EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, MARCH 27, 2015
BEA 15-13


* 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 Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Kate Shoemaker: (202) 606-5564 (Profits) cpniwd@bea.gov
Jeannine Aversa: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2014 (Third Estimate)
Corporate Profits: Fourth Quarter and Annual 2014
      Real gross domestic product -- the value of the production of goods and services in the United
States, adjusted for price changes -- increased at an annual rate of 2.2 percent in the fourth quarter of
2014, according to the "third" estimate released by the Bureau of Economic Analysis.  In the third
quarter, real GDP increased 5.0 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 also 2.2
percent.  While increases in exports and in personal consumption expenditures (PCE) were larger than
previously estimated and the change in private inventories was smaller, GDP growth is unrevised, and
the general picture of the economy for the fourth quarter remains the same (see "Revisions" on page 3).

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

      The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in
imports, a downturn in federal government spending, a deceleration in nonresidential fixed investment,
and a larger decrease in private inventory investment that were partly offset by accelerations in PCE and
in state and local government spending.


______
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 (2009)
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. For information on revisions, see "The Revisions to
GDP, GDI, and Their Major Components."

_______

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
decreased 0.1 percent in the fourth quarter, the same decrease as in the second estimate; this index
increased 1.4 percent in the third quarter.  Excluding food and energy prices, the price index for gross
domestic purchases increased 0.7 percent, compared with an increase of 1.6 percent.

      Real personal consumption expenditures increased 4.4 percent in the fourth quarter, compared
with an increase of 3.2 percent in the third.  Durable goods increased 6.2 percent, compared with an
increase of 9.2 percent.  Nondurable goods increased 4.1 percent, compared with an increase of 2.5
percent.  Services increased 4.3 percent, compared with an increase of 2.5 percent.

      Real nonresidential fixed investment increased 4.7 percent in the fourth quarter, compared with
an increase of 8.9 percent in the third.  Investment in nonresidential structures increased 5.9 percent,
compared with an increase of 4.8 percent.  Investment in equipment increased 0.6 percent, compared
with an increase of 11.0 percent.  Investment in intellectual property products increased 10.3 percent,
compared with an increase of 8.8 percent.  Real residential fixed investment increased 3.8 percent,
compared with an increase of 3.2 percent.

      Real exports of goods and services increased 4.5 percent in the fourth quarter, the same increase
as in the third quarter.  Real imports of goods and services increased 10.4 percent, in contrast to a
decrease of 0.9 percent.

      Real federal government consumption expenditures and gross investment decreased 7.3 percent
in the fourth quarter, in contrast to an increase of 9.9 percent in the third.  National defense decreased
12.2 percent, in contrast to an increase of 16.0 percent.  Nondefense increased 1.5 percent, compared
with an increase of 0.4 percent.  Real state and local government consumption expenditures and gross
investment increased 1.6 percent, compared with an increase of 1.1 percent.

      The change in real private inventories subtracted 0.10 percentage point from the fourth-quarter
change in real GDP after subtracting 0.03 percentage point from the third-quarter change.  Private
businesses increased inventories $80.0 billion in the fourth quarter, following increases of $82.2 billion
in the third quarter and $84.8 billion in the second.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 2.3
percent in the fourth quarter, compared with an increase of 5.0 percent in the third.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 3.2 percent in the fourth quarter, compared with an increase of 4.1 percent in the
third.


Gross national product

      Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 1.4 percent in the fourth quarter, compared with an increase of
5.3 percent in the third.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which decreased $30.7 billion in the fourth quarter, in contrast to an increase of $13.3 billion in
the third; in the fourth quarter, receipts decreased $28.3 billion, and payments increased $2.3 billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the production of goods and services in the United
States -- increased 2.4 percent, or $103.9 billion, in the fourth quarter to a level of $17,703.7 billion.  In
the third quarter, current-dollar GDP increased 6.4 percent, or $271.6 billion.


Gross domestic income

      Real gross domestic income (GDI), which measures the value of the production of goods and
services in the United States as the costs incurred and the incomes earned in production, increased 3.1
percent in the fourth quarter, compared with an increase of 5.2 percent in the third.  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 growth rate in real GDP was the same as was estimated last month, primarily reflecting
upward revisions to exports and to personal consumption expenditures (PCE) that were mostly offset by
a downward revision to private inventory investment.


                                         Advance Estimate     Second Estimate     Third Estimate
					       (Percent change from preceding quarter)
Real GDP...............................         2.6                 2.2               2.2
Current-dollar GDP.....................         2.5                 2.3               2.4
Real GDI...............................          --                 --                3.1
Gross domestic purchases price index...        -0.3                -0.1              -0.1


2014 GDP

	Real GDP increased 2.4 percent in 2014 (that is, from the 2013 annual level to the 2014 annual
level), compared with an increase of 2.2 percent in 2013.

