Survey of Current Business
July 2019
Volume 99, Number 7

GDP and the Economy

Third Estimates for the First Quarter of 2019

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Real gross domestic product (GDP) increased at an annual rate of 3.1 percent in the first quarter of 2019, according to the third estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 With the third estimate, real GDP growth for the first quarter was unrevised from the second estimate issued last month (see “Updates”). In the fourth quarter of 2018, real GDP increased 2.2 percent.

The increase in real GDP in the first quarter reflected positive contributions from exports, consumer spending, nonresidential fixed investment, inventory investment, and state and local government spending that were offset by a negative contribution from residential fixed investment.2 Imports, which are a subtraction in the calculation of GDP, decreased (chart 2 and table 1).

The acceleration in real GDP in the first quarter reflected an upturn in state and local government spending (table 1, line 26), accelerations in inventory investment (line 14) and in exports (line 16), and a smaller decrease in residential investment (line 13). These movements were partly offset by decelerations in consumer spending (line 2) and nonresidential fixed investment (line 9) and a downturn in federal government spending (line 23). Imports turned down (line 19), contributing to the acceleration in real GDP in the first quarter.

  • The upturn in state and local government spending primarily reflected an upturn in gross investment in structures.
  • The acceleration in inventory investment primarily reflected an upturn in manufacturing inventory investment, for both durable- and nondurable-goods industries.
  • The acceleration in exports primarily reflected upturns in foods, feeds, and beverages and in automotive vehicles, engines, and parts. These movements were partly offset by downturns in industrial supplies and materials and in nonautomotive capital goods.
  • The smaller decrease in residential investment primarily reflected an upturn in brokers' commissions and other ownership transfer costs, following four consecutive quarters of decline.
  • The deceleration in consumer spending primarily reflected a downturn in goods, mainly for spending on new motor vehicles (most notably, new light-truck purchases). Spending on services decelerated, primarily reflecting a downturn in spending by nonprofit institutions serving households (most notably, professional advocacy and hospitals) that was partly offset by an acceleration in spending for health care.
  • The downturn in federal government spending reflected a downturn in gross investment for defense equipment (mainly aircraft).
  • The downturn in imports reflected a downturn in goods and a deceleration in services. Within goods imports, the downturn was widespread; the leading contributors were motor vehicles and consumer goods (nonfood, nonautomotive). Within services imports, travel services decelerated and transport services turned down.

Real gross domestic income (line 27) increased 1.0 percent in the first quarter after increasing 0.5 percent in the fourth quarter.

Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 0.8 percent in the first quarter after increasing 1.7 percent in the fourth quarter (table 2, line 1, and chart 3). The deceleration primarily reflected a deceleration in prices paid for consumer services (led by a downturn in financial services and insurance). Food prices accelerated (line 20), increasing 3.1 percent after increasing 0.2 percent. Energy goods and services decreased 16.9 percent in the first quarter after decreasing 1.6 percent in the fourth quarter (line 21). Gross domestic purchases prices excluding food and energy (line 22) decelerated, increasing 1.3 percent in the first quarter after increasing 1.8 percent in the fourth quarter.

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

Consumer prices excluding food and energy (line 25), a measure of the “core” rate of inflation, decelerated, increasing 1.2 percent in the first quarter after increasing 1.8 percent in the fourth quarter.

Real GDP increased 3.1 percent in the first quarter of 2019, the same increase as in the second estimate (table 3, line 1). The revision reflected upward revisions to nonresidential fixed investment (line 9), consumer spending on goods (line 3), exports (line 16), state and local government spending (line 26), and residential fixed investment (line 13) that were offset by downward revisions to consumer spending on services (line 6) and inventory investment (line 14) and an upward revision to imports (line 19).

  • The upward revision to consumer spending on goods was mainly to recreational goods and vehicles and to “other” nondurable goods.
  • The revision to nonresidential fixed investment reflected upward revisions to investment in intellectual property products (both software and research and development) and in structures.
  • The downward revision to consumer spending on services reflected a downward revision to nonprofit hospital services, financial services, and “other” services (notably, net foreign travel).

Measured in current dollars, profits from current production (corporate profits with the inventory valuation adjustment (IVA) and the capital consumption adjustment decreased $59.3 billion, or 2.6 percent at a quarterly rate, in the first quarter of 2019 after decreasing $9.7 billion, or 0.4 percent, in the fourth quarter of 2018 (table 4, line 1). Profits of domestic financial corporations increased $1.4 billion (line 3), profits of domestic nonfinancial corporations decreased $68.1 billion (line 4), and rest-of-the-world profits increased $7.4 billion (line 5).

Profits after tax decreased $63.8 billion in the first quarter after decreasing $0.7 billion in the fourth quarter (line 10).

 

Industry profits (corporate profits by industry with IVA) decreased $11.0 billion, or 0.5 percent at a quarterly rate, in the first quarter of 2019 after decreasing $5.9 billion, or 0.3 percent, in the fourth quarter (table 5, line 1). Decreases in profits for “other” domestic nonfinancial, transportation and warehousing, manufacturing, and wholesale trade industries were partly offset by an increase in retail industry profits (chart 4).

 

 


  1. “Real” estimates are in chained (2012) dollars, and price indexes are chain-type measures. Each GDP estimate for a quarter (advance, second, and third) incorporates increasingly comprehensive and improved source data; for more information, see “The Revisions to GDP, GDI, and Their Major Components” in the January 2018 Survey of Current Business. Quarterly estimates are expressed at seasonally adjusted annual rates, which reflect a rate of activity for a quarter as if it were maintained for a year.
  2. In this article, “consumer spending” refers to “personal consumption expenditures,” “inventory investment” refers to “change in private inventories,” and “government spending” refers to “government consumption expenditures and gross investment.”