News Release
Gross Domestic Product, 3rd quarter 1998 (preliminary); Corporate Profits, 3rd quarter 1998 (preliminary)
This release is available as a text file download.
Full Release & Tables (Text)
Technical Notes
These technical notes provide background information about the source data and estimating methods used to produce the estimates presented in the GDP news releases; these notes also provide some perspective on the estimates. Additional material will become available in the next several days; much of it will be posted to BEA's web site <http://www.bea.gov>. In a few weeks, the estimates will be published in BEA's journal, the Survey of Current Business. The Survey also will provide a more detailed analysis of the estimates ("The Business Situation").
GDP, GNP, and Corporate Profits
Real GDP (revised): Real GDP is now estimated to have increased 3.9 percent in the third quarter of 1998, 0.6 percentage point more than the advance estimate of 3.3 percent. Real GDP increased 1.8 percent in the second quarter. The 0.6-percentage point upward revision to third-quarter real GDP growth is 0.1 percentage point higher than the 0.5-percentage point average revision--without regard to sign--between the advance and preliminary estimates over the past 20 years. (See the summary of revisions to real GDP estimates at the end of these notes.)
As in the advance estimate, the major contributors to the third-quarter increase in real GDP were consumer purchases of services and inventory investment, primarily in motor vehicles. The increase in GDP was moderated by a decrease in exports of services and an increase in imports of goods. Business purchases of equipment (producers' durable equipment), which increased in the advance estimate, decreased in the preliminary estimate, the first decline in this GDP component since the fourth quarter of 1991.
The step-up in GDP growth from the second to the third quarter was more than accounted for by inventory investment. Final sales of domestic product--GDP less change in business inventories--increased 2.9 percent in the third quarter after increasing 4.6 percent in the second. The slowdown in final sales reflected a downturn in nonresidential investment and slower growth in consumer spending for goods. Gross domestic purchases--GDP less net exports--increased 4.2 percent in the third quarter after increasing 3.9 percent in the second; net exports reduced GDP growth in both quarters, but by less in the third than in the second.
Real GNP: Real GNP increased 3.3 percent in the third quarter, 0.6 percentage point less than real GDP; GNP increased 1.7 percent in the second quarter. GNP equals GDP plus incomes, mainly on investments, earned abroad by U.S. residents less similar incomes earned in the United States by foreign residents. The smaller third-quarter growth in GNP than in GDP reflected a large drop in receipts earned abroad.
Corporate Profits: Profits from current production increased 0.4 percent (at a quarterly rate) in the third quarter, after decreasing 1.0 percent in the second. Compared with current-production profits in the third quarter of 1997, profits in the third-quarter of 1998 decreased 2.0 percent. The current-production measure differs from profits as they are usually reported in corporate financial statements. First, the current-production measure excludes non-operating items, such as special charges and capital gains net of losses. Second, the current-production measure is based on replacement-cost estimates of inventory withdrawals and depreciation rather than on historical-cost values.
Sources of Revision
The third-quarter revision to GDP primarily reflected revised estimates of imports and exports and upward revisions to consumer spending on durable goods and to business spending on nonresidential structures. (Table A shows both the BEA assumptions used for the advance estimate and newly available and revised source data for the preliminary estimate for selected key series.)
The revisions to imports and to exports mainly reflected the incorporation of revised August and newly available September Census Bureau data for international trade in goods. Both the upward revision to exports and the downward revision to imports reflected revisions to capital goods (both equipment and parts). Because the estimates of trade in capital goods are also used to calculate domestic business purchases of equipment (shipments of domestic manufacturers of business equipment are reduced by the value of such shipments included in exports and increased by the value of such equipment included in imports), the producers' durable equipment category of GDP was revised down by similar amounts.
The revisions to consumer spending on durable goods reflect upward revisions to trucks and to used automobiles, largely reflecting the incorporation of new data on the consumer share of truck purchases and on used car sales and inventories. These revised source data also contributed to downward revisions to business purchases of trucks and to change in business inventories. The revisions to nonresidential structures reflected the incorporation of revised July and August and newly available September Census Bureau data on the value of construction put in place.
