GDP and the Economy
Second Estimates for the Third Quarter of 2019
Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third quarter of 2019, according to the second estimates of the National Income and Product Accounts (NIPAs) (chart 1 and table 1).1 With the second estimate, real GDP growth for the third quarter was revised up 0.2 percentage point from the advance estimate issued last month (see “Updates”). In the second quarter of 2019, real GDP increased 2.0 percent.
The increase in real GDP in the third quarter reflected positive contributions from consumer spending, federal government spending, residential investment, private inventory investment, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2 and table 1).
The acceleration in real GDP in the third quarter reflected upturns in private inventory investment, exports, and residential fixed investment (table 1). These movements were partly offset by decelerations in consumer spending, federal government spending, and state and local government spending and a larger decrease in nonresidential fixed investment.
- The upturn in private inventory investment primarily reflected upturns in retail trade and nondurable-goods manufacturing industries.
- The upturn in exports reflected an upturn in exports of goods, led by a smaller decrease in nonautomotive capital goods and an upturn in automotive vehicles, engines, and parts.
- The upturn in residential fixed investment reflected an upturn in structures, led by an upturn in improvements.
- The deceleration in consumer spending reflected decelerations in spending on both goods and services. The deceleration in spending on goods was led by a deceleration in motor vehicles and a downturn in clothing and footwear. The deceleration in spending on services primarily reflected a slowdown in health care spending and a downturn in spending on recreation services.
- The deceleration in federal government spending primarily reflected a deceleration in nondefense spending. Second-quarter spending was boosted when the federal government returned to normal operations after 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?”
- The deceleration in state and local spending mainly reflected a downturn in gross investment in structures.
- The larger decrease in nonresidential fixed investment primarily reflected a downturn in spending on equipment, which was more than accounted for by a downturn in computers and peripheral equipment. The downturn in equipment was partly offset by an acceleration in spending on intellectual property products.
Real gross domestic income (GDI) increased 2.4 percent in the third quarter after increasing 0.9 percent in the second quarter (revised).
|Line||Share of current-dollar GDP (percent)||Change from preceding period (percent)||Contribution to percent change in real GDP (percentage points)|
|1||Gross domestic product (GDP)1||100.0||1.1||3.1||2.0||2.1||1.1||3.1||2.0||2.1|
|2||Personal consumption expenditures||68.1||1.4||1.1||4.6||2.9||0.97||0.78||3.03||1.97|
|7||Gross private domestic investment||17.4||3.0||6.2||−6.3||−0.1||0.53||1.09||−1.16||−0.01|
|12||Intellectual property products||4.7||11.7||10.8||3.6||5.1||0.51||0.48||0.17||0.24|
|14||Change in private inventories||0.4||......||......||......||......||0.07||0.53||−0.91||0.17|
|15||Net exports of goods and services||−3.0||......||......||......||......||−0.35||0.73||−0.68||−0.11|
|22||Government consumption expenditures and gross investment||17.5||−0.4||2.9||4.8||1.6||−0.07||0.50||0.82||0.28|
|26||State and local||10.9||−1.2||3.3||2.7||0.5||−0.14||0.36||0.29||0.06|
|27||Gross domestic income (GDI)2||......||0.8||3.2||0.9||2.4||......||......||......||......|
|28||Average of GDP and GDI||......||0.9||3.2||1.4||2.3||......||......||......||......|
|29||Final sales of domestic product||99.6||1.0||2.6||3.0||2.0||1.02||2.57||2.92||1.96|
|33||Motor vehicle output||2.9||1.3||−7.6||−7.6||35.1||0.04||−0.22||−0.21||0.84|
|34||GDP excluding motor vehicle output||97.1||1.1||3.4||2.3||1.3||1.05||3.32||2.23||1.29|
- The GDP estimates under the contribution columns are also percent changes.
- GDI is deflated by the implicit price deflator for GDP. The second-quarter 2019 change in GDI reflects the incorporation of newly-available data on private wages and salaries.
Prices for gross domestic purchases, goods and services purchased by U.S. residents, increased 1.4 percent in the third quarter after increasing 2.2 percent in the second quarter (chart 3 and table 2). The deceleration primarily reflected a deceleration in the prices for consumer goods; the main contributor was a downturn in prices for gasoline and other energy goods.
Food prices turned down, decreasing 0.7 percent in the third quarter after increasing 0.7 percent in the second quarter. Energy goods and services decreased 8.0 percent after increasing 18.8 percent. Gross domestic purchases prices excluding food and energy increased 1.8 percent, the same rate as in the second quarter.
