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Technical Note
Gross Domestic Product
First Quarter of 2014 (Second Estimate)
May 29, 2014
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 online monthly journal, the Survey of
Current Business, along with a more detailed analysis of the estimates ("GDP and the
Economy").

Sources of Revision to Real GDP

Real GDP decreased 1.0 percent (annual rate) in the first quarter, a downward revision
of 1.1 percentage points from the advance estimate. The revision reflected a downward
revision to private inventory investment and an upward revision to imports that were
partly offset by an upward revision to exports.

*	The downward revision to inventory investment was primarily to nonfarm inventories.
        Within nonfarm inventories, the largest downward revisions were to retail trade, to
        manufacturing, and to mining. The revisions to retail trade and to manufacturing
        industries primarily reflected newly available Census Bureau inventory data for
        March. Benchmarked Census inventories data for retail and wholesale trade and
        revised seasonal factors for manufacturing were incorporated on a best-change
        basis. (BEA applies the “best change” to the level of inventories.) The revision to
        mining was based on newly available preliminary Census quarterly financial report
        data for the first quarter.
*	The upward revisions to both exports and imports were mainly to goods and were
        based on newly available Census goods data for March.
*	There was a small upward revision to personal consumption expenditures, reflecting
        an upward revision to goods that more than offset a downward revision to services.
        Within goods, there were upward revisions to motor vehicles, to other nondurable
        goods, and to motor vehicle fuels, reflecting data from the Census Bureau on sales
        of used motor vehicle dealers, from the Department of the Treasury on tobacco, and
        from the Energy Information Administration on motor vehicle fuels. Within services,
        there was a downward revision to health care that reflected newly available data on
        Medicaid payments from the Centers for Medicare and Medicaid Services.

The price index for gross domestic purchases increased 1.3 percent in the first quarter, a
downward revision of 0.1 percentage point.

Gross Domestic Income and Corporate Profits

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, decreased 2.3
percent in the first quarter. 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.

Profits from current production decreased $213.4 billion, or 9.8 percent (quarterly
rate), in the first quarter.  Domestic profits of financial corporations decreased $70.6
billion, domestic profits of nonfinancial corporations decreased $102.3 billion, and rest-
of-the-world profits decreased $40.4 billion.

Revisions to Wages and Salaries, Disposable Personal Income, and GDI

In addition to presenting revised estimates for the first quarter, today's release also
presents revised estimates of fourth-quarter wages and salaries, personal taxes, and
contributions for government social insurance. Wages and salaries are now estimated to
have increased $66.3 billion in the fourth quarter of 2013, a downward revision of $2.8
billion. These estimates reflect newly available wage and salary tabulations for the fourth
quarter from the BLS quarterly census of employment and wages (QCEW). These data
are more comprehensive than the monthly employment and earnings data that were
used for the earlier estimates—the QCEW data include irregular pay, such as bonuses
and gains from the exercise of stock options.

Real disposable personal income is estimated to have increased 0.7 percent (annual
rate) in the fourth quarter of 2013 and 1.7 percent in the first quarter of 2014. By
comparison, the estimates that were available last month showed an increase of 0.8
percent in the fourth quarter and an increase of 1.9 percent in the first.

The revision to fourth-quarter wages and salaries also resulted in a revision to GDI. Real
GDI is estimated to have grown 2.6 percent in the fourth quarter, a downward revision of
0.1 percentage point.

Annual Revision Scheduled for July 30

The annual revision of the national income and product accounts (NIPAs) will be
released along with the “advance” estimate of GDP for the second quarter of 2014 on
July 30. In addition to the regular revision of estimates for the most recent 3 years and
for the first quarter of 2014, GDP and some components will be revised back to the first
quarter of 1999 (see "Preview of the Upcoming Annual NIPA Revision" in the
May Survey of Current Business).  The August Survey will contain an article that
describes the annual revision in detail.

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