      The increase in real GDP in 2014 reflected positive contributions from PCE, nonresidential fixed
investment, exports, state and local government spending, private inventory investment, and residential
fixed investment that were partly offset by a negative contribution from federal government spending.
Imports, which are a subtraction in the calculation of GDP, increased.

      The acceleration in real GDP growth in 2014 primarily reflected an acceleration in nonresidential
fixed investment, a smaller decrease in federal government spending, and accelerations in PCE and in
state and local government spending that were partly offset by an acceleration in imports and a
deceleration in residential fixed investment.

      The price index for gross domestic purchases increased 1.4 percent in 2014, compared with an
increase of 1.3 percent in 2013.

      Current-dollar GDP increased 3.9 percent, or $650.8 billion, in 2014 to a level of $17,418.9
billion, compared with an increase of 3.7 percent, or $604.9 billion, in 2013.

      During 2014 (that is, measured from the fourth quarter of 2013 to the fourth quarter of 2014),
real GDP increased 2.4 percent, compared with an increase of 3.1 percent during 2013.  The price index
for gross domestic purchases increased 1.1 percent during 2014, compared with an increase of 1.3
percent during 2013.


                                            Corporate Profits


Profits from current production

      Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) decreased $30.4 billion in the fourth quarter, in contrast to an
increase of $64.5 billion in the third.

      Profits of domestic financial corporations decreased $12.5 billion in the fourth quarter, in
contrast to an increase of $16.1 billion in the third.  Profits of domestic nonfinancial corporations
increased $18.1 billion, compared with an increase of $32.0 billion.  The rest-of-the-world component of
profits decreased $36.1 billion in the fourth quarter, in contrast to an increase of $16.5 billion in the
third.  This measure is calculated as the difference between receipts from the rest of the world and
payments to the rest of the world.  In the fourth quarter, receipts decreased $36.5 billion, and payments
decreased $0.4 billion.

      Taxes on corporate income decreased $4.8 billion in the fourth quarter, compared with a
decrease of $5.5 billion in the third.  Profits after tax with IVA and CCAdj decreased $25.8 billion, in
contrast to an increase of $70.1 billion.

 	Dividends increased $18.6 billion in the fourth quarter, in contrast to a decrease of $3.9 billion in
the third.  Undistributed profits decreased $44.3 billion, in contrast to an increase of $73.9 billion.  Net
cash flow with IVA -- the internal funds available to corporations for investment -- increased $12.2
billion, compared with an increase of $46.9 billion.

      The IVA and CCAdj are adjustments that convert inventory withdrawals and depreciation of
fixed assets reported on a tax-return, historical-cost basis to the current-cost economic measures used in
the national income and product accounts.  The IVA increased $27.5 billion in the fourth quarter,
compared with an increase of $16.7 billion in the third.   The CCAdj increased $3.9 billion, compared
with an increase of $0.9 billion.

	For the year 2014, profits from current production decreased $17.1 billion, in contrast to an
increase of $84.1 billion in 2013.  Profits of domestic financial corporations decreased, and profits of
domestic nonfinancial corporations increased.  The rest-of-the-world component of profits decreased
$9.0 billion in 2014, in contrast to an increase of $1.3 billion in 2013.

      For the year 2014, taxes on corporate income increased $118.3 billion, compared with an
increase of $19.5 billion in 2013.  Profits after tax with IVA and CCAdj decreased $135.4 billion, in
contrast to an increase of $64.6 billion.  Dividends decreased $54.5 billion, in contrast to an increase of
$102.5 billion.  Undistributed profits decreased $80.9 billion, compared with a decrease of $37.9 billion.


Corporate profits with IVA

      According to the measure of profits before tax with inventory valuation adjustment, profits of
domestic financial corporations decreased $13.0 billion in the fourth quarter, in contrast to an increase of
$16.2 billion in the third.  Profits of domestic nonfinancial corporations increased $14.7 billion,
compared with an increase of $31.1 billion.  The fourth-quarter increase in profits of nonfinancial
corporations primarily reflected increases in retail trade, in "other" nonfinancial industries, and in
manufacturing that were partly offset by decreases in utilities and in transportation and warehousing.

      For the year 2014, profits of domestic financial corporations decreased $22.5 billion, compared
with an increase of $44.6 billion in 2013.  Profits of domestic nonfinancial corporations increased
$212.4 billion in 2014, compared with an increase of $66.2 billion.  The 2014 increase in profits of
domestic nonfinancial corporations was widespread across all industries.  The largest increases were in
manufacturing, in "other" nonfinancial industries, and in utilities.


Gross value added of nonfinancial domestic corporate business

      In the fourth quarter, real gross value added of nonfinancial corporations increased, and profits
per unit of real gross value added were unchanged, reflecting a decrease in unit prices that was offset by
decreases in unit labor and nonlabor costs.



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