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Technical Note
Gross Domestic Product
Fourth Quarter of 2010 (Advance)
January 28, 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 fourth
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 3.2 percent (annual rate) in the fourth quarter of 2010, following an increase of
2.6 percent in the third quarter.  The acceleration in real GDP in the fourth quarter reflected a
downturn in imports, an acceleration in consumer spending, and an upturn in residential investment
that more than offset downturns in inventory investment and in federal government spending and a
deceleration in nonresidential fixed investment.

Source data for the advance estimate

The advance GDP estimate for the fourth quarter of 2010 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; manufacturing
durables 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 manufacturing inventories,
*       an increase in non-motor-vehicle merchant wholesale and retail trade inventories,
*	an increase in exports of goods, excluding gold, and
*	an increase in imports of goods, excluding gold.

Prices

The price index for gross domestic purchases increased 2.1 percent in the fourth quarter, following
an increase of 0.7 percent in the third.  Excluding food and energy, the price index for gross domestic
purchases increased 1.1 percent in the fourth quarter, following an increase of 0.4 percent in the third.

American Recovery and Reinvestment Act of 2009

BEA's national accounts reflect the effects of the federal outlays and tax cuts included in the American
Recovery and Reinvestment Act of 2009.  Most of the effects of ARRA on GDP show up indirectly through
the effects on GDP components such as consumer spending, residential investment, and state and local
government spending.  Thus, BEA’s accounts do not directly identify the portion of GDP expenditures that
is funded by ARRA.  It is possible, however, to identify the effects of ARRA on selected federal government
transactions (see table B).

During the fourth quarter of 2010, ARRA provisions lowered personal taxes about $120 billion (annual rate)
and raised government social benefits to persons about $60 billion, thus raising disposable personal income
(income after taxes) about $180 billion.  In addition, ARRA funded about $94 billion in current grants to
state and local governments (such as Medicaid and education grants); about $30 billion in capital transfers
to state and local governments, to home buyers, and to businesses; about $23 billion in federal consumption
expenditures and gross investment; and about $3 billion in subsidies for housing and energy.  Further
information, including quarterly estimates of the effects of ARRA beginning with 2009, is available at
http://www.bea.gov/recovery/index.htm.


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