GDP and the Economy

Third Estimates for the Second Quarter of 2019

By Lisa S. Mataloni  |  Volume 99, Number 10  |  October 16, 2019

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Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the second 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 second quarter was the same as in the second estimate issued last month (see “Updates”). In the first quarter of 2019, real GDP increased 3.1 percent.

The increase in real GDP in the second quarter reflected positive contributions from consumer spending, federal government spending, and state and local government spending that were partly offset by negative contributions from private inventory investment, exports, nonresidential fixed investment, and residential fixed investment (chart 2 and table 1).2

Chart 1. Real GDP: Percent Change From Preceding Quarter, bar chart

[Click chart to expand]

Chart 2. Real GDP: Contributions to the Percent Change in 2019:II, bar chart

[Click chart to expand]

The deceleration in real GDP in the second quarter primarily reflected downturns in inventory investment (line 14), exports (line 16), and nonresidential fixed investment (line 9). These downturns were partly offset by accelerations in consumer spending (line 2) and federal government spending (line 23).

  • The downturn in private inventory investment primarily reflected a downturn in nondurable-goods manufacturing and larger decreases in wholesale and retail trade.
  • The downturn in exports reflected downturns in both goods and services.
    • Within goods (line 17), a larger decrease in nonautomotive capital goods and downturns in automotive vehicles, engines, and parts and in consumer goods except food and automotive were partly offset by an upturn in exports of petroleum and products.
    • Within services (line 18), travel was the largest contributor to the downturn.
  • The downturn in nonresidential fixed investment reflected a downturn in structures (line 10) and a deceleration in intellectual property products (IPP) (line 12). Within IPP, research and development and software investment slowed.
  • The acceleration in consumer spending reflected accelerations in spending on both goods and services.
    • The acceleration in spending on goods (line 3) primarily reflected upturns in spending on motor vehicles and parts, in food purchased for off-premises consumption, and in clothing and footwear.
    • Within services (line 6), upturns in food services and accommodations and recreation services and accelerations in transportation services and in housing and utilities were partly offset by a deceleration in health care services.
  • The acceleration in federal government spending was more than accounted for by nondefense spending (line 25). Within nondefense, compensation of general government employees and intermediate goods and services purchased both turned up. These components were impacted by the partial government shutdown that occurred in the fourth quarter of 2018 and the first quarter of 2019. For more information, see “How will the federal government shutdown be reflected in GDP for the fourth quarter of 2018 and the first quarter of 2019?”

Real gross domestic income (line 27) increased 1.8 percent in the second quarter after increasing 3.2 percent in the first quarter.

