

	Profits before tax increased $157.2 billion in the first quarter, in contrast to a decrease of $499.2
billion in the fourth.  The before-tax measure of profits does not reflect, as does profits from current
production, the capital consumption and inventory valuation adjustments.  These adjustments convert
depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to
the current-cost measures used in the national income and product accounts.  The capital consumption
adjustment decreased $55.6 billion in the first quarter (from -$88.1 billion to -$143.7 billion), compared
with a decrease of $0.1 billion in the fourth.  The inventory valuation adjustment decreased $53.5 billion
(from $158.1 billion to $104.6 billion), in contrast to an increase of $249.0 billion.


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                          Next release – July 31, 2009, at 8:30 A.M. EDT for:
                      Gross Domestic Product:  Second Quarter 2009 (Advance) and
                 Comprehensive Revision of the National Income and Product Accounts
                                (1929 through First Quarter 2009)