Errata: May 3, 2010, 4:30 PM - The technical note for gross domestic product, first quarter 2010 advance (released April 30, 2010) has been revised to correct an error in the reported ARRA provisions for government social benefits to persons and the resulting level of disposable personal income. The corrected values are shown below. The corrections did not alter the level of gross domestic product, of disposable personal income, or of any other number shown in the GDP news release.

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                                          Technical Note
                                      Gross Domestic Product
                                  First Quarter of 2010 (Advance)
                                           April 30, 2010
                                           
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 first
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").

Real GDP

Real GDP increased 3.2 percent (annual rate) in the first quarter of 2010, following an increase of
5.6 percent in the fourth quarter of 2009.  The deceleration in real GDP in the first quarter mostly
reflected decelerations in inventory investment and in exports.  Consumer spending, in contrast,
accelerated.

Source Data for the Advance Estimate

The advance GDP estimate for the first quarter of 2010 is based on source data that are incomplete and
subject to revision.  Three months of source data were available for consumer spending on goods; shipments
of capital equipment other than aircraft; motor vehicle sales and inventories; manufacturing durables
inventories; federal government outlays; and consumer, producer, and international prices.  Only two months
of data were available for most other key data sources; BEAs assumptions for the third month are shown in
table A.  Among those assumptions are the following:

     *     an increase in nondurable manufacturing inventories,
     *     an increase in non-motor-vehicle merchant wholesale and retail inventories,
     *     an increase in exports of goods, excluding gold, and
     *     an increase in imports of goods, excluding gold.

Prices

The price index for gross domestic purchases increased 1.7 percent in the first quarter after increasing
2.0 percent in the fourth quarter.  Excluding food and energy prices, the price index for gross domestic
purchases increased 1.1 percent in the first quarter, after increasing 1.5 percent in the fourth.  The
federal pay raise for civilian and military personnel, which is treated as an increase in the price of
employee services purchased by the federal government, added about 0.2 percentage point to the first-quarter
change in the gross domestic purchases price index.

American Recovery and Reinvestment Act of 2009

BEA's national accounts include the effects of the federal outlays and tax cuts included in the American
Recovery and Reinvestment Act of 2009.  Because most of the outlays and tax reductions from ARRA have been in
the form of grants to state and local governments, tax reductions for individual and business taxpayers, and
social benefits to households, their effects on GDP show up indirectly through the effects on GDP components
such as consumer spending, residential investment, and state and local government spending.  Thus, BEAs
accounts do not directly identify the portion of GDP expenditures that is funded by ARRA.  It is possible,
however, to identify the effects of ARRA on components of income.

     During the first quarter of 2010, ARRA provisions lowered personal taxes about $121 billion (annual rate) and
raised government social benefits to persons about $112 billion, thus raising disposable personal income about
$233 billion.  Corporate taxes were also lowered about $13 billion.  In addition, ARRA funded about $96 billion
in current grants to state and local governments (such as Medicaid and education grants), about $16 billion in
capital transfers to state and local governments and to home buyers, about $7 billion in federal expenditures
for goods and services, and about $3 billion in subsidies for housing and energy.  Further information, including
estimates of the effects of ARRA for the quarters of 2009, is available at http://www.bea.gov/recovery/index.htm.

Note on the Source Data for Wages and Salaries

Beginning with the first quarter of 2010, BEA estimates of the change in private wages and salaries for the most
recent quarter reflect monthly data on hours and earnings for all employees on private nonfarm payrolls from the
Bureau of Labor Statistics (BLS) current employment statistics.  Previously, the estimates used BLS data on hours
and earnings for only production and nonsupervisory workers on private nonfarm payrolls.  (BEAs estimates of wages
and salaries also reflect BLS monthly data on employment, which have not changed.)  Beginning with January 2010,
BLS began featuring data on hours and earnings for all employees, which corresponds more closely to the population
covered by BEAs national income statistics.  As a consequence, beginning with the first quarter of 2010 (and
January 2010 for monthly estimates), BEAs initial estimates of wages and salaries reflect these new, more
comprehensive source data.  The BLS monthly current employment statistics, however, do not include certain types
of irregular pay, such as bonuses and stock options, which are included in the quarterly census of employment and
wages.  Therefore, BEA will continue to incorporate data from the more comprehensive quarterly census of employment
and wages in the GDP estimates that are released about five months after the end of each quarter.

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