Table 1. Real Gross Domestic Product (GDP) and Related Measures
[Seasonally adjusted at annual rates]
Line   Share of current-dollar GDP (percent) Change from preceding period (percent) Contribution to percent change in real GDP (percentage points)
2019 2018 2019 2018 2019
II III IV I II III IV I II
1 Gross domestic product1 100.0 2.9 1.1 3.1 2.0 2.9 1.1 3.1 2.0
2 Personal consumption expenditures 68.0 3.5 1.4 1.1 4.6 2.34 0.97 0.78 3.03
3 Goods 21.1 3.6 1.6 1.5 8.6 0.75 0.33 0.32 1.74
4 Durable goods 7.1 3.6 1.3 0.3 13.0 0.25 0.09 0.02 0.87
5 Nondurable goods 14.0 3.6 1.7 2.2 6.5 0.50 0.24 0.30 0.87
6 Services 46.9 3.4 1.4 1.0 2.8 1.59 0.65 0.46 1.29
7 Gross private domestic investment 17.6 13.7 3.0 6.2 −6.3 2.27 0.53 1.09 −1.16
8 Fixed investment 17.2 0.7 2.7 3.2 −1.4 0.13 0.46 0.56 −0.25
9 Nonresidential 13.5 2.1 4.8 4.4 −1.0 0.29 0.64 0.60 −0.14
10 Structures 3.0 −2.1 −9.0 4.0 −11.1 −0.07 −0.29 0.12 −0.36
11 Equipment 5.9 2.9 7.4 −0.1 0.8 0.17 0.42 0.00 0.05
12 Intellectual property products 4.7 4.1 11.7 10.8 3.6 0.18 0.51 0.48 0.17
13 Residential 3.7 −4.0 −4.7 −1.0 −3.0 −0.16 −0.18 −0.04 −0.11
14 Change in private inventories 0.4 ...... ...... ...... ...... 2.14 0.07 0.53 −0.91
15 Net exports of goods and services −3.1 ...... ...... ...... ...... −2.05 −0.35 0.73 −0.68
16 Exports 11.7 −6.2 1.5 4.1 −5.7 −0.78 0.18 0.49 −0.69
17 Goods 7.7 −9.1 2.6 4.6 −5.9 −0.78 0.21 0.36 −0.48
18 Services 4.0 −0.1 −0.7 3.3 −5.1 0.00 −0.03 0.13 −0.21
19 Imports 14.8 8.6 3.5 −1.5 0.0 −1.27 −0.53 0.23 0.01
20 Goods 12.0 9.2 2.3 −2.8 0.1 −1.11 −0.28 0.36 −0.02
21 Services 2.8 6.1 8.9 4.5 −0.7 −0.16 −0.24 −0.13 0.02
22 Government consumption expenditures and gross investment 17.5 2.1 −0.4 2.9 4.8 0.36 −0.07 0.50 0.82
23 Federal 6.6 2.9 1.1 2.2 8.3 0.19 0.07 0.14 0.53
24 National defense 3.9 3.0 5.2 7.7 3.3 0.11 0.20 0.29 0.13
25 Nondefense 2.7 2.8 −4.5 −5.4 16.1 0.07 −0.12 −0.15 0.40
26 State and local 10.9 1.6 −1.2 3.3 2.7 0.17 −0.14 0.36 0.29
Addenda:
27 Gross domestic income (GDI)2 ...... 3.3 0.8 3.2 1.8 ...... ...... ...... ......
28 Average of GDP and GDI ...... 3.1 0.9 3.2 1.9 ...... ...... ...... ......
29 Final sales of domestic product ...... 0.8 1.0 2.6 3.0 0.78 1.02 2.57 2.92
30 Goods 29.6 4.8 4.8 7.3 2.1 1.41 1.39 2.12 0.62
31 Services 62.2 2.8 0.6 1.0 2.7 1.73 0.37 0.66 1.66
32 Structures 8.2 −2.5 −7.7 3.9 −3.1 −0.21 −0.67 0.32 −0.26
33 Motor vehicle output 2.7 10.3 1.3 −7.6 −7.6 0.28 0.04 −0.22 −0.21
  1. The GDP estimates under the contribution columns are also percent changes.
  2. GDI is deflated by the implicit price deflator for GDP.

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 2.2 percent in the second quarter after increasing 0.8 percent in the first quarter (chart 3 and table 2, line 1). The acceleration primarily reflected an upturn in prices paid for consumer goods (notably gasoline and other energy goods) and an upturn in prices paid for state and local government spending (notably petroleum products). Food prices decelerated (line 20), increasing 0.7 percent after increasing 3.0 percent. Energy goods and services prices turned up (line 21), increasing 18.8 percent after decreasing 16.7 percent. Gross domestic purchases prices excluding food and energy (line 22) accelerated, increasing 1.8 percent in the second quarter after increasing 1.2 percent in the first 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, accelerated, increasing 1.9 percent in the second quarter after increasing 1.1 percent in the first quarter.