In addition to the revisions to the components of GDP, personal tax and nontax payments were revised down $5.4 billion in the third quarter, largely reflecting the incorporation of newly available data on collections of Federal nonwithheld income taxes through September, which include the final payment of quarterly estimated taxes in the calendar year. The advance third-quarter estimate had been based on collections data for the first seven months of the fiscal year and on projections for the remainder of the year, reflecting historical collection patterns.
Attachments
Robert P. Parker
Chief Statistician
Bureau of Economic Analysis
202-606-9607
Summary of revisions to real GDP estimates, 1978-97 (percent changes at annual rate)
___________________________________________________________________________________________
Range
Average _______________________________________
Quarterly estimates without Two-thirds Nine-tenths
compared regard of of
to sign revisions revisions
___________________________________________________________________________________________
Current-dollar GDP
__________________________________________________________
Advance to peliminary.......... 0.6 -0.5 to 0.8 -1.1 to 1.4
Advance to final............... .7 - .6 to 1.0 -1.0 to 1.6
Preliminary to final........... .3 - .3 to .4 - .6 to .7
Real GDP
__________________________________________________________
Advance to preliminary........... 0.5 -0.5 to 0.7 -0.9 to 1.4
Advance to final................. .6 - .6 to .9 -1.0 to 1.3
Preliminary to final............. .3 - .4 to .4 - .5 to .7
___________________________________________________________________________________________
Table A.--SOURCE DATA FOR THE ADVANCE AND PRELIMINARY
ESTIMATES OF GDP FOR THE THIRD QUARTER OF 1998
This table shows the actual data used for the preliminary estimate of GDP for the third quarter of
1998. For these key series, actual data for September were not available in time for inclusion in the
advance GDP estimate released on October 30, 1998, and BEA made assumptions for these source
data. The numbers in brackets show the September values that had been assumed for the advance
estimate. For most series, the data incorporated for August and, in some cases, for July were
preliminary and the numbers shown in brackets are the values used last month.
All series shown in the table are in billions of dollars, seasonally adjusted at annual rates, and are
published by the Bureau of the Census.
1998
Apr. May Jun. Jul. Aug. Sep.
Private fixed investment:
Nonresidential structures:
Buildings:
1 Value of new nonresidential
construction put in place........ 169.4 166.3 169.6 169.1 169.2 166.0
{165.2} {164.3} {164.6}
Producers' durable equipment:
2 Manufacturers' shipments of
complete aircraft..................... 41.0 43.1 44.4 52.4 41.9 44.6
{42.0} {45.8}
Residential structures:
Value of new residential
construction put in place:
3 1-unit structures...................... 182.1 181.4 185.0 188.9 189.6 190.9
{188.2} {188.4} {190.7}
4 2-or-more-unit structures.......... 24.8 22.9 23.0 23.7 22.5 23.5
{23.5} {22.3} {22.5}
Change in business inventories,
nonfarm:
5 Change in inventories for
manufacturing and trade (except
nonmerchant wholesalers) for
industries other than motor
vehicles and equipment in trade..... 36.6 23.9 44.3 20.4 41.7 40.4
{35.2} {26.9}
Net exports:
Exports of goods:
6 U.S. exports of goods,
balance-of-payments basis........ 664.0 656.6 657.2 645.9 646.3 670.5
{644.4} {668.7}
6a Excluding gold....................... 660.5 652.2 652.4 643.2 639.8 664.1
{637.8} {662.1}
Imports of goods:
7 U.S. imports of goods,
balance-of-payments basis....... 920.0 927.6 903.6 898.3 919.2 917.6
{922.8} {928.3}
7a Excluding gold...................... 914.8 922.0 897.9 893.1 910.0 910.0
{913.6} {920.9}
8 Net exports of goods.................... -256.0 -271.0 -246.4 -252.4 -272.9 -247.1
{-278.4} {-259.6}
8a Excluding gold..................... -254.3 -269.8 -245.5 -249.9 -270.2 -245.9
{-275.8} {-258.8}
Government:
State and local:
Structures:
9 Value of new construction put
in place...................... 132.3 126.0 132.9 131.6 131.9 135.2
{133.9} {132.7}