GDP and the Economy
Second Estimates for the Second Quarter of 2018
Real gross domestic product (GDP) increased at an annual rate of 4.2 percent in the second quarter of 2018, according to the second estimate of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 With the second estimate, real GDP growth for the second quarter was revised up 0.1 percentage point from the advance estimate of 4.1 percent issued last month (see “Revisions” below). In the first quarter, real GDP increased 2.2 percent.
The increase in real GDP in the second quarter reflected positive contributions from consumer spending, nonresidential fixed investment, exports, federal government spending, and state and local government spending. These positive contributions were partly offset by negative contributions from inventory investment and from residential fixed investment (chart 2).2 Imports, which are a subtraction in the calculation of GDP, decreased.
The acceleration in real GDP growth in the second quarter reflected accelerations in consumer spending and in exports, a smaller decrease in residential fixed investment, and accelerations in federal government spending and in state and local government spending. These movements were partly offset by a downturn in private inventory investment and a deceleration in nonresidential fixed investment. Imports turned down.
- The acceleration in consumer spending (line 2) reflected an upturn in spending on goods and an acceleration in spending on services.
- The upturn in goods (line 3) reflected an upturn in durable goods (mainly motor vehicles and parts) and an acceleration in nondurable goods (mainly due to an upturn in clothing and footwear).
- The main contributors to the acceleration in services (line 6) were an upturn in spending on "other" services (reflecting upturns in legal services and in social services and religious activities), and accelerations in food services and accommodations and in housing and utilities.
- The deceleration in nonresidential fixed investment (line 9) primarily reflected decelerations in equipment (mainly due to a deceleration in transportation equipment and a downturn in industrial equipment) and in intellectual property products (mainly software).
- The smaller decrease in residential fixed investment reflected an upturn in investment in "other" structures (mainly improvements) and in multi-family structures that were partly offset by a downturn in investment in single-family structures.
- The downturn in private inventory investment (line 14) mainly reflected a downturn in wholesale trade industries (primarily nondurable goods).
- The acceleration in exports (line 16) reflected an acceleration in exports of goods that was partly offset by a deceleration in exports of services.
- The acceleration in exports of goods (line 17) primarily reflected an upturn in exports of industrial supplies and materials (mainly petroleum and products) and an acceleration in foods, feeds, and beverages (notably, soybeans).
- Real gross domestic income (GDI) (line 27) increased 1.8 percent in the second quarter of 2018 after increasing 3.9 percent in the first quarter.
|Line||Share of current-dollar GDP (percent)||Change from preceding period (percent)||Contribution to percent change in real GDP (percentage points)|
|1||Gross domestic product1||100.0||2.8||2.3||2.2||4.2||2.8||2.3||2.2||4.2|
|2||Personal consumption expenditures||68.0||2.2||3.9||0.5||3.8||1.52||2.64||0.36||2.55|
|7||Gross private domestic investment||17.6||8.8||0.8||9.6||0.4||1.47||0.14||1.61||0.10|
|12||Intellectual property products||4.5||1.7||0.7||14.1||11.0||0.08||0.03||0.58||0.47|
|14||Change in private inventories||0.0||......||......||......||......||1.04||−0.91||0.27||−0.97|
|15||Net exports of goods and services||−2.7||......||......||......||......||0.01||−0.89||−0.02||1.17|
|22||Government consumption expenditures and gross investment||17.2||−1.0||2.4||1.5||2.3||−0.18||0.41||0.27||0.41|
|26||State and local||10.7||−0.9||1.4||0.9||1.6||−0.10||0.15||0.10||0.17|
|27||Gross domestic income (GDI)2||......||1.3||1.5||3.9||1.8||......||......||......||......|
|28||Average of GDP and GDI||......||2.0||1.9||3.1||3.0||......||......||......||......|
|29||Final sales of domestic product||100.0||1.8||3.2||1.9||5.3||1.79||3.20||1.94||5.20|
|33||Motor vehicle output||2.7||−3.8||23.2||9.5||−6.2||−0.10||0.58||0.26||−0.18|
|34||GDP excluding motor vehicle output||97.3||3.0||1.8||2.0||4.5||2.93||1.72||1.96||4.41|
- The GDP estimates under the contribution columns are also percent changes.
