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GROSS DOMESTIC PRODUCT: FOURTH QUARTER 2007 (PRELIMINARY)
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 0.6 percent in the fourth quarter of 2007, according to preliminary estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent. The GDP estimates released today are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the increase in real GDP was also 0.6 percent (see "Revisions" on page 3). The increase in real GDP in the fourth quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential structures, state and local government spending, and equipment and software that were largely offset by negative contributions from private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, decreased. The deceleration in real GDP growth in the fourth quarter primarily reflected a downturn in inventory investment and decelerations in exports, in PCE, and in federal government spending that were partly offset by a downturn in imports. Final sales of computers contributed 0.16 percentage point to the fourth-quarter growth in real GDP after contributing 0.28 percentage point to the third-quarter growth. Motor vehicle output subtracted 0.85 percentage point from the fourth-quarter growth in real GDP after contributing 0.36 percentage point to the third-quarter growth. 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 (2000) dollars. Price indexes are chain-type measures. This news release is available on BEA's Web site at www.bea.gov/newsreleases/rels.htm. The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 3.9 percent in the fourth quarter, 0.1 percentage point more than in the advance estimate; this index increased 1.8 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 2.5 percent in the fourth quarter, compared with an increase of 1.9 percent in the third. Real personal consumption expenditures increased 1.9 percent in the fourth quarter, compared with an increase of 2.8 percent in the third. Real nonresidential fixed investment increased 6.9 percent, compared with an increase of 9.3 percent. Nonresidential structures increased 14.7 percent, compared with an increase of 16.4 percent. Equipment and software increased 3.3 percent, compared with an increase of 6.2 percent. Real residential fixed investment decreased 25.2 percent, compared with a decrease of 20.5 percent. Real exports of goods and services increased 4.8 percent in the fourth quarter, compared with an increase of 19.1 percent in the third. Real imports of goods and services decreased 1.9 percent, in contrast to an increase of 4.4 percent. Real federal government consumption expenditures and gross investment increased 0.9 percent in the fourth quarter, compared with an increase of 7.1 percent in the third. National defense decreased 0.3 percent, in contrast to an increase of 10.1 percent. Nondefense increased 3.4 percent, compared with an increase of 1.1 percent. Real state and local government consumption expenditures and gross investment increased 3.0 percent, compared with an increase of 1.9 percent. The real change in private inventories subtracted 1.49 percentage points from the fourth-quarter change in real GDP, after adding 0.89 percentage point to the third-quarter change. Private businesses decreased inventories $10.1 billion in the fourth quarter, following increases of $30.6 billion in the third quarter and $5.8 billion in the second. Real final sales of domestic product -- GDP less change in private inventories -- increased 2.1 percent in the fourth quarter, compared with an increase of 4.0 percent in the third. Gross domestic purchases Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- decreased 0.3 percent in the fourth quarter, in contrast to an increase of 3.3 percent in the third. Current-dollar GDP Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 3.3 percent, or $113.6 billion, in the fourth quarter to a level of $14,084.1 billion. In the third quarter, current-dollar GDP increased 6.0 percent, or $201.7 billion. Revisions The preliminary estimate of the fourth-quarter increase in real GDP is the same as the advance estimate issued last month, primarily reflecting a downward revision to imports that was largely offset by a downward revision to private inventory investment. Advance Preliminary (Percent change from preceding quarter) Real GDP............................... 0.6 0.6 Current-dollar GDP.................... 3.2 3.3 Gross domestic purchases price index... 3.8 3.9 2007 GDP Real GDP increased 2.2 percent in 2007 (that is, from the 2006 annual level to the 2007 annual level), compared with an increase of 2.9 percent in 2006. The major contributors to the increase in real GDP in 2007 were personal consumption expenditures (PCE), exports, nonresidential structures, and state and local government spending. These positive contributions were partly offset by decreases in residential fixed investment and in inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP primarily reflected a larger decrease in residential fixed investment, a downturn in private inventory investment, and a deceleration in equipment and software that were partly offset by a deceleration in imports. The price index for gross domestic purchases increased 2.7 percent in 2007, compared with an increase of 3.3 percent in 2006. Current-dollar GDP increased 4.9 percent, or $649.1 billion, in 2007. Current-dollar GDP increased 6.1 percent, or $760.8 billion, in 2006. During 2007 (that is, measured from the fourth quarter of 2006 to the fourth quarter of 2007), real GDP increased 2.5 percent. Real GDP increased 2.6 percent during 2006. The price index for gross domestic purchases increased 3.3 percent during 2007, compared with an increase of 2.4 percent during 2006. 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. * * * Next release -- March 27, 2008, at 8:30 A.M. EDT for: Gross Domestic Product: Fourth Quarter 2007 (Final) Corporate Profits: Fourth Quarter 2007