Home > News Release: Gross Domestic Product (GDP) and Corporate Profits
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, WEDNESDAY, DECEMBER 22, 2010
BEA 10-62


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Lisa S. Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Andrew Hodge: (202) 606-5564 (Profits) cpniwd@bea.gov
Recorded message: (202) 606-5306  
National Income and Product Accounts
Gross Domestic Product, 3rd quarter 2010 (third estimate);
Corporate Profits, 3rd 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 2.6 percent in the third quarter of 2010, (that
is, from the second quarter to the third quarter), according to the "third" estimate released by the Bureau
of Economic Analysis.  In the second quarter, real GDP increased 1.7 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 2.5
percent (see "Revisions" on page 3).

      The increase in real GDP in the third quarter primarily reflected positive contributions from
personal consumption expenditures, private inventory investment, nonresidential fixed investment,
exports, and federal government spending that were partly offset by a negative contribution from
residential fixed investment.  Imports, which are a subtraction in the calculation of GDP, increased.

      The acceleration in real GDP in the third quarter primarily reflected a sharp deceleration in
imports and an acceleration in private inventory investment that were partly offset by a downturn in
residential fixed investment and decelerations in nonresidential fixed investment and in exports.

      Motor vehicle output added 0.49 percentage point to the third-quarter change in real GDP after
subtracting 0.06 percentage point from the second-quarter change.  Final sales of computers added 0.29
percentage point to the third-quarter change in real GDP after adding 0.03 percentage point to the
second-quarter change.


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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 price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.7 percent in the third quarter, 0.1 percentage point less than the second estimate; this index
increased 0.1 percent in the second quarter.  Excluding food and energy prices, the price index for gross
domestic purchases increased 0.4 percent in the third quarter, compared with an increase of 0.8 percent
in the second.

      Real personal consumption expenditures increased 2.4 percent in the third quarter, compared
with an increase of 2.2 percent in the second.  Real nonresidential fixed investment increased 10.0
percent, compared with an increase of 17.2 percent.  Nonresidential structures decreased 3.5 percent,
compared with a decrease of 0.5 percent.  Equipment and software increased 15.4 percent, compared
with an increase of 24.8 percent.  Real residential fixed investment decreased 27.3 percent, in contrast to
an increase of 25.7 percent.

      Real exports of goods and services increased 6.8 percent in the third quarter, compared with an
increase of 9.1 percent in the second.  Real imports of goods and services increased 16.8 percent,
compared with an increase of 33.5 percent.

      Real federal government consumption expenditures and gross investment increased 8.8 percent
in the third quarter, compared with an increase of 9.1 percent in the second.  National defense increased
8.5 percent, compared with an increase of 7.4 percent.  Nondefense increased 9.5 percent, compared
with an increase of 12.8 percent.  Real state and local government consumption expenditures and gross
investment increased 0.7 percent, compared with an increase of 0.6 percent.

      The change in real private inventories added 1.61 percentage points to the third-quarter change in
real GDP, after adding 0.82 percentage point to the second-quarter change.  Private businesses increased
inventories $121.4 billion in the third quarter, following increases of $68.8 billion in the second quarter
and $44.1 billion in the first.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 0.9
percent in the third quarter, the same increase as in the second.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 4.2 percent in the third quarter, compared with an increase of 5.1 percent in the
second.


Gross national product

      Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 2.3 percent in the third quarter, compared with an increase of 1.8
percent in the second.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which decreased $7.1 billion in the third quarter after increasing $3.7 billion in the second; in the
third quarter, receipts increased $5.9 billion, and payments increased $13.0 billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
4.6 percent, or $166.4 billion, in the third quarter to a level of $14,745.1 billion.  In the second quarter,
current-dollar GDP increased 3.7 percent, or $132.3 billion.


Revisions

      The "third" estimate of the third-quarter increase in real GDP is 0.1 percentage point, or $1.1
billion, higher than the "second" estimate issued last month, primarily reflecting an upward revision to
private inventory investment that was largely offset by a downward revision to personal consumption
expenditures.


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

Real GDP..........................................        2.0                 2.5                 2.6
Current-dollar GDP................................        4.2                 4.8                 4.6
Gross domestic purchases price index..............        0.8                 0.8                 0.7


Corporate Profits

      Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $26.0 billion in the third quarter, compared with an increase of
$47.5 billion in the second quarter.  Current-production cash flow (net cash flow with inventory
valuation adjustment) -- the internal funds available to corporations for investment -- decreased $68.4
billion in the third quarter, in contrast to an increase of $61.1 billion in the second.

      Taxes on corporate income increased $23.8 billion in the third quarter, compared with an
increase of $2.4 billion in the second.  Profits after tax with inventory valuation and capital consumption
adjustments increased $2.2 billion in the third quarter, compared with an increase of $45.2 billion in the
second.  Dividends increased $8.1 billion, the same increase as in the second quarter; current-production
undistributed profits decreased $5.9 billion in the third quarter, in contrast to an increase of $37.1 billion
in the second.

      Domestic profits of financial corporations increased $34.6 billion in the third quarter, in contrast
to a decrease of $3.4 billion in the second.  Domestic profits of nonfinancial corporations increased $0.3
billion in the third quarter, compared with an increase of $48.2 billion in the second.  In the third
quarter, real gross value added of nonfinancial corporations decreased.  Profits per unit of real value
added were unchanged; an increase in unit prices was offset by increases in both the unit labor costs and
the unit nonlabor costs corporations incurred.


      The rest-of-the-world component of profits decreased $8.9 billion in the third quarter, in contrast
to an increase of $2.8 billion in the second.  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 third-quarter decrease was
accounted for by a larger increase in payments than in receipts.

      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 financial corporations increased and profits of nonfinancial corporations
decreased.  The slight decrease in nonfinancial reflected decreases in wholesale trade and in
manufacturing that were largely offset by increases in "other" nonfinancial industries and in information.
Within manufacturing, the decrease primarily reflected a large decrease in petroleum and coal products
that was partly offset by increases in most of the other detailed manufacturing industries shown.

      Profits before tax increased $57.5 billion in the third quarter, compared with an increase of $15.3
billion in the second.  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 increased $1.4 billion in the third quarter (from -$170.7 billion to -$169.3 billion), in contrast
to a decrease of $0.8 billion in the second.  The inventory valuation adjustment decreased $32.9 billion
(from -$3.5 billion to -$36.4 billion), in contrast to an increase of $32.9 billion.

      Effective with this release, chained-dollar gross value added of nonfinancial corporate business
was revised beginning with 1929.  Chained-dollar gross value added is derived by deflating current-
dollar gross value added by a revised chain-type price index for nonfinancial industries from the annual
revision of BEA’s industry accounts that was released this month.


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      BEA’s national, international, regional, and industry estimates; the Survey of Current Business;
and BEA news releases are available without charge on BEA’s Web site at www.bea.gov.  By visiting
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                            Next release – January 28, 2011, at 8:30 A.M. EST for:
                       Gross Domestic Product:  Fourth Quarter 2010 (Advance Estimate)


Release dates in 2011


Gross Domestic Product

                   2010: IV and 2010 annual     2011: I         2011: II          2011: III

Advance....             January 28              April 28        July 29           October 27
Second.....             February 25             May 26          August 26         November 22
Third......             March 25                June 24         September 29      December 22


Corporate Profits

Preliminary...           .......                May 26          August 26         November 22
Revised.......           March 25               June 24         September 29      December 22