Home > News Release: Gross Domestic Product (GDP) and Corporate Profits
EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, FRIDAY, AUGUST 26, 2011
BEA 11-42


* See the navigation bar at the right side of the news release text for links to data tables,
contact personnel and their telephone numbers, and supplementary materials.


Lisa S. Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Andrew Hodge: (202) 606-5564 (Profits) cpniwd@bea.gov
Recorded message: (202) 606-5306    
Ralph Stewart: (202) 606-2649 (News Media)  
Thomas Dail: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product, 2nd quarter 2011 (second estimate)
Corporate Profits, 2nd quarter 2011 (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 1.0 percent in the second quarter of 2011,
(that is, from the first quarter to the second quarter), according to the "second" estimate released by the
Bureau of Economic Analysis.  In the first quarter, real GDP increased 0.4 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 1.3
percent (see "Revisions" on page 3).

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

        The acceleration in real GDP in the second quarter primarily reflected a deceleration in imports,
an upturn in federal government spending, and an acceleration in nonresidential fixed investment that
were partly offset by decelerations in PCE and in exports and a downturn in private inventory
investment.

__________________________
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.
__________________________

        Final sales of computers added 0.11 percentage point to the second-quarter change in real GDP
after adding 0.08 percentage point to the first-quarter change.  Motor vehicle output subtracted 0.15
percentage point from the second-quarter change in real GDP after adding 1.08 percentage points to the
first-quarter change.

        The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 3.3 percent in the second quarter, 0.1 percentage point more than in the advance estimate; this
index increased 4.0 percent in the first quarter.  Excluding food and energy prices, the price index for
gross domestic purchases increased 2.6 percent in the second quarter, compared with an increase of 2.4
percent in the first.

        Real personal consumption expenditures increased 0.4 percent in the second quarter, compared
with an increase of 2.1 percent in the first.  Real nonresidential fixed investment increased 9.9 percent,
compared with an increase of 2.1 percent.  Nonresidential structures increased 15.7 percent, in contrast
to a decrease of 14.3 percent.  Equipment and software increased 7.9 percent, compared with an increase
of 8.7 percent.  Real residential fixed investment increased 3.4 percent, in contrast to a decrease of 2.4
percent.

        Real exports of goods and services increased 3.1 percent in the second quarter, compared with an
increase of 7.9 percent in the first.  Real imports of goods and services increased 1.9 percent, compared
with an increase of 8.3 percent.

        Real federal government consumption expenditures and gross investment increased 2.0 percent
in the second quarter, in contrast to a decrease of 9.4 percent in the first.  National defense increased 7.1
percent, in contrast to a decrease of 12.6 percent.  Nondefense decreased 7.5 percent, compared with a
decrease of 2.7 percent.  Real state and local government consumption expenditures and gross
investment decreased 2.8 percent, compared with a decrease of 3.4 percent.

        The change in real private inventories subtracted 0.23 percentage point from the second-quarter
change in real GDP, after adding 0.32 percentage point to the first-quarter change.  Private businesses
increased inventories $40.6 billion in the second quarter, following increases of $49.1 billion in the first
quarter and of $38.3 billion in the fourth.

        Real final sales of domestic product -- GDP less change in private inventories -- increased 1.2
percent in the second quarter, after increasing less than 0.1 percent.


Gross domestic purchases

	Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 0.9 percent in the second quarter, compared with an increase of 0.7 percent in the
first.


Gross national product

	Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 1.7 percent in the second quarter, compared with an increase of
1.5 percent in the first.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which increased $24.3 billion in the second quarter after increasing $36.6 billion in the first; in
the second quarter, receipts increased $29.0 billion, and payments increased $4.7 billion.

Current-dollar GDP

	Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
3.5 percent, or $129.0 billion, in the second quarter to a level of $14,996.8 billion.  In the first quarter,
current-dollar GDP increased 3.1 percent, or $112.8 billion.


Revisions

	The “second” estimate of the second-quarter increase in real GDP is 0.3 percentage point, or $9.6
billion, lower than the advance estimate issued last month, primarily reflecting downward revisions to
private inventory investment and to exports that were partly offset by upward revisions to nonresidential
fixed investment and to personal consumption expenditures (PCE).




                                                 Advance Estimate        Second Estimate
                                                 (Percent change from preceding quarter)

Real GDP..........................................      1.3                   1.0
Current-dollar GDP................................      3.7                   3.5
Gross domestic purchases price index..............      3.2                   3.3



                                             Corporate Profits

	Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $57.3 billion in the second quarter, compared with an increase of
$19.0 billion in the first quarter.  Current-production cash flow (net cash flow with inventory valuation
adjustment) -- the internal funds available to corporations for investment -- increased $83.8 billion in the
second quarter, compared with an increase of $21.1 billion in the first.