Table 2. Prices for Gross Domestic Purchases
[Percent change at annual rates; based on seasonally adjusted index numbers (2012=100)]
Line   Change from preceding period (percent) Contribution to percent change in gross domestic purchases prices (percentage points)
2018 2019 2018 2019
III IV I II III IV I II
1 Gross domestic purchases1 1.9 1.5 0.8 2.2 1.9 1.5 0.8 2.2
2 Personal consumption expenditures 1.6 1.3 0.4 2.4 1.05 0.88 0.26 1.57
3 Goods −0.3 −1.4 −1.6 1.6 −0.07 −0.29 −0.34 0.32
4 Durable goods −1.2 −1.1 −0.3 −1.8 −0.08 −0.08 −0.02 −0.12
5 Nondurable goods 0.1 −1.5 −2.3 3.3 0.01 −0.21 −0.31 0.44
6 Services 2.5 2.6 1.3 2.8 1.12 1.17 0.60 1.25
7 Gross private domestic investment 2.1 0.7 1.7 2.0 0.36 0.12 0.30 0.35
8 Fixed investment 2.1 0.5 1.8 2.0 0.35 0.09 0.30 0.33
9 Nonresidential 1.6 0.0 1.6 2.0 0.21 0.00 0.20 0.27
10 Structures 3.2 5.6 2.8 4.0 0.10 0.16 0.08 0.11
11 Equipment 1.6 −1.1 1.0 0.4 0.09 −0.06 0.06 0.02
12 Intellectual property products 0.5 −2.2 1.5 2.9 0.02 −0.10 0.07 0.13
13 Residential 3.9 2.5 2.6 1.7 0.14 0.09 0.09 0.06
14 Change in private inventories ...... ...... ...... ...... 0.01 0.03 0.00 0.02
15 Government consumption expenditures and gross investment 3.0 2.9 1.3 1.7 0.51 0.48 0.22 0.29
16 Federal 2.6 2.8 4.6 −2.1 0.16 0.18 0.29 −0.14
17 National defense 2.7 1.8 1.1 1.5 0.10 0.07 0.04 0.06
18 Nondefense 2.4 4.3 10.0 −7.2 0.06 0.11 0.25 −0.19
19 State and local 3.3 2.9 −0.6 4.1 0.35 0.30 −0.06 0.43
Addenda:
  Gross domestic purchases:                
20 Food 0.4 0.2 3.0 0.7 0.02 0.01 0.14 0.03
21 Energy goods and services 3.5 −4.9 −16.7 18.8 0.10 −0.13 −0.49 0.47
22 Excluding food and energy 2.0 1.7 1.2 1.8 1.80 1.59 1.14 1.71
  Personal consumption expenditures:                
23 Food and beverages purchased for off-premises consumption 0.4 0.2 3.0 0.6 ...... ...... ...... ......
24 Energy goods and services 3.9 −5.2 −16.7 18.4 ...... ...... ...... ......
25 Excluding food and energy 1.6 1.7 1.1 1.9 ...... ...... ...... ......
26 Gross domestic product 2.0 1.6 1.1 2.4 ...... ...... ...... ......
27 Exports of goods and services 1.1 −1.4 −2.5 3.3 ...... ...... ...... ......
28 Imports of goods and services 0.6 −1.8 −3.5 1.6 ...... ...... ...... ......
  1. The estimated 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.

Real GDP increased 2.0 percent in the second quarter of 2019, the same increase as in the second estimate (table 3, line 1). The revision reflected downward revisions to consumer spending (line 2) and nonresidential fixed investment (line 9) that were offset primarily by upward revisions to state and local government spending (line 26) and exports (line 16) and a downward revision to imports (line 19).

