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Technical Note

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                          Technical Note
                     Gross Domestic Product
                 Second Quarter of 2004 (Final)
                       September 29, 2004
This technical note provides background information about the source data and estimating
methods used to produce the estimates presented in the GDP news release.  The complete
set of estimates for the second quarter is available on BEA's Web site <>;
a brief summary of "highlights" is also posted on the Web site.  In a few weeks, the
estimates will be published in BEA's monthly journal, the Survey of Current Business,
along with a more detailed analysis of the estimates ("The Business Situation").  

Sources of Revisions
Real GDP growth in the second quarter was revised from 2.8 percent to 3.3 percent.  The
upward revision to GDP growth reflected a downward revision to imports and upward
revisions to private inventory investment and to exports. 

 .   Imports, which are subtracted in the calculation of GDP, were revised down, mainly
     on the basis of newly available data on services for the first and second quarters
     from BEA's international transactions accounts.
 .   Inventory investment was revised up, primarily for retail trade and for
     manufacturing. The upward revision to retail trade was more than accounted for by
     motor vehicle dealers and reflected newly available data on used vehicle inventories
     for June from a trade source.  The upward revision to manufacturing mainly
     reflected revised Census book value data for June.
 .   Exports of both goods and services were revised up, reflecting revised Census data
     on goods for June, and first- and second-quarter data on services from BEA's
     international transactions accounts.

The price index for gross domestic purchases increased 3.5 percent in the second quarter,
the same as in the preliminary estimate.   

Brent R. Moulton  
Associate Director for National Economic Accounts
Bureau of Economic Analysis  
(202) 606-9606

Table 1.  Price Index for Market-Based Personal Consumption Expenditures

        Market-based PCE          Market-based PCE
                                excluding food and energy
         Index   Percent           Index    Percent
        [2000=100] change          [2000=100] change

2001      101.941      1.9          101.668        1.7
2002      103.113      1.1          103.185        1.5
2003      105.040      1.9          104.388        1.2

        [Seasonally adjusted at annual rates]

2001:I    101.479      2.8          101.072        2.1
2001:II   102.003      2.1          101.408        1.3
2001:III  102.205      0.8          101.890        1.9
2001:IV   102.079     -0.5          102.304        1.6

2002:I    102.242      0.6          102.560        1.0
2002:II   102.966      2.9          103.011        1.8
2002:III  103.424      1.8          103.449        1.7
2002:IV   103.820      1.5          103.722        1.1

2003:I    104.601      3.0          103.952        0.9
2003:II   104.768      0.6          104.238        1.1
2003:III  105.294      2.0          104.572        1.3
2003:IV   105.496      0.8          104.790        0.8

2004:I    106.334      3.2          105.261        1.8
2004:II   107.292      3.7          105.798        2.1

NOTE. -- The price index for "market-based" personal consumption expenditures (PCE)
is a supplemental measure prepared by the Bureau of Economic Analysis that is based
on household expenditures for which there are observable price measures.  It excludes
most implicit prices (for example, the services furnished without payment by financial
intermediaries) and the expenses of nonprofit institutions.  More information is
available on BEA's Web site at