        Taxes on corporate income decreased $3.0 billion in the second quarter, in contrast to an
increase of $17.6 billion in the first.  Profits after tax with inventory valuation and capital consumption
adjustments increased $60.3 billion in the second quarter, compared with an increase of $1.4 billion in
the first.  Dividends increased $13.6 billion compared with an increase of $19.0 billion; current-
production undistributed profits increased $46.7 billion, in contrast to a decrease of $17.6 billion.

	Domestic profits of financial corporations decreased $54.2 billion in the second quarter,
compared with a decrease of $38.7 billion in the first.  Domestic profits of nonfinancial corporations
increased $84.4 billion in the second quarter, compared with an increase of $19.7 billion in the first.  In
the second quarter, real gross value added of nonfinancial corporations increased, and profits per unit of
real value added increased.  The increase in unit profits reflected an increase in unit prices and decreases
in both the unit labor and nonlabor costs corporations incurred.

	The rest-of-the-world component of profits increased $27.1 billion in the second quarter,
compared with an increase of $37.9 billion in the first.  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 second-quarter
increase was accounted for by a larger increase in receipts than in payments.

	Profits before tax increased $8.7 billion in the second quarter, compared with an increase of
$134.6 billion in the first.  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 $8.2 billion in the second quarter (from $115.4 billion to $107.2
billion), compared with a decrease of $89.8 billion in the first.  The inventory valuation adjustment
increased $56.7 billion (from -$116.0 billion to -$59.3 billion), in contrast to a decrease of $25.7 billion.

                                           *          *          *

        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 -- September 29, 2011, at 8:30 A.M. EDT for:
                        Gross Domestic Product:  Second Quarter 2011 (Third Estimate)
                              Corporate Profits:  Second Quarter 2011 (Revised)


                                            Comparisons of Revisions to GDP

     Quarterly estimates of GDP are released on the following schedule:  the “advance” estimate, based on
source data that are incomplete or subject to further revision by the source agency, is released near the end of the
first month after the end of the quarter; as more detailed and more comprehensive data become available,
the “second” and “third” estimates are released near the end of the second and third months, respectively.  The
“latest” estimate reflects the results of both annual and comprehensive revisions.

     Annual revisions, which cover the quarters of the 3 most recent calendar years, are usually carried out
each summer and incorporate newly available major annual source data.  Comprehensive (or benchmark)
revisions are carried out at about 5-year intervals and incorporate major periodic source data, as well as
improvements in concepts and methods that update the accounts to portray more accurately the evolving U.S.
economy.

The table below shows comparisons of the revisions between quarterly percent changes of current-dollar
and of real GDP for the different vintages of the estimates.  From the advance estimate to the second estimate (one
month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the
advance estimate to the third estimate (two months later), it is 0.6 percentage point.  From the advance estimate to
the latest estimate, the average revision without regard to sign is 1.3 percentage points.  The average revision
(with regard to sign) from the advance estimate to the latest estimate is 0.3 percentage point, which is larger than
the average revisions from the advance estimate to the second or to the third estimates.  The larger average
revisions to the latest estimate reflect the fact that comprehensive revisions include major improvements, such as
the incorporation of BEA’s latest benchmark input-output accounts.  The quarterly estimates correctly indicate the
direction of change of real GDP 98 percent of the time, correctly indicate whether GDP is accelerating or
decelerating 74 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend
growth more than three-fifths of the time.

                           Revisions Between Quarterly Percent Changes of GDP: Vintage Comparisons
                                                     [Annual rates]

       Vintages                                   Average         Average without     Standard deviation of
       compared                                                    regard to sign      revisions without
                                                                                         regard to sign

____________________________________________________Current-dollar GDP_______________________________________________

Advance to second....................               0.2                 0.5                  0.4
Advance to third.....................                .2                  .7                   .4
Second to third......................                .0                  .3                   .2

Advance to latest....................                .4                 1.2                   .9

________________________________________________________Real GDP_____________________________________________________

Advance to second....................               0.1                 0.5                  0.4
Advance to third.....................                .1                  .6                   .4
Second to third......................                .0                  .2                   .2

Advance to latest....................                .3                 1.3                  1.0
NOTE.--These comparisons are based on the period from 1983 through 2007.