EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, SEPTEMBER 26, 2014
BEA 14-48


* 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
Kate Shoemaker: (202) 606-5564 (Profits) cpniwd@bea.gov
Jeannine Aversa: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2014 (Third Estimate)
Corporate Profits: Second Quarter 2014 (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 4.6 percent in the second quarter of 2014,
according to the "third" estimate released by the Bureau of Economic Analysis.  In the first quarter, real
GDP decreased 2.1 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 4.2
percent.  With the third estimate for the second quarter, the general picture of economic growth
remains the same; increases in nonresidential fixed investment and in exports were larger than
previously estimated (for more information, see "Revisions" on page 3).

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

      Real GDP increased 4.6 percent in the second quarter, after decreasing 2.1 percent in the first.
This upturn in the percent change in real GDP primarily reflected upturns in exports and in private
inventory investment, accelerations in nonresidential fixed investment and in PCE, and upturns in state
and local government spending and in residential fixed investment that were partly offset by an
acceleration in imports.

_____

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,
increased 2.0 percent in the second quarter, 0.1 percentage point more than in the second estimate; this
index increased 1.4 percent in the first quarter.  Excluding food and energy prices, the price index for
gross domestic purchases increased 1.7 percent, compared with an increase of 1.3 percent.

      Real personal consumption expenditures increased 2.5 percent in the second quarter, compared
with an increase of 1.2 percent in the first.  Durable goods increased 14.1 percent, compared with an
increase of 3.2 percent.  Nondurable goods increased 2.2 percent; it was unchanged in the first quarter.
Services increased 0.9 percent, compared with an increase of 1.3 percent.

      Real nonresidential fixed investment increased 9.7 percent in the second quarter, compared with
an increase of 1.6 percent in the first.  Investment in nonresidential structures increased 12.6 percent,
compared with an increase of 2.9 percent.  Investment in equipment increased 11.2 percent, in contrast
to a decrease of 1.0 percent.  Investment in intellectual property products increased 5.5 percent,
compared with an increase of 4.6 percent.  Real residential fixed investment increased 8.8 percent, in
contrast to a decrease of 5.3 percent.

      Real exports of goods and services increased 11.1 percent in the second quarter, in contrast to a
decrease of 9.2 percent in the first.  Real imports of goods and services increased 11.3 percent,
compared with an increase of 2.2 percent.

      Real federal government consumption expenditures and gross investment decreased 0.9 percent
in the second quarter, compared with a decrease of 0.1 percent in the first.  National defense increased
0.9 percent, in contrast to a decrease of 4.0 percent.  Nondefense decreased 3.8 percent, in contrast to an
increase of 6.6 percent.  Real state and local government consumption expenditures and gross
investment increased 3.4 percent, in contrast to a decrease of 1.3 percent.

      The change in real private inventories added 1.42 percentage points to the second-quarter change
in real GDP after subtracting 1.16 percentage points from the first-quarter change.  Private businesses
increased inventories $84.8 billion in the second quarter, following increases of $35.2 billion in the first
quarter and $81.8 billion in the fourth.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 3.2
percent in the second quarter, in contrast to a decrease of 1.0 percent in the first.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 4.8 percent in the second quarter, in contrast to a decrease of 0.4 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 4.6 percent in the second quarter, in contrast to a decrease of 2.8
percent in the first.  GNP includes, and GDP excludes, net receipts of income from the rest of the world,
which increased $1.4 billion in the second quarter, in contrast to a decrease of $27.4 billion in the first;
in the second quarter, receipts increased $1.7 billion, and payments increased $0.4 billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
6.8 percent, or $284.2 billion, in the second quarter to a level of $17,328.2 billion.  In the first quarter,
current-dollar GDP decreased 0.8 percent, or $34.3 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 5.2 percent in the second quarter,
in contrast to a decrease of 0.8 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 upward revision to the percent change in real GDP primarily reflected upward revisions to
nonresidential fixed investment and to exports.


                                            Advance Estimate  Second Estimate  Third Estimate
                                                  (Percent change from preceding quarter)
Real GDP.....................................        4.0           4.2             4.6
Current-dollar GDP...........................        6.0           6.4             6.8
Real GDI.....................................                     4.7             5.2
Gross domestic purchases price index.........        1.9           1.9             2.0





                                            Corporate Profits


Profits from current production

      Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) increased $164.1 billion in the second quarter, in contrast to a
decrease of $201.7 billion in the first.

      Profits of domestic financial corporations increased $33.3 billion in the second quarter, in
contrast to a decrease of $86.2 billion in the first.  Profits of domestic nonfinancial corporations
increased $134.3 billion, in contrast to a decrease of $89.6 billion.  The rest-of-the-world component of
profits decreased $3.6 billion in the second quarter, compared with a decrease of $26.0 billion in the
first.  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 second quarter, receipts increased $2.7 billion and payments
increased $6.3 billion.

      Taxes on corporate income increased $45.7 billion in the second quarter, compared with an
increase of $66.9 billion in the first.  Profits after tax with IVA and CCAdj increased $118.4 billion, in
contrast to a decrease of $268.6 billion.

      Dividends decreased $0.5 billion in the second quarter, compared with a decrease of $89.5
billion in the first.  Undistributed profits increased $118.8 billion, in contrast to a decrease of $178.9
billion.  Net cash flow with IVA -- the internal funds available to corporations for investment --
increased $133.4 billion, in contrast to a decrease of $163.0 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.  IVA increased $11.9 billion in the second quarter, in contrast
to a decrease of $21.6 billion.  CCAdj decreased $0.8 billion in the second quarter, compared with a
decrease of $195.7 billion.


Corporate profits with IVA

      Profits of domestic financial corporations increased $33.7 billion in the second quarter, in
contrast to a decrease of $68.6 billion in the first.  Profits of domestic nonfinancial corporations
increased $134.7 billion, compared with an increase of $88.5 billion.  The increase in profits of financial
corporations reflected increases in "other" financial industries and in Federal Reserve banks.  The
increase in profits of nonfinancial corporations was widespread; the largest industry contributors were
manufacturing, information, and "other" nonfinancial.  Within manufacturing, the largest increases were
in nondurable goods industries.


Gross value added of nonfinancial domestic corporate business

      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 decreases in unit nonlabor
and labor costs incurred by corporations and an increase in unit prices.


      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 site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.




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                     Next release -- October 30, 2014 at 8:30 A.M. EDT for:
                 Gross Domestic Product:  Third Quarter 2014 (Advance Estimate)