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Technical Note
Gross Domestic Product
Second Quarter of 2011 (Advance Estimate)
July 29, 2011
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 second quarter is available on BEA's Web site at
www.bea.gov; 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 ("GDP and the
Economy").


Real GDP

Real GDP increased 1.3 percent (annual rate) in the second quarter of 2011, following
an increase of 0.4 percent in the first quarter (revised).  The acceleration in real GDP in
the second quarter reflected a deceleration in imports, an upturn in federal government
spending, and an acceleration in nonresidential fixed investment that were partly offset
by a sharp deceleration in consumer spending.


Source data for the advance estimate

The advance GDP estimate for the second quarter of 2011 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; motor
vehicle sales and inventories; durable goods manufacturing 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.  Among those assumptions are the following:

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


Prices

The price index for gross domestic purchases increased 3.2 percent in the second
quarter, following an increase of 4.0 percent in the first.  Excluding food and energy, the
price index for gross domestic purchases increased 2.6 percent in the second quarter,
following an increase of 2.4 percent in the first.

Annual revision

Today’s GDP news release presents results from the regular annual revision of the
national income and product accounts.  This year’s revision includes revised estimates
for most series for the most recent 3 years (from 2008 to 2010) and for the first quarter
of 2011.  For selected series—including GDP, personal consumption expenditures
(PCE), and private fixed investment—the estimates have been revised for the most
recent 8 years (from 2003 to 2010).  The revision incorporates source data that are more
complete and reliable than those previously available.  A table on the BEA Web site
shows selected component detail and the major source data for the revisions
(http://www.bea.gov/national/pdf/NIPA2011RevisionTable.pdf).  A detailed discussion of
the results will be published in the August issue of the Survey.

For 2007–2010, real GDP decreased at an average annual rate of 0.3 percent; in the
previously published estimates, real GDP had increased at an average annual rate of
less than 0.1 percent.  The largest contributors to the downward revision to GDP for
2007–2010 were downward revisions to PCE and to nonresidential fixed investment:

*	Real PCE decreased at an average annual rate of 0.2 percent for 2007–2010,
        compared with the previously published increase of 0.1 percent.  Spending for
        both goods and services were revised down.  The revision to goods reflected
        newly available data from Census Bureau’s annual retail trade survey for 2009,
        and the revision to services reflected data from several sources including new
        and revised data from the Census Bureau’s service annual survey for 2008–
        2010.
*	Real nonresidential fixed investment decreased at an average annual rate of 5.2
        percent, compared with the previously published decrease of 4.2 percent.  The
        revisions reflected new and revised data from the Census Bureau’s annual
        survey of manufactures for 2008–2009 and data from several other sources.

The revised estimates show a sharper cyclical contraction in GDP during 2008 and the
first half of 2009 than in the previously published estimates.  From the fourth quarter of
2007 to the second quarter of 2009, real GDP decreased at an average annual rate of
3.5 percent; in the previously published estimates, it had decreased at an average
annual rate of 2.8 percent.  Over the six quarters of contraction, the cumulative decrease
in real GDP (not at an annual rate) was 5.1 percent, compared to the previous estimate
of 4.1 percent.  Over the expansion from the second quarter of 2009 through the second
quarter of 2011, the cumulative increase in real GDP was 5.0 percent.

Revision to GDP for 2011:QI

For the first quarter of 2011, real GDP increased 0.4 percent (annual rate), which was
1.5 percentage points less than last month’s estimate. The downward revision to first
quarter real GDP primarily reflected a downward revision to inventory investment and an
upward revision to imports.


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