Consumer prices excluding food and energy, a measure of the “core” rate of inflation, accelerated, increasing 2.1 percent in the third quarter after increasing 1.9 percent in the second quarter.
|Line||Change from preceding period (percent)||Contribution to percent change in gross domestic purchases prices (percentage points)|
|1||Gross domestic purchases1||1.5||0.8||2.2||1.4||1.5||0.8||2.2||1.4|
|2||Personal consumption expenditures||1.3||0.4||2.4||1.5||0.88||0.26||1.57||0.98|
|7||Gross private domestic investment||0.7||1.7||2.0||1.1||0.12||0.30||0.35||0.19|
|12||Intellectual property products||−2.2||1.5||2.9||2.0||−0.10||0.07||0.13||0.09|
|14||Change in private inventories||......||......||......||......||0.03||0.00||0.02||−0.01|
|15||Government consumption expenditures and gross investment||2.9||1.3||1.7||1.5||0.48||0.22||0.29||0.26|
|19||State and local||2.9||−0.6||4.1||1.6||0.30||−0.06||0.43||0.17|
|Gross domestic purchases:|
|21||Energy goods and services||−4.9||−16.7||18.8||−8.0||−0.13||−0.49||0.47||−0.22|
|22||Excluding food and energy||1.7||1.2||1.8||1.8||1.59||1.14||1.71||1.68|
|Personal consumption expenditures:|
|23||Food and beverages purchased for off-premises consumption||0.2||3.0||0.6||−0.5||......||......||......||......|
|24||Energy goods and services||−5.2||−16.7||18.4||−8.2||......||......||......||......|
|25||Excluding food and energy||1.7||1.1||1.9||2.1||......||......||......||......|
|26||Gross domestic product||1.6||1.1||2.4||1.8||......||......||......||......|
|27||Exports of goods and services||−1.4||−2.5||3.3||−2.3||......||......||......||......|
|28||Imports of goods and services||−1.8||−3.5||1.6||−4.0||......||......||......||......|
- The estimates for gross domestic purchases under the contribution columns are also percent changes.
Personal income (table 3), which is measured in current dollars, increased $168.8 billion in the third quarter after increasing $200.4 billion in the second quarter (revised). The deceleration primarily reflected a downturn in personal interest income that was partly offset by accelerations in proprietors' income and compensation of employees.
- Personal current taxes decreased $9.5 billion in the third quarter after increasing $43.2 billion in the second quarter.
- Disposable personal income (DPI) increased $178.3 billion after increasing $157.2 billion.
- The personal saving rate (chart 4)—personal saving as a percentage of DPI—was 7.9 percent in the third quarter; in the second quarter, the personal saving rate was 7.8 percent.
- Real DPI (chart 5) increased 2.9 percent in the third quarter after increasing 1.5 percent in the second quarter. Current-dollar DPI increased 4.4 percent after increasing 3.9 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, the Bureau of Economic Analysis also released revised estimates of second-quarter wages and salaries, personal taxes, and contributions for social insurance. These estimates reflect newly available second-quarter private wages and salaries from the Bureau of Labor Statistics Quarterly Census of Employment and Wages. As a result:
- Wages and salaries is now estimated to have increased $62.1 billion in the second quarter, a downward revision of $46.7 billion.
- Personal income is now estimated to have increased $200.4 billion, a downward revision of $43.7 billion.
- Real DPI is now estimated to have increased 1.5 percent; in the previously published estimate, real DPI increased 2.4 percent.
- The personal saving rate is now estimated at 7.8 percent; in the previously published estimate, the personal saving rate was 8.0 percent.
- The percent change in real GDI (table 1, line 27) is now estimated at 0.9 percent; in the previously published estimate, real GDI increased 1.8 percent.
|Line||Level||Change from preceding period|
|2||Compensation of employees||11,386.9||11,488.0||63.1||249.2||80.4||101.0|
|3||Wages and salaries||9,273.6||9,352.9||47.8||221.5||62.1||79.3|
|8||Trade, transportation, and utilities||1,410.0||1,418.2||6.8||30.4||6.6||8.2|
|9||Other services-producing industries||4,887.3||4,934.0||19.8||145.0||36.6||46.7|
|11||Supplements to wages and salaries||2,113.3||2,135.0||15.3||27.7||18.3||21.7|
|12||Proprietors' income with IVA and CCAdj||1,632.9||1,684.3||34.4||−3.2||11.7||51.4|
|15||Rental income of persons with CCAdj||777.2||779.8||−1.1||2.9||10.2||2.6|
|16||Personal income receipts on assets||3,016.5||3,002.2||44.3||−46.8||61.4||−14.3|
|17||Personal interest income||1,750.5||1,721.6||8.0||−27.9||51.2||−28.9|
|18||Personal dividend income||1,266.0||1,280.5||36.4||−19.0||10.2||14.5|
|19||Personal current transfer receipts||3,158.6||3,197.4||19.9||109.4||45.4||38.8|
|20||Government social benefits to persons||3,104.2||3,142.8||19.5||109.7||45.4||38.6|
|27||Other current transfer receipts, from business (net)||54.4||54.6||0.4||−0.3||0.0||0.2|
|28||Less: Contributions for government social insurance||1,416.3||1,427.0||6.3||38.9||8.7||10.6|
|29||Less: Personal current taxes||2,200.1||2,190.6||−9.1||79.5||43.2||−9.5|
|30||Equals: Disposable personal income (DPI)||16,355.7||16,534.0||163.4||193.1||157.2||178.3|
|31||Less: Personal outlays||15,073.1||15,230.8||102.2||65.2||250.1||157.7|
|32||Equals: Personal saving||1,282.6||1,303.2||61.2||127.9||−92.9||20.6|
|33||Personal saving as a percentage of DPI||7.8||7.9||......||......||......||......|
|Percent change at annual rate|
|35||Real DPI, chained (2012) dollars||......||......||2.8||4.5||1.5||2.9|
- Capital consumption adjustment
- Inventory valuation adjustment
Real GDP increased 2.1 percent in the third quarter of 2019, an upward revision of 0.2 percentage point from the advance estimate (table 4). The revision reflected upward revisions to private inventory investment, nonresidential fixed investment, and consumer spending that were partly offset by a downward revision to state and local government spending.
