Home > News Release: Gross Domestic Product (GDP) and Corporate Profits
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, THURSDAY, MAY 27, 2010
BEA 10-22


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Lisa S. Mataloni: (202) 606-5304 (GDP)
Andrew Hodge: (202) 606-5564 (Profits)
Recorded message: (202) 606-5306  
Gross Domestic Product: First Quarter 2010 (Second Estimate)
Corporate Profits: First Quarter 2010 (Preliminary Estimate)
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 3.0 percent in the first quarter of 2010, (that
is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau
of Economic Analysis.  In the fourth quarter, real GDP had increased 5.6 percent.

	The GDP estimates released today are based on more complete source data than were available for
the "advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 3.2
percent (see "Revisions" on page 3).

	The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential
fixed investment that were partly offset by negative contributions from state and local government
spending and residential fixed investment.  Imports, which are a subtraction in the calculation of GDP,
increased.

	The deceleration in real GDP in the first quarter primarily reflected decelerations in private
inventory investment and in exports, a downturn in residential fixed investment, a larger decrease in
state and local government spending, and a deceleration in nonresidential fixed investment that were
partly offset by an acceleration in PCE and a deceleration in imports.

	Motor vehicle output added 0.49 percentage point to the first-quarter change in real GDP after
adding 0.45 percentage point to the fourth-quarter change.  Final sales of computers added 0.18
percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the fourth-
quarter change.
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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
(2005) dollars.  Price indexes are chain-type measures.

            This news release is available on BEA’s Web site along with the Technical Note and Highlights
related to this release.
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        The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.7 percent in the first quarter, the same increase as in the advance estimate; this index
increased 2.0 percent in the fourth quarter.  Excluding food and energy prices, the price index for gross
domestic purchases increased 1.1 percent in the first quarter, compared with an increase of 1.5 percent in
the fourth.  The federal pay raise for civilian and military personnel added 0.2 percentage point to the
first-quarter increase in the gross domestic purchases price index.

	Real personal consumption expenditures increased 3.5 percent in the first quarter, compared with
an increase of 1.6 percent in the fourth.  Real nonresidential fixed investment increased 3.1 percent,
compared with an increase of 5.3 percent.  Nonresidential structures decreased 15.3 percent, compared
with a decrease of 18.0 percent.  Equipment and software increased 12.7 percent, compared with an
increase of 19.0 percent.  Real residential fixed investment decreased 10.7 percent, in contrast to an
increase of 3.8 percent.

	Real exports of goods and services increased 7.2 percent in the first quarter, compared with an
increase of 22.8 percent in the fourth.  Real imports of goods and services increased 10.4 percent,
compared with an increase of 15.8 percent.

	Real federal government consumption expenditures and gross investment increased 1.2 percent in
the first quarter, compared with no change in the fourth.  National defense increased 1.1 percent, in
contrast to a decrease of 3.6 percent.  Nondefense increased 1.5 percent, compared with an increase of
8.3 percent.  Real state and local government consumption expenditures and gross investment decreased
3.9 percent, compared with a decrease of 2.2 percent.

	The change in real private inventories added 1.65 percentage points to the first-quarter change in
real GDP, after adding 3.79 percentage points to the fourth-quarter change.  Private businesses increased
inventories $33.9 billion in the first quarter, following decreases of $19.7 billion in the fourth quarter
and $139.2 billion in the third.

	Real final sales of domestic product -- GDP less change in private inventories -- increased 1.4
percent in the first quarter, compared with an increase of 1.7 percent in the fourth.


Gross domestic purchases

	Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 3.6 percent in the first quarter, compared with an increase of 5.2 percent in the
fourth.


Gross national product

	Real gross national product -- the goods and services produced by the labor and property supplied
by U.S. residents -- increased 3.9 percent in the first quarter, compared with an increase of 5.0 percent in
the fourth.  GNP includes, and GDP excludes, net receipts of income from the rest of the world, which
increased $27.7 billion in the first quarter after decreasing $14.5 billion in the fourth; in the first quarter,
receipts increased $22.7 billion, and payments decreased 5.0 billion.


Current-dollar GDP

	Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
4.1 percent, or $147.6 billion, in the first quarter to a level of $14,601.4 billion.  In the fourth quarter,
current-dollar GDP increased 6.1 percent, or $211.7 billion.


Revisions

	The “second” estimate of the first-quarter increase in real GDP is 0.2 percentage point, or $6.5
billion, lower than the advance estimate issued last month, primarily reflecting an upward revision to
imports and a downward revision to personal consumption expenditures that were partly offset by an
upward revision to exports.

                                                        Advance             Second
						(Percent change from preceding quarter)

Real GDP.........................................          3.2                3.0
Current-dollar GDP...............................          4.1                4.1
Gross domestic purchases price index.............          1.7                1.7



                                            Corporate Profits

	Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $81.4 billion in the first quarter, compared with an increase of
$108.7 billion in the fourth quarter.  Current-production cash flow (net cash flow with inventory
valuation adjustment) -- the internal funds available to corporations for investment -- increased $30.8
billion in the first quarter, compared with an increase of $69.1 billion in the fourth.

	 Taxes on corporate income increased $57.7 billion in the first quarter, compared with an increase
of $40.9 billion in the fourth quarter.  Profits after tax with inventory valuation and capital consumption
adjustments increased $23.7 billion in the first quarter, compared with an increase of $67.8 billion in the
fourth.  Dividends decreased $26.2 billion, in contrast to an increase of $29.1 billion; current-production
undistributed profits increased $49.9 billion, compared with an increase of $38.7 billion.

	Domestic profits of financial corporations increased $7.4 billion in the first quarter, compared
with an increase of $65.0 billion in the fourth quarter.  Domestic profits of nonfinancial corporations
increased $44.5 billion in the first quarter, compared with an increase of $59.8 billion in the fourth.  In
the first quarter, real gross value added of nonfinancial corporations increased, and profits per unit of
real value added increased.  The increase in unit profits reflected decreases in both the unit labor and
nonlabor costs corporations incurred that more than offset a decrease in unit prices.

	The rest-of-the-world component of profits increased $29.5 billion in the first quarter, in contrast
to a decrease of $16.1 billion in the fourth quarter.  This measure is calculated as (1) receipts by U.S.
residents of earnings from their foreign affiliates plus dividends received by U.S. residents from
unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign
parents plus dividends paid by U.S. corporations to unaffiliated foreign residents.  The first-quarter
increase was accounted for by an increase in receipts and a slight decrease in payments.

	Profits before tax increased $180.9 billion in the first quarter, compared with an increase of
$137.0 billion in the fourth quarter.  The before-tax measure of profits does not reflect, as does profits
from current production, the capital consumption and inventory valuation adjustments.  These
adjustments convert depreciation of fixed assets and inventory withdrawals reported on a tax-return,
historical-cost basis to the current-cost measures used in the national income and product accounts.  The
capital consumption adjustment decreased $107.2 billion in the first quarter (from -$118.8 billion to
-$226.0 billion), in contrast to an increase of $0.1 billion in the fourth.  The inventory valuation
adjustment increased $7.7 billion (from -$45.6 billion to -$37.9 billion), in contrast to a decrease of
$28.5 billion.


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                             Next release – June 25, 2010, at 8:30 A.M. EDT for:
                         Gross Domestic Product:  First Quarter 2010 (Third Estimate)
                              Corporate Profits:  First Quarter 2010 (Revised)