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Technical Note

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                         Technical Note
                     Gross Domestic Product
                Third Quarter of 2004 (Advance)
                        October 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 third 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").  

Source Data for the Advance Estimate
The advance GDP estimate for the third quarter of 2004 is based on source data that are
incomplete and subject to revision.  Three months of source data were available for
consumer spending on goods; shipments of capital equipment other than aircraft; unit
motor vehicle sales and inventories; manufacturing durables inventories; federal
government outlays; and consumer, producer, and international prices. Only two months
of data were available for most other key data sources; BEA's assumptions for the third
month are shown in table A.  The following assumptions were made for the third month
of the quarter:

       .  an increase in nondurable manufacturing inventories,
       .  an increase in non-motor-vehicle merchant wholesale and retail inventories,
       .  an increase in exports of goods, excluding gold, and
       .  an increase in imports of goods, excluding gold.

Price Index for Market-Based Personal Consumption Expenditures

Since June of this year, the supplemental price index for "market-based" personal
consumption expenditures (covering household purchases of goods and services for which
explicit prices are charged) has been shown in table B of the Technical Note.  Beginning
next month, information on this price index will be shown in the GDP news release (in
tables 6 and 8 and in appendix table A).

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

                                       FOR THE THIRD QUARTER OF 2004
For many of the key series used to prepare the advance estimate of GDP, including retail sales, unit
automobile and truck sales and inventories, manufacturers' shipments of nondefense capital goods
(other than aircraft), manufacturers' inventories of durable goods, federal defense spending, and
consumer, producer, and international price indexes, actual data are available for all months of the

For the key series shown in this table, actual data for the third month of the quarter usually are not
available in time for inclusion in the advance GDP estimate.  BEA makes assumptions for the source
data that are not yet available; assumptions for September 2004 are shown in the last column of the
table.  For most series shown, the data for August are preliminary and subject to further revision. 
Occasionally, the data for earlier months are also subject to revision.

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.
                                                   April         May         Jun.          Jul.         Aug.       Sept. *
 Private fixed investment:

   Nonresidential structures:    
1     Value of new total private
          construction put in place less 
           residential (inc. improvements)...       221.6        220.9       220.4         225.3        227.0       226.2

  Equipment and software:
2  Manufacturers' shipments of
     complete aircraft........................       24.6         31.3        25.7          27.4         23.4        20.8

  Residential structures:
    Value of new residential
        construction put in place:
3        Single family.........................     360.0        369.0       370.4         372.8        380.7       381.2

4      Multifamily.............................      37.8         38.5        39.3          39.6         40.0        40.0

  Change in private inventories: 
5     Change in inventories for nondurable
           manufacturing.......................       6.3         13.7        21.9          16.6          7.2        15.6

5a    Change in inventories for merchant
          wholesale and retail industries other
     than motor vehicles and equipment.........      34.9         72.0        58.6          49.6         47.2        64.8

 Net exports:

  Exports of goods:
6   U.S. exports of goods,
        accounts basis.........................     791.4        824.3       776.1         809.5        808.7       823.4

6a        Excluding gold.......................     787.9        820.6       772.8         804.9        804.8       819.8

   Imports of goods:
7  U.S. imports of goods,
           accounts basis......................    1427.2       1442.0      1485.5        1466.7       1498.0      1513.1

7a        Excluding gold.......................    1423.4       1439.2      1482.3        1462.3       1494.6      1509.5

8   Net exports of goods.......................    -635.9       -617.7      -709.4        -657.1       -689.3      -689.7

    8a      Excluding gold.....................    -635.5       -618.6      -709.4        -657.5       -689.8      -689.7


  State and local:
9         Value of new construction put
           in place............................     221.1        219.2       220.5         222.4        220.2       221.3


Table B.  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
2004:III  107.670      1.4          106.057        1.0

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