EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, MAY 29, 2015
BEA 15-21


* 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 Pinard: (202) 606-5564 (Profits) cpniwd@bea.gov
Jeannine Aversa: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product: First Quarter 2015 (Second Estimate)
Corporate Profits: First Quarter 2015 (Preliminary Estimate)
      Real gross domestic product -- the value of the production of goods and services in the United
States, adjusted for price changes -- decreased at an annual rate of 0.7 percent in the first quarter of
2015, according to the "second" estimate released by the Bureau of Economic Analysis.  In the fourth
quarter, real GDP increased 2.2 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, real GDP increased 0.2 percent.
With the second estimate for the first quarter, imports increased more and private inventory investment
increased less than previously estimated (for more information, see "Revisions" on page 3).

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


BOX._____________

           Upcoming Annual Revision of the National Income and Product Accounts

      The annual revision of the national income and product accounts will be released along
with the "advance" estimate of GDP for the second quarter of 2015 on July 30.  In addition to the
regular revision of the estimates for the most recent 3 years and for the first quarter of 2015,
some series will be revised back further.  The June Survey of Current Business will contain an
article that previews the annual revision, and the August Survey will contain an article that
describes the results.


FOOTNOTE.________

      NOTE.  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"
_________________

      Real GDP decreased 0.7 percent in the first quarter of 2015, in contrast to an increase of
2.2 percent in the fourth quarter of 2014.  The downturn in the percent change in real GDP primarily
reflected a deceleration in PCE and downturns in exports, in nonresidential fixed investment, and in
state and local government spending that were partly offset by a deceleration in imports and upturns
in federal government spending and in private inventory investment.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
decreased 1.6 percent in the first quarter, a downward revision of 0.1 percentage point from the advance
estimate; this index decreased 0.1 percent in the fourth quarter.  Excluding food and energy prices, the
price index for gross domestic purchases increased 0.2 percent, compared with an increase of 0.7
percent.

      Real personal consumption expenditures increased 1.8 percent in the first quarter, compared with
an increase of 4.4 percent in the fourth.  Durable goods increased 1.1 percent, compared with an increase
of 6.2 percent.  Nondurable goods increased 0.1 percent, compared with an increase of 4.1 percent.
Services increased 2.5 percent, compared with an increase of 4.3 percent.

      Real nonresidential fixed investment decreased 2.8 percent in the first quarter, in contrast to an
increase of 4.7 percent in the fourth.  Investment in nonresidential structures decreased 20.8 percent, in
contrast to an increase of 5.9 percent.  Investment in equipment increased 2.7 percent, compared with an
increase of 0.6 percent.  Investment in intellectual property products increased 3.6 percent, compared
with an increase of 10.3 percent.  Real residential fixed investment increased 5.0 percent, compared with
an increase of 3.8 percent.

      Real exports of goods and services decreased 7.6 percent in the first quarter, in contrast to an
increase of 4.5 percent in the fourth.  Real imports of goods and services increased 5.6 percent,
compared with an increase of 10.4 percent.

      Real federal government consumption expenditures and gross investment increased 0.1 percent
in the first quarter, in contrast to a decrease of 7.3 percent in the fourth.  National defense decreased 1.0
percent, compared with a decrease of 12.2 percent.  Nondefense increased 2.0 percent, compared with an
increase of 1.5 percent.  Real state and local government consumption expenditures and gross
investment decreased 1.8 percent, in contrast to an increase of 1.6 percent.

      The change in real private inventories added 0.33 percentage point to the first-quarter change in
real GDP after subtracting 0.10 percentage point from the fourth-quarter change.  Private businesses
increased inventories $95.0 billion in the first quarter, following increases of $80.0 billion in the fourth
quarter and $82.2 billion in the third.

      Real final sales of domestic product -- GDP less change in private inventories -- decreased 1.1
percent in the first quarter, in contrast to an increase of 2.3 percent in the fourth.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 1.1 percent in the first quarter, compared with an increase of 3.2 percent in the
fourth.