  • The downward revision to consumer spending primarily reflected a downward revision to spending on nondurable goods (line 4), mainly food and beverages purchased for off-premises consumption.
  • The downward revision to nonresidential investment was primarily to structures, notably investment in manufacturing structures.
  • The upward revision to state and local government spending was to structures reflecting updated Census construction spending data.
  • The revisions to exports and imports reflected updated statistics from BEA international transactions accounts.
Table 3. Second and Third Estimates for the Second Quarter of 2019
[Seasonally adjusted at annual rates]
Line   Change from preceding period (percent) Contribution to percent change in real GDP (percentage points)
Second estimate Third estimate Third estimate minus second estimate Second estimate Third estimate Third estimate minus second estimate
1 Gross domestic product (GDP)1 2.0 2.0 0.0 2.0 2.0 0.0
2 Personal consumption expenditures 4.7 4.6 −0.1 3.10 3.03 −0.07
3 Goods 8.8 8.6 −0.2 1.78 1.74 −0.04
4 Durable goods 13.0 13.0 0.0 0.87 0.87 0.00
5 Nondurable goods 6.8 6.5 −0.3 0.91 0.87 −0.04
6 Services 2.8 2.8 0.0 1.32 1.29 −0.03
7 Gross private domestic investment −6.1 −6.3 −0.2 −1.11 −1.16 −0.05
8 Fixed investment −1.1 −1.4 −0.3 −0.20 −0.25 −0.05
9 Nonresidential −0.6 −1.0 −0.4 −0.09 −0.14 −0.05
10 Structures −9.4 −11.1 −1.7 −0.30 −0.36 −0.06
11 Equipment 0.7 0.8 0.1 0.04 0.05 0.01
12 Intellectual property products 3.7 3.6 −0.1 0.17 0.17 0.00
13 Residential −2.9 −3.0 −0.1 −0.11 −0.11 0.00
14 Change in private inventories ...... ...... ...... −0.91 −0.91 0.00
15 Net exports of goods and services ...... ...... ...... −0.72 −0.68 0.04
16 Exports −5.8 −5.7 0.1 −0.71 −0.69 0.02
17 Goods −5.6 −5.9 −0.3 −0.45 −0.48 −0.03
18 Services −6.3 −5.1 1.2 −0.26 −0.21 0.05
19 Imports 0.1 0.0 −0.1 −0.01 0.01 0.02
20 Goods 0.3 0.1 −0.2 −0.03 −0.02 0.01
21 Services −0.8 −0.7 0.1 0.02 0.02 0.00
22 Government consumption expenditures and gross investment 4.5 4.8 0.3 0.77 0.82 0.05
23 Federal 8.1 8.3 0.2 0.52 0.53 0.01
24 National defense 3.1 3.3 0.2 0.12 0.13 0.01
25 Nondefense 16.0 16.1 0.1 0.40 0.40 0.00
26 State and local 2.3 2.7 0.4 0.25 0.29 0.04
Addenda:
27 Final sales of domestic product 3.0 3.0 0.0 2.95 2.92 −0.03
28 Gross domestic income (GDI) 2.1 1.8 −0.3 ...... ...... ......
29 Average of GDP and GDI 2.1 1.9 −0.2 ...... ...... ......
30 Gross domestic purchases price index 2.2 2.2 0.0 ...... ...... ......
31 GDP price index 2.4 2.4 0.0 ...... ...... ......
  1. 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 $75.8 billion, or 3.8 percent at a quarterly rate, in the second quarter of 2019 after decreasing $78.7 billion, or 3.8 percent, in the first quarter (table 4, line 1). Profits of domestic financial corporations increased $2.5 billion (line 3), profits of domestic nonfinancial corporations increased $34.7 billion (line 4), and rest-of-the-world profits increased $38.7 billion (line 5).

Profits after tax increased $66.1 billion in the second quarter after decreasing $75.7 billion in the first quarter (line 10).

Table 4. Corporate Profits
[Seasonally adjusted]
Line   Billions of dollars (annual rate) Percent change from preceding quarter (quarterly rate)
Level Change from preceding quarter
2019 2018 2019 2018 2019
II III IV I II III IV I II
  Current production measures:                  
1 Corporate profits with IVA and CCAdj 2,082.7 47.8 −18.6 −78.7 75.8 2.3 −0.9 −3.8 3.8
2 Domestic industries 1,544.5 31.2 0.7 −86.0 37.2 2.0 0.0 −5.4 2.5
3 Financial 409.7 −21.8 −6.7 22.2 2.5 −5.3 −1.7 5.8 0.6
4 Nonfinancial 1,134.8 53.0 7.4 −108.2 34.7 4.6 0.6 −9.0 3.2
5 Rest of the world 538.2 16.6 −19.3 7.3 38.7 3.4 −3.8 1.5 7.7
6 Receipts from the rest of the world 894.6 1.7 −5.0 13.7 25.3 0.2 −0.6 1.6 2.9
7 Less: Payments to the rest of the world 356.4 −14.9 14.3 6.4 −13.4 −4.1 4.1 1.8 −3.6
                     
