Home > News Release: Gross Domestic Product (GDP) and Corporate Profits
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, JUNE 25, 2010
BEA 10-31


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Lisa S. Mataloni: (202) 606-5304 (GDP)
Andrew Hodge: (202) 606-5564 (Profits)
Recorded message: (202) 606-5306  
Gross Domestic Product: First Quarter 2010 (Third Estimate)
Corporate Profits: First Quarter 2010 (Revised Estimate)
      Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 2.7 percent in the first quarter of 2010,
(that is, from the fourth quarter to the first quarter), according to the "third" estimate released by
the Bureau of Economic Analysis.  In the fourth quarter of 2009, real GDP increased 5.6 percent.

      The GDP estimate released today is based on more complete source data than were available for
the "second" estimate issued last month.  In the second estimate, the increase in real GDP was 3.0
percent (see "Revisions" on page 3).

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

      The annual revision of the national income and product accounts (NIPAs), covering the first
quarter of 2007 through the first quarter of 2010 for most estimates, will be released along with the
"advance" estimate of GDP for the second quarter of 2010 on July 30.  Information about changes in the
news release tables, the interactive NIPA tables, and the underlying detail tables is available on BEA’s
Web site at www.bea.gov/national/an1.htm.  The August Survey of Current Business will contain an
article that describes the annual revision in detail.

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 (2005) 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 increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential
fixed investment that were partly offset by negative contributions from state and local government
spending and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP,
increased.

      The deceleration in real GDP in the first quarter primarily reflected decelerations in private
inventory investment and in exports, a downturn in residential fixed investment, a deceleration in
nonresidential fixed investment, and a larger decrease in state and local government spending that were
partly offset by an acceleration in PCE.

      Motor vehicle output added 0.40 percentage point to the first-quarter change in real GDP after
adding 0.45 percentage point to the fourth-quarter change.  Final sales of computers added 0.09
percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the
fourth-quarter change.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.7 percent in the first quarter, unrevised from the second estimate; this index increased 2.0
percent in the fourth quarter.  Excluding food and energy prices, the price index for gross domestic
purchases increased 1.2 percent in the first quarter, compared with an increase of 1.5 percent in the
fourth.  The federal pay raise for civilian and military personnel added 0.1 percentage point to the
first-quarter increase in the gross domestic purchases price index.

      Real personal consumption expenditures increased 3.0 percent in the first quarter, compared with
an increase of 1.6 percent in the fourth.  Real nonresidential fixed investment increased 2.2 percent,
compared with an increase of 5.3 percent.  Nonresidential structures decreased 15.5 percent, compared
with a decrease of 18.0 percent.  Equipment and software increased 11.4 percent, compared with an
increase of 19.0 percent.  Real residential fixed investment decreased 10.3 percent, in contrast to an
increase of 3.8 percent.

      Real exports of goods and services increased 11.3 percent in the first quarter, compared with an
increase of 22.8 percent in the fourth.  Real imports of goods and services increased 14.8 percent,
compared with an increase of 15.8 percent.

      Real federal government consumption expenditures and gross investment increased 1.2 percent
in the first quarter, compared with no change in the fourth.  National defense increased 1.0 percent, in
contrast to a decrease of 3.6 percent.  Nondefense increased 1.5 percent, compared with an increase of
8.3 percent.  Real state and local government consumption expenditures and gross investment decreased
3.8 percent, compared with a decrease of 2.2 percent.

      The change in real private inventories added 1.88 percentage points to the first-quarter change
in real GDP, after adding 3.79 percentage points to the fourth-quarter change.  Private businesses
increased inventories $41.2 billion in the first quarter, following decreases of $19.7 billion in the
fourth quarter and $139.2 billion in the third.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 0.8
percent in the first quarter, compared with an increase of 1.7 percent in the fourth.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 3.5 percent in the first quarter, compared with an increase of 5.2 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 -- increased 3.5 percent in the first quarter, compared with an increase of
5.0 percent in the fourth.  GNP includes, and GDP excludes, net receipts of income from the rest of
the world, which increased $23.6 billion in the first quarter after decreasing $14.5 billion in the
fourth; in the first quarter, receipts increased $24.5 billion, and payments increased $0.8 billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.9 percent, or $138.6 billion, in the first quarter to a level of $14,592.4 billion.  In the fourth
quarter, current-dollar GDP increased 6.1 percent, or $211.7 billion.


Revisions

      The "third" estimate of the first-quarter change in real GDP is 0.3 percentage point, or $9.6
billion, lower than the second estimate issued last month, primarily reflecting an upward revision to
imports and a downward revision to personal consumption expenditures that were partly offset by
upward revisions to exports and to private inventory investment.


                                                   Advance Estimate     Second Estimate      Third Estimate
	(Percent change from preceding quarter)

Real GDP................................................  3.2                 3.0                 2.7
Current-dollar GDP......................................  4.1                 4.1                 3.9
Gross domestic purchases price index....................  1.7                 1.7                 1.7



                                          Corporate Profits

      Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $116.9 billion in the first quarter, compared with an increase of
$108.7 billion in the fourth quarter.  Current-production cash flow (net cash flow with inventory
valuation adjustment) -- the internal funds available to corporations for investment -- increased $63.7
billion in the first quarter, compared with an increase of $69.1 billion in the fourth.

      Taxes on corporate income increased $61.3 billion in the first quarter, compared with an increase
of $40.9 billion in the fourth.  Profits after tax with inventory valuation and capital consumption
adjustments increased $55.6 billion in the first quarter, compared with an increase of $67.8 billion
in the fourth.  Dividends decreased $27.3 billion, in contrast to an increase of $29.1 billion;
current-production undistributed profits increased $82.9 billion, compared with an increase of
$38.7 billion.

      Domestic profits of financial corporations increased $11.2 billion in the first quarter, compared
with an increase of $65.0 billion in the fourth.  Domestic profits of nonfinancial corporations increased
$79.6 billion in the first quarter, compared with an increase of $59.8 billion in the fourth.  In the first
quarter, real gross value added of nonfinancial corporations increased.  Profits per unit of real value
added increased, reflecting decreases in both the unit labor and nonlabor costs corporations incurred that
more than offset a decrease in unit prices.

      The rest-of-the-world component of profits increased $26.1 billion in the first quarter, in contrast
to a decrease of $16.1 billion in the fourth quarter.  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
increase was accounted for by a larger increase 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 increase in
nonfinancial corporations reflected increases in all the major industry categories shown except
information.  Within manufacturing, all the subcategories increased except chemical products and
"other" nondurable goods.

      Profits before tax increased $215.1 billion in the first quarter, compared with an increase of
$137.0 billion in the fourth quarter.  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 $107.4 billion in the first quarter (from -$118.8 billion to
-$226.2 billion), in contrast to an increase of $0.1 billion in the fourth.  The inventory valuation
adjustment increased $9.2 billion (from -$45.6 billion to -$36.4 billion), in contrast to a decrease of
$28.5 billion.

      The large decrease in the first-quarter capital consumption adjustment reflects the expiration of
bonus depreciation.  Profits from current production are not affected because they do not depend on the
depreciation-accounting practices used for federal income tax returns; rather they are based on
depreciation of fixed assets valued at current cost and using consistent depreciation profiles based on
used-asset prices.


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      BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
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                          Next release – July 30, 2010, at 8:30 A.M. EDT for:
                     Gross Domestic Product:  Second Quarter 2010 (Advance Estimate)
                       Annual Revision of the National Income and Product Accounts
                             (First Quarter 2007 through First Quarter 2010)