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 Survey of Current Business, BEA’s online monthly journal,
will publish a more detailed analysis of the estimates ("GDP and the Economy").

Real GDP

Real GDP increased 2.9 percent (annual rate) in the third quarter of 2016, following an increase of 1.4
percent in the second quarter of 2016. The acceleration in real GDP in the third quarter reflected an
upturn in inventory investment, an acceleration in exports, a smaller decrease in state and local
government spending, and an upturn in federal government spending, that were partly offset by a
deceleration in consumer spending and an acceleration in imports.

The acceleration in exports was mostly attributable to an acceleration in exports of foods, feeds, and
beverages, mainly reflecting an increase in exports of soybeans. This increase in soybean exports was
largely offset by decreases in components of nonfarm and farm inventory investment, most notably in
merchant wholesale inventories of “farm product raw material.”

Source Data for the Advance Estimate

The advance GDP estimate for the third quarter of 2016 is based on source data that are incomplete and
subject to updates. Three months of source data were available for consumer spending on goods;
shipments of capital equipment; motor vehicle sales and inventories; durable goods manufacturing
inventories; wholesale and retail trade inventories; exports and imports of goods; federal government
outlays; and consumer, producer, and international prices. For major source data series for which only
two months of data are available, BEA’s key assumptions for the third month are shown in table A1.

Advance Economic Indicators Report

On October 26, the Census Bureau released the "Advance Economic Indicators Report" that included
newly available wholesale and retail trade inventories as well as exports and imports of goods for the
month of September. Today’s advance GDP estimates reflect these advance inventories and foreign
trade statistics (table A2).

Prices

The price index for personal consumption expenditures (PCE) increased 1.4 percent in the third quarter,
following an increase of 2.0 percent in the second. Excluding food and energy prices, the PCE price index
increased 1.7 percent after increasing 1.8 percent.

Disposable Personal Income

Real disposable personal income increased 2.2 percent in the third quarter, following an increase of 2.1
percent in the second. The personal saving rate was 5.7 percent in the third quarter, the same as in the
second quarter.




David B. Wasshausen
Chief, National Income and Wealth Division
Bureau of Economic Analysis
(301) 278-9715


                            

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