- GDI is deflated by the implicit price deflator for GDP. The first-quarter change in GDI reflects the incorporation of revised wage and salary estimates.
Note. Percent changes are from NIPA tables 1.1.1 and 1.2.1, contributions are from NIPA tables 1.1.2 and 1.2.2, and shares are from NIPA table 1.1.10 or are calculated from NIPA table 1.2.5.
Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 2.3 percent in the second quarter of 2018 after increasing 2.5 percent in the first quarter (table 2, line 1, and chart 3). The deceleration primarily reflected a deceleration in the prices paid for consumer nondurable goods (line 5) that was partly offset by an acceleration in the prices paid for nonresidential fixed investment (line 9).
The main contributors to the deceleration in consumer nondurable goods prices were decelerations in gasoline and other energy goods as well as clothing and footwear.
All subcomponents contributed to the acceleration in the prices paid for nonresidential fixed investment
Consumer prices excluding food and energy (line 25), a measure of the “core” rate of inflation, decelerated, increasing 2.0 percent in the second quarter after increasing 2.2 percent in the first quarter.
The GDP price index accelerated in the second quarter, increasing 3.0 percent (line 26) after increasing 2.0 percent in the first quarter. The movement in the GDP price index differs from the movement in the gross domestic purchases price index because of the changes in import and in export prices. Import prices, which are included in gross domestic purchases and excluded from GDP, decelerated, increasing 0.7 percent in the second quarter after increasing 7.3 percent in the first quarter. Export prices, which are included in GDP and excluded from gross domestic purchases, accelerated, increasing 5.7 percent in the second quarter after increasing 4.0 percent in the first quarter.
|Line||Change from preceding period (percent)||Contribution to percent change in gross domestic purchases prices (percentage points)|
|1||Gross domestic purchases1||1.8||2.6||2.5||2.3||1.8||2.6||2.5||2.3|
|2||Personal consumption expenditures||1.6||2.7||2.5||1.9||1.06||1.81||1.63||1.26|
|7||Gross private domestic investment||1.9||1.3||2.5||3.1||0.33||0.22||0.42||0.52|
|12||Intellectual property products||2.0||1.2||0.4||1.4||0.09||0.05||0.02||0.06|
|14||Change in private inventories||......||......||......||......||0.00||0.02||0.01||−0.01|
|15||Government consumption expenditures and gross investment||2.5||3.2||2.9||3.3||0.42||0.53||0.48||0.55|
|19||State and local||3.4||4.4||3.6||4.2||0.35||0.45||0.37||0.43|
|Gross domestic purchases:|
|21||Energy goods and services||8.5||24.9||12.6||0.4||0.21||0.61||0.33||0.01|
|22||Excluding food and energy||1.7||2.1||2.4||2.5||1.59||1.95||2.19||2.27|
|Personal consumption expenditures (PCE):|
|23||Food and beverages purchased for off-premises consumption||0.3||0.2||0.2||1.2||......||......||......||......|
|24||Energy goods and services||8.3||24.1||12.7||0.6||......||......||......||......|
|25||Excluding food and energy||1.4||2.1||2.2||2.0||......||......||......||......|
|26||Gross domestic product (GDP)||2.2||2.5||2.0||3.0||......||......||......||......|
|27||Exports of goods and services||3.8||6.1||4.0||5.7||......||......||......||......|
|28||Imports of goods and services||1.0||5.7||7.3||0.7||......||......||......||......|
- The estimates prices for gross domestic purchases under the contribution columns are also percent changes.
Note. Most percent changes are from NIPA table 1.6.7; percent changes for PCE for food and energy goods and services and for PCE excluding food and energy are from NIPA table 2.3.7. Contributions are from NIPA table 1.6.8. GDP, export, and import prices are from NIPA table 1.1.7.
Personal income (table 3, line 1), which is measured in current dollars, decelerated in the second quarter, increasing $178.5 billion after increasing $216.1 billion (revised) in the first quarter. Decelerations in wages and salaries, government social benefits, personal interest income, and nonfarm proprietors’ income were partly offset by a deceleration in contributions for government social insurance (a subtraction in the calculation of personal income), an acceleration in personal dividend income, and an upturn in farm proprietors’ income.
- Personal current taxes (line 29) increased $12.6 billion in the second quarter after decreasing $40.9 billion (revised) in the first quarter.
