EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, THURSDAY, SEPTEMBER 27, 2012
BEA 12-44


* See the navigation bar at the right side of the news release text for links to data tables,
contact personnel and their telephone numbers, and supplementary materials.


Lisa S. Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Andrew Hodge: (202) 606-5564 (Profits) cpniwd@bea.gov
Recorded message: (202) 606-5306    
Ralph Stewart: (202) 606-2649 (News Media)  
Jeannine Aversa: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2012 (third estimate);
   Corporate Profits: Second Quarter 2012 (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 1.3 percent in the second quarter of 2012
(that is, from the first quarter to the second quarter), according to the "third" estimate released by the
Bureau of Economic Analysis.  In the first quarter, real GDP increased 2.0 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 1.7
percent (see "Revisions" on page 3).

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

      The deceleration in real GDP in the second quarter primarily reflected decelerations in PCE, in
nonresidential fixed investment, and in residential fixed investment that were partly offset by smaller
decreases in federal government spending and in state and local government spending and an
acceleration in exports.

      Motor vehicle output added 0.20 percentage point to the second-quarter change in real GDP after
adding 0.72 percentage point to the first-quarter change.  Final sales of computers subtracted 0.10
percentage point from the second-quarter change in real GDP after adding 0.02 percentage point to the
first-quarter change.

__________

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 BEAs Web site along with the Technical Note and Highlights related to this release.  
For information on revisions, see "Revisions to GDP, GDI, and Their Major Components."
__________

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.7 percent in the second quarter, 0.1 percentage point less than the second estimate; this index
increased 2.5 percent in the first quarter.  Excluding food and energy prices, the price index for gross
domestic purchases increased 1.4 percent in the second quarter, compared with an increase of 2.4
percent in the first.

      Real personal consumption expenditures increased 1.5 percent in the second quarter, compared
with an increase of 2.4 percent in the first.  Durable goods decreased 0.2 percent, in contrast to an
increase of 11.5 percent.  Nondurable goods increased 0.6 percent, compared with an increase of 1.6
percent.  Services increased 2.1 percent, compared with an increase of 1.3 percent.

      Real nonresidential fixed investment increased 3.6 percent in the second quarter, compared with
an increase of 7.5 percent in the first.  Nonresidential structures increased 0.6 percent, compared with an
increase of 12.9 percent.  Equipment and software increased 4.8 percent, compared with an increase of
5.4 percent.  Real residential fixed investment increased 8.5 percent, compared with an increase of 20.5
percent.

      Real exports of goods and services increased 5.3 percent in the second quarter, compared with an
increase of 4.4 percent in the first.  Real imports of goods and services increased 2.8 percent, compared
with an increase of 3.1 percent.

      Real federal government consumption expenditures and gross investment decreased 0.2 percent
in the second quarter, compared with a decrease of 4.2 percent in the first.  National defense decreased
0.2 percent, compared with a decrease of 7.1 percent.  Nondefense decreased 0.4 percent, in contrast to
an increase of 1.8 percent.  Real state and local government consumption expenditures and gross
investment decreased 1.0 percent, compared with a decrease of 2.2 percent.

      The change in real private inventories subtracted 0.46 percentage point from the second-quarter
change in real GDP, after subtracting 0.39 percentage point from the first-quarter change.  Private
businesses increased inventories $41.4 billion in the second quarter, following increases of $56.9 billion
in the first quarter and $70.5 billion in the fourth.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 1.7
percent in the second quarter, compared with an increase of 2.4 percent in the first.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 1.0 percent in the second quarter, compared with an increase of 1.8 percent in the
first.


Gross national product

      Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 2.1 percent in the second quarter, compared with an increase of
0.6 percent in the first.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which increased $27.4 billion in the second quarter after decreasing $44.1 billion in the first; in
the second quarter, receipts increased $3.5 billion, and payments decreased $24.0 billion.
Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
2.8 percent, or $107.3 billion, in the second quarter to a level of $15,585.6 billion.  In the first quarter,
current-dollar GDP increased 4.2 percent, or $157.3 billion.


Gross domestic income

      Real gross domestic income (GDI), which measures the output of the economy as the costs
incurred and the incomes earned in the production of GDP, increased 0.2 percent in the second quarter,
compared with an increase of 3.8 percent in the first.  For a given quarter, the estimates of GDP and GDI
may differ for a variety of reasons, including the incorporation of largely independent source data.
However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of
change.


Revisions

      The "third" estimate of the second-quarter percent change in real GDP is 0.4 percentage point, or
$16.0 billion, less than the "second" estimate issued last month, primarily reflecting downward revisions
to private inventory investment, to personal consumption expenditures, and to exports.

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

Real GDP...............................       1.5                   1.7                 1.3
Current-dollar GDP.....................       3.1                   3.3                 2.8
Gross domestic purchases price index...       0.7                   0.8                 0.7



Corporate Profits

	Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $21.8 billion in the second quarter, in contrast to a decrease of
$53.0 billion in the first quarter.  Current-production cash flow (net cash flow with inventory valuation
adjustment) -- the internal funds available to corporations for investment -- increased $6.0 billion in the
second quarter, in contrast to a decrease of $169.8 billion in the first.

	 Taxes on corporate income decreased $10.3 billion in the second quarter, in contrast to an
increase of $83.2 billion in the first.  Profits after tax with inventory valuation and capital consumption
adjustments increased $31.9 billion in the second quarter, in contrast to a decrease of $136.2 billion in
the first.  Dividends increased $20.4 billion, compared with an increase of $9.2 billion; current-
production undistributed profits increased $11.6 billion, in contrast to a decrease of $145.5 billion.

	Domestic profits of financial corporations decreased $39.7 billion in the second quarter, compared
with a decrease of $12.3 billion in the first.  Domestic profits of nonfinancial corporations increased
$27.8 billion in the second quarter, compared with an increase of $7.3 billion in the first.  In the second
quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value
added increased.  The increase in unit profits reflected an increase in unit prices and a decrease in unit
nonlabor costs that were partly offset by an increase in unit labor costs.

	The rest-of-the-world component of profits increased $33.6 billion in the second quarter, in
contrast to a decrease of $48.0 billion in the first.  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 second-quarter
increase was accounted for by an increase in receipts and a decrease 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 financial corporations decreased.  The decrease in financial corporations
was primarily accounted for by a decrease in "other" financial industries.  Domestic profits of
nonfinancial corporations increased, primarily reflecting increases in wholesale trade, in manufacturing,
and in information industries.  Within manufacturing, the largest increases were in computer and
electronic products and in "other" durable goods.

	Profits before tax decreased $16.3 billion in the second quarter, in contrast to an increase of
$188.1 billion in the first.  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 $1.7 billion in the second quarter (from -$200.7 billion to -$202.4
billion), compared with a decrease of $230.3 billion in the first.  The large decrease in the first-quarter
capital consumption adjustment mainly reflected the expiration of bonus depreciation claimed under the
Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010.  The inventory
valuation adjustment increased $39.7 billion (from -$23.7 billion to $16.0 billion), in contrast to a
decrease of $10.8 billion.

                                         *          *          *

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                             Next release  October 26, 2012, at 8:30 A.M. EDT for:
                          Gross Domestic Product:  Third Quarter 2012 (Advance Estimate)