EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, Friday, May 27, 2016
BEA 16—24


* 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: (301) 278-9083 (GDP) gdpniwd@bea.gov
Howard Krakower: (301) 278-9417 (Profits) cpniwd@bea.gov
Jeannine Aversa: (301) 278-9003 (News Media)  
National Income and Product Accounts
Gross Domestic Product: First Quarter 2016 (Second Estimate)
Corporate Profits: First Quarter 2016 (Preliminary Estimate)
      Real gross domestic product -- the value of the goods and services produced by the nation’s
economy less the value of the goods and services used up in production, adjusted for price
changes -- increased at an annual rate of 0.8 percent in the first quarter of 2016, according to the
"second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP
increased 1.4 percent.

      The GDP estimate released today is based on more complete source data than were available for
the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 0.5
percent. With the second estimate for the first quarter, the decrease in private inventory investment was
smaller than previously estimated (see "Revisions" on page 2).

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

BOX._____

                 Upcoming Annual Revision of the National Income and Product Accounts

      The annual revision of the national income and product accounts, covering the first
quarter of 2013 through the first quarter of 2016, will be released along with the "advance"
estimate of GDP for the second quarter of 2016 on July 29.  For more information, see “Preview
of the Upcoming Annual NIPA Revision” included in the May Survey of Current Business article
on “GDP and the Economy”.
_________

NOTE. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified.
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.

      The deceleration in real GDP in the first quarter primarily reflected a larger decrease in
nonresidential fixed investment, a deceleration in PCE, and a downturn in federal government spending
that were partly offset by an upturn in state and local government spending, and an acceleration in
residential fixed investment.

      Real gross domestic income (GDI) -- the value of the costs incurred and the incomes earned in
the production of goods and services in the nation’s economy -- increased 2.2 percent in the first quarter,
compared with an increase of 1.9 percent (revised) in the fourth quarter. The average of real GDP and
real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI,
increased 1.5 percent in the first quarter, compared with an increase of 1.7 percent (revised) in the fourth
quarter.

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 1.0 percent in the first quarter, compared with an increase of 1.5 percent in the
fourth.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 0.2 percent in the first quarter, compared with an increase of 0.4 percent in the fourth.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent,
compared with an increase of 1.0 percent.

      Current-dollar GDP -- the market value of the goods and services produced by the nation’s
economy less the value of the goods and services used up in production -- increased 1.4 percent, or
$64.7 billion, in the first quarter to a level of $18,229.5 billion. In the fourth quarter, current-dollar GDP
increased 2.3 percent, or $104.6 billion.


Revisions

      The second estimate of the first quarter percent change in real GDP is 0.3 percentage point more
than the advance estimate issued last month, primarily reflecting upward revisions to private inventory
investment, to residential fixed investment, and to exports and a downward revision to imports. For
more information, see the Technical Note. For information on revisions, see "The Revisions to GDP,
GDI, and Their Major Components."


                                            Advance Estimate    Second Estimate

                                          (Percent change from preceding quarter)
Real GDP                                          0.5                 0.8
Current-dollar GDP                                1.2                 1.4
Real GDI                                            …                 2.2
Average of Real GDP and Real GDI                    …                 1.5
Gross domestic purchases price index              0.3                 0.2


      For the fourth quarter of 2015, real GDI was revised up 1.0 percentage point, from 0.9 percent to
1.9 percent.


                                         Corporate Profits

Profits from current production

      Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) increased $6.5 billion in the first quarter, in contrast to a
decrease of $159.6 billion in the fourth.

      Profits of domestic financial corporations decreased $2.0 billion in the first quarter, compared
with a decrease of $24.0 billion in the fourth. Profits of domestic nonfinancial corporations increased
$45.7 billion, in contrast to a decrease of $129.2 billion. The rest-of-the-world component of profits
decreased $37.3 billion, compared with a decrease of $6.5 billion. 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 first
quarter, receipts decreased $3.5 billion, and payments increased $33.8 billion.

      Taxes on corporate income decreased $1.7 billion in the first quarter, compared with a decrease
of $32.2 billion in the fourth. Profits after tax with IVA and CCAdj increased $8.1 billion, in contrast to
a decrease of $127.4 billion.

      Dividends increased $7.4 billion in the first quarter, in contrast to a decrease of $15.1 billion in
the fourth. Undistributed profits increased $0.8 billion, in contrast to a decrease of $112.2 billion. Net
cash flow with IVA -- the internal funds available to corporations for investment -- increased $11.8
billion, in contrast to a decrease of $101.6 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 decreased $20.8 billion in the first quarter, in
contrast to an increase of $13.2 billion in the fourth. The CCAdj decreased $2.8 billion in the first
quarter, in contrast to an increase of $3.6 billion.

Gross value added of nonfinancial domestic corporate business

      Real gross value added of nonfinancial corporations increased in the first quarter. Unit profits
from current production (profits per unit of real gross value added) increased reflecting a decrease in
unit nonlabor cost that was partially offset by a decrease in price per unit and an increase in unit labor
cost.

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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 the
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                                       *          *          *

                        Next release -- June 28, 2016 at 8:30 A.M. EDT for:
                    Gross Domestic Product:  First Quarter 2016 (Third Estimate)
                     Corporate Profits:  First Quarter 2016 (Revised Estimate)