- Disposable personal income (line 30 and chart 4) increased $165.9 billion in the second quarter after increasing $257.0 billion (revised) in the first quarter.
- The personal saving rate (line 33 and chart 5)—personal saving as a percentage of disposable personal income—was 6.8 percent in the second quarter; in the first quarter, the personal saving rate was 7.2 percent.
- Real disposable personal income (DPI) increased 2.5 percent in the second quarter after increasing 4.4 percent in the first quarter. Current-dollar DPI increased 4.4 percent after increasing 7.0 percent. The differences in the movements in real DPI and current-dollar DPI reflected a deceleration in the implicit price deflator for consumer spending, which is used to deflate DPI.
- With the release of the second estimate of GDP, BEA also released revised estimates of various income-related measures for the previous quarter. The revision reflected the incorporation of first-quarter tabulations from the Quarterly Census of Employment and Wages from the Bureau of Labor Statistics. As a result of this revision:
- Wages and salaries (line 3) increased $122.5 billion in the first quarter, an upward revision of $0.4 billion.
- Personal income (line 1) increased $216.1 billion, an upward revision of $0.3 billion.
- The personal saving rate (line 33) was 7.2 percent and the percent change in real GDI (table 1, line 27) was 3.9 percent, both the same as previously estimated.
|Line||Level||Change from preceding period|
|2||Compensation of employees||10,710.1||10,820.3||131.3||97.4||141.5||110.2|
|3||Wages and salaries||8,710.6||8,805.8||110.9||81.5||122.5||95.1|
|8||Trade, transportation, and utilities||1,344.8||1,358.2||14.4||4.8||18.8||13.4|
|9||Other services-producing industries||4,550.5||4,600.1||67.3||59.7||56.3||49.5|
|11||Supplements to wages and salaries||1,999.4||2,014.5||20.4||15.9||19.0||15.1|
|12||Proprietors' income with IVA and CCAdj||1,549.9||1,573.5||12.5||18.6||23.8||23.6|
|15||Rental income of persons with CCAdj||749.3||753.9||7.7||13.3||4.0||4.7|
|16||Personal income receipts on assets||2,719.5||2,743.4||4.2||77.7||26.6||23.9|
|17||Personal interest income||1,597.6||1,603.2||9.2||77.1||20.4||5.6|
|18||Personal dividend income||1,121.9||1,140.2||−4.9||0.6||6.2||18.3|
|19||Personal current transfer receipts||2,933.9||2,963.6||33.6||12.3||46.4||29.7|
|20||Government social benefits to persons||2,875.7||2,903.2||33.9||11.0||44.3||27.5|
|27||Other current transfer receipts, from business (net)||58.2||60.4||−0.3||1.3||2.1||2.2|
|28||Less: Contributions for government social insurance||1,343.6||1,357.1||15.4||11.3||26.2||13.6|
|29||Less: Personal current taxes||2,030.0||2,042.6||34.3||22.4||−40.9||12.6|
|30||Equals: Disposable personal income (DPI)||15,289.2||15,455.1||139.6||185.6||257.0||165.9|
|31||Less: Personal outlays||14,194.8||14,400.8||136.5||230.0||111.5||206.0|
|32||Equals: Personal saving||1,094.3||1,054.3||3.1||−44.5||145.5||−40.1|
|33||Personal saving as a percentage of DPI||7.2||6.8||......||......||......||......|
|Percent change at annual rate|
|35||Real DPI, chained (2012) dollars||......||......||2.2||2.3||4.4||2.5|
- Capital consumption adjustment
- Inventory valuation adjustment
Note. Dollar levels and percent changes are from NIPA tables 2.1 and 2.2B.
Real GDP increased 4.2 percent in the second quarter of 2018, a slight upward revision of 0.1 percentage point from the advance estimate (table 4, line 1). The revision primarily reflected an upward revision to nonresidential fixed investment (line 9) that was partly offset by downward revisions to consumer spending on goods (line 3). Imports, which are a subtraction in the calculation of GDP, were revised down (line 19).
- The downward revision to consumer spending for goods reflected widespread downward revisions among the subcomponents.
- The upward revision to nonresidential fixed investment was mostly accounted for by higher spending on investment in software, based on new data from the Census Bureau Advance Quarterly Services Report.
