This technical note provides background information about the source data and
estimating methods used to produce the estimates presented in the GDP news
releases.  This month, in addition, it contains information on revised estimates for
the first two quarters of 1999 and information on the comprehensive revision to
the national income and product accounts.

In the next several days, additional material will be posted to BEA's Web site
www.bea.doc.gov. In a few weeks, an extensive set of NIPA tables will be
published in BEA's monthly journal, the Survey of Current Business.
                                
                   NIPA estimates, 1999:I-III

Third-quarter real GDP: Based on source data available at this time, BEA estimates
that real GDP increased 4.8 percent (annual rate) in the third quarter of 1999 after
increasing 1.9 percent in the second and 3.7 percent in the first.  (First- and
second-quarter estimates have been revised, as explained below.)

The 4.8-percent GDP growth in the third quarter was largely accounted for by
increases in consumer spending, exports, and private investment in equipment and
software.  The increase in GDP was moderated by increases in imports and
decreases in residential and nonresidential structures. 

The step-up in GDP growth was mainly accounted for by a turnaround in inventory
investment.  Final sales of domestic production (GDP less change in private
inventories), increased 4.1 percent in the third quarter, following a 3.4 percent
increase in the second quarter.

Prices: The chain-type price index for gross domestic purchases increased 1.6
percent in the third quarter after increasing 1.9 percent in the second and 1.6
percent in the first.  Excluding food and energy prices, which are normally more
volatile than many other prices, the price index increased 1.0 percent in the third
quarter after increasing 1.2 percent in the second.  The price index for GDP, which
measures the prices paid for goods and services produced in the United States,
increased 1.0 percent in the third quarter, or 0.6 percentage point less than the
price index for gross domestic purchases. The price index for gross domestic
purchases, unlike that for GDP, includes the prices of imports and excludes the
prices of exports.

Disposition of personal income: Disposable personal income in current dollars
increased 4.5 percent in the third quarter, after increasing 5.5 percent in the
second and 5.6 percent in the first.  The personal saving rate--saving as a
percentage of disposable personal income--was 2.1 percent in the third quarter,
compared to 2.5 percent in the second quarter and 3.0 percent in the first.  
Source data for third-quarter estimate 

The advance estimate for the third quarter is based on source data that are
incomplete or subject to further revision by the source agency. Three months of
source data are available for consumer spending on goods, investment in
equipment and software other than aircraft, motor vehicle sales and
inventories, Federal Government spending, and consumer, producer, and
international prices. Only two months of data are available for most other key data
sources; BEA's assumptions for the third month for these series are shown in table
A. 

     ·    For shipments of commercial aircraft, a decrease in September was
     assumed, based on trade source data. 
     ·    For exports and for imports of goods, excluding gold, a decrease was
     assumed for exports, reflecting a decline in exports of commercial aircraft
     based on trade source data, and an increase was assumed for imports; as a
     result, the assumed goods deficit for September is larger than the deficit for
     August. 
     ·    For the change in non-motor-vehicle inventories, an increase in September
     was assumed.

The source data and assumptions shown in table A are expressed in current
dollars and do not have  the impact of price changes removed.  Consequently, for
some of the series shown in table A, the quarterly changes in current dollars may
differ substantially from the changes that enter the calculation of real GDP.

Revised first- and second-quarter GDP estimates

As part of the comprehensive revision released today, estimates for periods back
to 1959 have been revised.  For the first two quarters of 1999, both the revised
and previously published estimates show a slowdown in real GDP growth from
the first quarter to the second quarter.  The revised estimates show a second-
quarter increase of 1.9 percent, following a 3.7-percent first-quarter increase; in
the previously published estimates, a second-quarter increase of 1.6 percent
followed a 4.3-increase in the first quarter.  These revisions to the first- and
second-quarter GDP estimates reflect the definitional and statistical changes
introduced as part of the comprehensive revision.  Among the statistical changes,
the most important were the incorporation of revised monthly Census Bureau
estimates of retail and wholesale sales and inventories, value of construction put
in place, and trade in goods and of updated seasonal adjustment factors for these
and other monthly source data.