Gross national product

      Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- decreased 1.4 percent in the first quarter, in contrast to an increase of 1.4
percent in the fourth.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which decreased $24.9 billion in the first quarter, compared with a decrease of $30.7 billion in
the fourth; in the first quarter, receipts decreased $22.4 billion, and payments increased $2.5 billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the production of goods and services in the United
States -- decreased 0.9 percent, or $38.7 billion, in the first quarter to a level of $17,665.0 billion.  In the
fourth quarter, current-dollar GDP increased 2.4 percent, or $103.9 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 1.4
percent in the first quarter, compared with an increase of 3.7 percent (revised) in the fourth.  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 second estimate of the first-quarter percent change in real GDP is 0.9 percentage point, or
$40.7 billion, less than the advance estimate issued last month, primarily reflecting an upward revision
to imports and downward revisions to private inventory investment and to personal consumption
expenditures that were partly offset by an upward revision to residential fixed investment.



                                        Advance Estimate  Second Estimate
                                     (Percent change from preceding quarter)

Real GDP...............................       0.2              -0.7
Current-dollar GDP.....................       0.1              -0.9
Real GDI...............................       ---               1.4
Gross domestic purchases priceindex....      -1.5              -1.6


Corporate Profits


Profits from current production

      Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) decreased $125.5 billion in the first quarter, compared with a
decrease of $30.4 billion in the fourth.

      Profits of domestic financial corporations decreased $2.6 billion in the first quarter, compared
with a decrease of $12.5 billion in the fourth.  Profits of domestic nonfinancial corporations decreased
$100.4 billion, in contrast to an increase of $18.1 billion. The rest-of-the-world component of profits
decreased $22.4 billion, compared with a decrease of $36.1 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 $28.9 billion, and payments decreased $6.5 billion.

      Taxes on corporate income increased $9.3 billion in the first quarter, in contrast to a decrease of
$4.8 billion in the fourth.  Profits after tax with IVA and CCAdj decreased $134.6 billion, compared
with a decrease of $25.8 billion.  The first-quarter changes in taxes on corporate income mainly reflect
the expiration of bonus depreciation provisions. For further explanation, see the box below.

      Dividends increased $5.1 billion in the first quarter, compared with an increase of $18.6 billion
in the fourth.  Undistributed profits decreased $139.7 billion, compared with a decrease of $44.3 billion.
Net cash flow with IVA -- the internal funds available to corporations for investment -- decreased
$132.1 billion, in contrast to an increase of $12.2 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 $29.4 billion, compared with an increase
of $27.5 billion.  The CCAdj decreased $220.4 billion, in contrast to an increase of $3.9 billion. The
first-quarter changes in CCAdj mainly reflect the expiration of bonus depreciation provisions. For
further explanation, see the box below.


BOX._____________

                   Impacts of Bonus Depreciation on the First Quarter of 2015

      The first-quarter changes in taxes on corporate income and in capital consumption adjustment
(CCAdj) mainly reflect the expiration of both the 50-percent bonus depreciation provision and increased
Section 179 expensing limits claimed under extensions of the 2010 tax acts.  For detailed data, see the
table "Net Effects of the Tax Acts of 2002, 2003, 2008, 2009, 2010 (and extensions) on Selected
Measures of Corporate Profits".

             BEA’s estimates of profits from current production are not affected by these tax acts because
profits from current production do not depend on the depreciation-accounting practices used for federal
income tax purposes.  BEA’s measure of current-production profits reflects economic accounting
practices in which depreciation is based on an estimate of the reduction in the value of fixed capital used
in the production process.  For a more detailed discussion on the effect of tax act provisions on the
CCAdj, see FAQ 1002, "How do the economic stimulus acts impact NIPA Corporate Profits?"
_________________


Gross value added of nonfinancial domestic corporate business

      Real gross value added of nonfinancial corporations increased 0.6 percent in the first quarter.
Profits per unit of real value added decreased, reflecting increases in unit labor and nonlabor costs and a
decrease in unit prices.



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                             Next release -- June 24, 2015 at 8:30 A.M. EDT for:
                             Gross Domestic Product:  First Quarter 2015 (Third Estimate)
                             Corporate Profits:  First Quarter 2015 (Revised Estimate)