9 Less: Taxes on corporate income 225.2 7.7 −11.8 −3.0 9.7 3.5 −5.1 −1.4 4.5
                     
10 Equals: Profits after tax 1,857.5 40.1 −6.8 −75.7 66.1 2.2 −0.4 −4.1 3.7
11 Net dividends 1,346.9 37.8 32.8 −37.9 22.2 2.9 2.5 −2.8 1.7
12 Undistributed profits from current production 510.7 2.3 −39.6 −37.8 43.9 0.4 −7.3 −7.5 9.4
                     
13 Net cash flow with IVA 2,404.1 13.9 −32.1 23.2 72.9 0.6 −1.4 1.0 3.1
CCAdj
Capital consumption adjustment
IVA
Inventory valuation adjustment

Note. Levels of these and other profits series are shown in NIPA tables 1.12 and 6.16D.

 

Industry profits (corporate profits by industry with IVA) increased $80.6 billion, or 4.0 percent at a quarterly rate, in the second quarter of 2019 after decreasing $31.4 billion, or 1.5 percent, in the first quarter (chart 4 and table 5, line 1).

Table 5. Corporate Profits by Industry
[Seasonally adjusted]
Line   Billions of dollars (annual rate) Percent change from preceding quarter (quarterly rate)
Level Change from preceding quarter
2019 2018 2019 2018 2019
II III IV I II III IV I II
  Industry profits:                  
1 Corporate profits with IVA 2,080.5 53.5 −13.7 −31.4 80.6 2.7 −0.7 −1.5 4.0
2 Domestic industries 1,542.3 36.9 5.6 −38.7 41.9 2.5 0.4 −2.5 2.8
3 Financial 422.4 −21.0 −6.5 28.1 3.4 −5.0 −1.6 7.2 0.8
4 Nonfinancial 1,120.0 57.9 12.2 −66.8 38.5 5.4 1.1 −5.8 3.6
5 Utilities −1.4 −3.8 −5.3 6.6 2.8 ...... ...... ...... ......
6 Manufacturing 265.5 11.8 4.2 −42.9 5.4 4.1 1.4 −14.2 2.1
7 Wholesale trade 120.6 18.6 11.9 −6.8 4.5 20.1 10.8 −5.5 3.9
8 Retail trade 161.5 19.0 −11.8 21.2 10.3 15.5 −8.3 16.3 6.8
9 Transportation and warehousing 38.1 3.6 10.1 −12.5 −3.0 8.9 23.3 −23.3 −7.4
10 Information 111.6 −3.1 −12.8 −2.8 2.9 −2.4 −10.3 −2.5 2.7
11 Other nonfinancial 424.0 11.8 16.0 −29.6 15.6 2.9 3.8 −6.8 3.8
12 Rest of the world 538.2 16.6 −19.3 7.3 38.7 3.4 −3.8 1.5 7.7
Addenda:
13 Profits before tax (without IVA and CCAdj) 2,084.9 10.7 −40.6 −31.1 69.4 0.5 −1.9 −1.5 3.4
14 Profits after tax (without IVA and CCAdj) 1,859.7 3.0 −28.7 −28.0 59.7 0.2 −1.5 −1.5 3.3
15 IVA −4.4 42.8 26.8 −0.3 11.2 ...... ...... ...... ......
16 CCAdj 2.2 −5.7 −4.9 −47.4 −4.8 ...... ...... ...... ......
CCAdj
Capital consumption adjustment
IVA
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.

Chart 4. Real GDP: Percent Change From Preceding Quarter, bar chart

[Click chart to expand]

 

 

  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.”