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Technical Note

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                         Technical Note
      Gross Domestic Product, Fourth Quarter 2003 (Final)
             Corporate Profits, Fourth Quarter 2003
                         March 25, 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 note also
provides some perspective on the estimates.  Additional material is available on BEA's
Web site <>.  In a few weeks, the estimates will be published in BEA's
monthly journal, the Survey of Current Business.  The Survey also will provide a more
detailed analysis of the estimates ("The Business Situation").

                     Gross Domestic Product

Real GDP (revised):  Real GDP is now estimated to have increased at an annual rate of 4.1
percent in the fourth quarter of 2003, the same as in the preliminary estimate released last
month.  Real GDP increased 8.2 percent in the third quarter.  As in the preliminary
estimate, the slowdown in real GDP growth was mainly accounted for by consumer
spending and the trade balance.

Prices (revised):  The chain-type price index for gross domestic purchases is now
estimated to have increased 1.3 percent in the fourth quarter; the preliminary estimate had
shown an increase of 1.1 percent.  The index had increased 1.8 percent in the third

                      Source of Revisions

There were modest, roughly offsetting, revisions to several components of GDP.  An
upward revision to personal consumption expenditures for services mainly reflected the
incorporation of new data on bank services from the Federal Deposit Insurance
Corporation and new data on net foreign travel from BEA's international transactions
accounts.  A downward revision to inventory investment mainly reflected revised Census
Bureau data on manufacturing inventories for December and the annual revision to
wholesale trade inventories. 

The 0.2-percentage point upward revision to the price index for gross domestic purchases
primarily reflected an upward revision to the implicit price of bank services, based on
newly available Federal Reserve Board tabulations of call report data.

The news release that presents final estimates for a quarter also presents revised
estimates of wages and salaries, personal taxes, and contributions for government social
insurance for the preceding quarter.  Third-quarter wages and salaries were revised up,
reflecting the incorporation of the most recently available BLS tabulations of private wages
and salaries from the state unemployment insurance program.  Revisions to personal taxes
and to contributions for government social insurance for the third quarter reflected the
revisions to wages and salaries.  Real disposable personal income is now estimated to
have increased 6.8 percent in the third quarter (revised up from 6.3 percent) and 0.5
percent in the fourth quarter (revised up from no change).

                   Corporate Profits and GNP

The news release that presents the final estimate of fourth-quarter GDP also presents the
first estimates of corporate profits and gross national product (GNP) for the quarter. 

Corporate Profits:  Profits from current production (that is, "corporate profits with
inventory valuation and capital consumption adjustments") increased 7.2 percent
(quarterly rate) in the fourth quarter, following an increase of 9.9 percent in the third. 
Profits were 29.0 percent higher than in the fourth quarter of 2002.  The
current-production measure of profits differs from profits as they are usually reported in
corporate financial statements.  It excludes non-operating items, such as special charges
and capital gains and losses, and is based on depreciation of fixed assets and inventory
withdrawals valued at current cost, rather than at historical cost.

Real GNP:  Real GNP increased 5.5 percent in the fourth quarter, 1.4 percentage points
more than the increase in real GDP; GNP increased 8.3 percent in the third quarter.  GNP
equals GDP plus incomes, mainly on investments, earned abroad by U.S. residents, less
similar incomes earned in the United States by residents of other countries.  Net income
receipts by U.S. residents increased $36.4 billion in the fourth quarter; receipts increased
$45.3 billion, and payments to foreign residents increased $8.9 billion.

Brent R. Moulton
Associate Director for National Economic Accounts
Bureau of Economic Analysis
(202) 606-9606
March 25, 2004