- The upward revision to private inventory investment primarily reflected an upward revision to nondurable-goods manufacturing industries. With the upward revision, private inventory investment contributed positively to GDP growth, in contrast to a negative contribution in the advance estimate.
- Within nonresidential fixed investment, the upward revision primarily reflected an upward revision to structures, notably commercial and health care structures.
- The upward revision to consumer spending was primarily accounted for by a revision to spending on goods. Within goods, the leading source of the revision was motor vehicles and parts.
- Within state and local government spending, the downward revision primarily reflected a downward revision to gross investment in structures.
|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||1.9||2.1||0.2||1.9||2.1||0.2|
|2||Personal consumption expenditures||2.9||2.9||0.0||1.93||1.97||0.04|
|7||Gross private domestic investment||−1.5||−0.1||1.4||−0.27||−0.01||0.26|
|12||Intellectual property products||6.6||5.1||−1.5||0.30||0.24||−0.06|
|14||Change in private inventories||......||......||......||−0.05||0.17||0.22|
|15||Net exports of goods and services||......||......||......||−0.08||−0.11||−0.03|
|22||Government consumption expenditures and gross investment||2.0||1.6||−0.4||0.35||0.28||−0.07|
|26||State and local||1.1||0.5||−0.6||0.12||0.06||−0.06|
|27||Final sales of domestic product||2.0||2.0||0.0||1.97||1.96||−0.01|
|28||Gross domestic purchases price index||1.4||1.4||0.0||......||......||......|
|29||GDP price index||1.7||1.8||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 adjustment (IVA) and the capital consumption adjustment (CCAdj)) increased $4.6 billion, or 0.2 percent at a quarterly rate, in the third quarter after increasing $75.8 billion, or 3.8 percent, in the second quarter (table 5). Profits of domestic financial corporations decreased $9.8 billion, profits of domestic nonfinancial corporations increased $7.9 billion, and rest-of-the-world profits increased $6.5 billion.
Profits after tax (without the IVA and the CCAdj) decreased $11.3 billion in the third quarter.
|Line||Billions of dollars (annual rate)||Percent change from preceding quarter (quarterly rate)|
|Level||Change from preceding quarter|
|1||Current production measures:|
|2||Corporate profits with IVA and CCAdj||2,087.3||−18.6||−78.7||75.8||4.6||−0.9||−3.8||3.8||0.2|
|6||Rest of the world||544.7||−19.3||7.3||38.7||6.5||−3.8||1.5||7.7||1.2|
|7||Receipts from the rest of the world||885.5||−5.0||13.7||25.3||−9.1||−0.6||1.6||2.9||−1.0|
|8||Less: Payments to the rest of the world||340.7||14.3||6.4||−13.4||−15.6||4.1||1.8||−3.6||−4.4|
|9||Less: Taxes on corporate income||206.1||−11.8||−3.0||9.7||−19.1||−5.1||−1.4||4.5||−8.5|
|10||Equals: Profits after tax||1,881.2||−6.8||−75.7||66.1||23.7||−0.4||−4.1||3.7||1.3|
|12||Undistributed profits from current production||541.9||−39.6||−37.8||43.9||31.3||−7.3||−7.5||9.4||6.1|
|13||Net cash flow||2,457.1||−32.1||23.2||72.9||53.0||−1.4||1.0||3.1||2.2|
|14||Profits with IVA||2,083.2||−13.7||−31.4||80.6||2.7||−0.7||−1.5||4.0||0.1|
|18||Rest of the world||544.7||−19.3||7.3||38.7||6.5||−3.8||1.5||7.7||1.2|
|19||Profits before tax (without IVA and CCAdj)||2,054.6||−40.6||−31.1||69.4||−30.4||−1.9||−1.5||3.4||−1.5|
|20||Profits after tax (without IVA and CCAdj)||1,848.4||−28.7||−28.0||59.7||−11.3||−1.5||−1.5||3.3||−0.6|
- Capital consumption adjustment
- Inventory valuation adjustment
- “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.”