- The downward revision to imports primarily reflected a downward revision to imported goods. Within goods, the downward revision was widespread; the largest contributor was petroleum and petroleum-related products. The estimates reflected updated data from the joint BEA/Census monthly U.S. International Trade in Goods and Services Report.
|Line||Change from preceding period (percent)||Contribution to percent change in real GDP (percentage points)|
|Advance estimate||Second estimate||Second estimate minus advance estimate||Advance estimate||Second estimate||Second estimate minus advance estimate|
|1||Gross domestic product (GDP) 1||4.1||4.2||0.1||4.1||4.2||0.1|
|2||Personal consumption expenditures||4.0||3.8||−0.2||2.69||2.55||−0.14|
|7||Gross private domestic investment||−0.5||0.4||0.9||−0.06||0.10||0.16|
|12||Intellectual property products||8.2||11.0||2.8||0.35||0.47||0.12|
|14||Change in private inventories||......||......||......||−1.00||−0.97||0.03|
|15||Net exports of goods and services||......||......||......||1.06||1.17||0.11|
|22||Government consumption expenditures and gross investment||2.1||2.3||0.2||0.37||0.41||0.04|
|26||State and local||1.4||1.6||0.2||0.15||0.17||0.02|
|27||Final sales of domestic product||5.1||5.3||0.2||5.06||5.20||0.14|
|28||Gross domestic purchases price index||2.3||2.3||0.0||......||......||......|
|29||GDP price index||3.0||3.0||0.0||......||......||......|
- The GDP estimates under the contribution columns are also percent changes.
Measured in current dollars, profits from current production (corporate profits with the inventory valuation (IVA) adjustment and the capital consumption adjustment) increased $72.4 billion, or 3.3 percent at a quarterly rate, in the second quarter after increasing $26.7 billion, or 1.2 percent, in the first quarter (table 5, line 1). In the second quarter, profits of domestic financial corporations increased $16.8 billion (line 3), profits of domestic nonfinancial corporations increased $63.6 billion (line 4), and rest-of-the-world profits decreased $8.0 billion (line 5).
Profits after tax (without the inventory valuation and capital consumption adjustment) increased $69.5 billion in the second quarter, after increasing $148.1 billion in the first quarter (line 19).
|Line||Billions of dollars (annual rate)||Percent change from preceding quarter (quarterly rate)|
|Level||Change from preceding quarter|
|Current production measures:|
|1||Corporate profits with IVA and CCAdj||2,249.7||11.6||49.5||26.7||72.4||0.6||2.4||1.2||3.3|
|5||Rest of the world||478.6||40.6||23.1||3.7||−8.0||9.7||5.0||0.8||−1.6|
|6||Receipts from the rest of the world||813.6||38.3||39.3||20.9||−6.0||5.3||5.2||2.6||−0.7|
|7||Less: Payments to the rest of the world||335.0||−2.3||16.2||17.2||2.0||−0.7||5.4||5.4||0.6|
|8||Less: Taxes on corporate income||237.1||9.4||−31.4||−121.8||25.1||2.6||−8.6||−36.5||11.8|
|9||Equals: Profits after tax||2,012.6||2.2||80.9||148.4||47.3||0.1||4.7||8.2||2.4|
|11||Undistributed profits from current production||790.5||20.1||101.6||130.0||38.4||4.0||19.5||20.9||5.1|
|12||Net cash flow||2,565.0||−107.9||−737.5||1150.1||66.3||−4.9||−35.4||85.3||2.7|
|13||Profits with IVA||2,115.4||12.5||−189.6||26.6||78.5||0.6||−8.6||1.3||3.9|
|17||Rest of the world||478.6||40.6||23.1||3.7||−8.0||9.7||5.0||0.8||−1.6|
|18||Profits before tax (without IVA and CCAdj)||2,205.6||30.3||−146.0||26.4||94.6||1.4||−6.5||1.3||4.5|
|19||Profits after tax (without IVA and CCAdj)||1,968.5||20.9||−114.7||148.1||69.5||1.1||−6.1||8.5||3.7|
- Capital consumption adjustment
- Inventory valuation adjustment
Note. Levels of these and other profits series are shown in NIPA tables 1.12, 1.14, 1.15, and 6.16D.
- “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.
- 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.”