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Technical Note
Gross Domestic Product
Third Quarter of 2011 (Third)
December 22, 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 third
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").

Sources of Revision to Real GDP

Real GDP increased 1.8 percent (annual rate) in the third quarter, which was 0.2 percentage point less
than in last month’s estimate.  The downward revision to GDP primarily reflected a downward revision to
personal consumption expenditures (PCE) that was partly offset by an upward revision to inventory investment.

*       The downward revision to PCE was more than accounted for by a downward revision to PCE for services.
        Within PCE for services, the largest contributor to the revision was health care—mainly, nonprofit
        hospital services.  The revision reflected newly available quarterly services survey data for the
        third quarter from the Census Bureau.

*       The upward revision to inventory investment was primarily accounted for by farm inventories and
        reflected a newly available 2011 Farm Income Forecast from the U.S. Department of Agriculture.

The price index for gross domestic purchases—the prices paid by U.S. residents for goods and services
wherever produced—increased 2.0 percent in the third quarter, 0.1 percentage point more than in last
month’s estimate.

Corporate Profits and Gross Domestic Income

Profits from current production increased $32.5 billion, or 1.7 percent (quarterly rate), in the third quarter.
Domestic profits of financial corporations increased $9.2 billion, domestic profits of nonfinancial corporations
increased $17.9 billion, and rest-of-the-world profits increased $5.4 billion.

Effective with today’s release, the estimates of real gross value added of nonfinancial corporate business were
revised beginning with 1929, to reflect the use of a revised deflator for nonfinancial industries from the
annual revision of BEA’s industry accounts that was released earlier this month.  Revisions to percent changes
before the first quarter of 2003 are small.

Real gross domestic income (GDI) increased 0.2 percent in the third quarter, 0.2 percentage point less than in
last month’s estimate.  GDI measures output as the costs incurred and the incomes earned in the production of GDP.
In theory, GDP should equal GDI, but in practice, they can differ because they are estimated using largely
independent and less-than-perfect source data.

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