         Highlights of the comprehensive NIPA revision

As discussed in the special text section of today's release, BEA has released the
11th comprehensive NIPA revision; the last comprehensive revision was released
in January 1996.  The 1999 revision introduces the following improvements:

     ·    Recognition of business and government expenditures for software as fixed
     investment;
     
     ·    Reclassification of government employee retirement plans so that they are
     treated similarly to private pension plans;
          
     ·    New treatments of the property income of private noninsured pension plans
     and of certain transfers of existing assets;
          
     ·    Improved methodologies for estimating prices and quantities, including a new
     measure of the growth of unpriced bank services and carrying back the
     geometric-mean-type consumer price indexes for estimating real personal
     consumption expenditures;
          
     ·    Incorporation of more reliable and comprehensive source data, including BEA's
     benchmark 1992 input-output (I-O) tables, preliminary information from the
     1997 Censuses of Wholesale Trade and Retail Trade, IRS tabulations of
     business tax returns for 1997, Census Bureau annual surveys of businesses
     and governments for several years, and BLS tabulations of wages and salaries
     for 1998.
          
The revised NIPA estimates, which are now available beginning with 1959, show the
following:

     ·    For 1959-98, the average annual growth rate of real GDP is 3.4 percent, 0.2
     percentage point higher than previously published; the revised estimates over
     this period show higher growth rates for all major components of GDP.
          
     ·    The pace of the current expansion is stronger than was shown in the
     previously published estimates.  From the first quarter of 1991 to the second
     quarter of 1999, real GDP increased at an average annual rate of 3.5 percent,
     compared with the previously published increase of 3.1 percent.  All major
     components of GDP contributed to the stronger growth.
          
     ·    The personal saving rate is higher than was shown in the previously published
     estimates, though it continues to show a two-decade long downtrend.  For
     1982-98, the personal saving rate declines from 10.9 percent to 3.7 percent,
     compared with the previous decline from 9.0 percent to 0.5 percent. 
     
     Attachment
     
                         Robert P. Parker    202-606-9607   
                         Brent R. Moulton    202-606-9606
     October 28, 1999
         
         
         Table A.--KEY ASSUMPTIONS FOR THE ADVANCE ESTIMATES OF GDP
                             FOR THE THIRD QUARTER OF 1999


For many of the key series used to prepare the advance estimate of GDP, including sales of retail
stores, unit automobile and truck sales and inventories, manufacturers' shipments of nondefense
capital goods (other than aircraft), federal defense spending, and consumer and producer price
indexes, actual data are available for all months of the quarter.

For the key series shown in this table, actual data for the third month of the quarter usually are not
available in time for inclusion in the advance GDP estimate.  BEA makes assumptions for the source
data that are not yet available; assumptions for September 1999 are shown in the last column of
the table.  For most series shown, the data for August are preliminary and subject to further
revision.  Occasionally, the data for earlier months are also subject to revision.

All series shown in the table are in billions of dollars, seasonally adjusted at annual rates, and are
published by the Bureau of the Census.                                                           


                                                                            1999
                                                 Apr.       May        Jun.        Jul.       Aug.      Sep.*
 Private fixed investment:

   Nonresidential structures:
     Buildings: 
1         Value of nonresidential 
          construction put in place........     184.4      184.2      182.9       181.5      178.2      178.3
     
  Equipment and software:
2  Manufacturers' shipments of
     complete aircraft.....................      37.5       40.5       30.2        39.3       60.1       33.9
                                                                                               
  Residential structures:
    Value of new residential
      construction put in place:
3      1-unit structures...................     212.9      212.6      211.4       210.2      208.8      205.9
       
4     2-units-or-more......................      28.3       27.3       27.1        26.5       27.1       27.5
                                                                                   
  Change in private inventories, 
    nonfarm:

5  Change in inventories for
      manufacturing and trade (except
       nonmerchant wholesalers) for
      industries other than motor                                       
     vehicles and equipment in trade........      7.3       16.0       15.3        49.9       29.1       33.8
                                                                                               
 Net exports:

  Exports of goods:
6   U.S. exports of goods, 
    international-transactions-                            
    accounts basis.........................     663.2      661.5      665.7       670.7      705.4      709.0

6a    Excluding gold.......................     659.2      659.4      661.7       668.9      700.6      697.6
                                                                                               
                                                                                                              
   Imports of goods:
7  U.S. imports of goods,
    international-transactions-                      
    accounts basis........................      967.2      996.2     1039.8      1047.7     1072.4     1081.3
               
7a        Excluding gold..................      964.0      993.2     1036.5      1045.0     1064.9     1069.6
                                                                                               

8   Net exports of goods..................     -304.0     -334.8     -374.1      -377.1     -367.0     -372.4
                                                                                               
8a        Excluding gold..................     -304.8     -333.8     -374.8      -376.1     -364.3     -372.0
                                                                                               
 Government:

  State and local:
   Structures:
9      Value of new construction put
               in place...................      142.6      138.9      138.4       138.2      142.4      139.6
______________________                                                                                                  
 *Assumption