GDP and the Economy

Third Estimates for the Third Quarter of 2019

By Lisa S. Mataloni  |  Volume 100, Number 1  |  January 17, 2020

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Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the third 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 third quarter was the same as in the second 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, exports, and state and local government spending that were partly offset by a negative contribution from nonresidential fixed investment and private inventory investment.2 Imports, which are a subtraction in the calculation of GDP, increased (chart 2 and table 1).

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:III, bar chart

[Click chart to expand]

The acceleration in real GDP in the third quarter reflected a smaller decrease in private inventory investment and upturns in 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 smaller decrease in private inventory investment primarily reflected upturns in the 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 slowdowns in spending on health care and 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 increased 2.1 percent in the third quarter after increasing 0.9 percent in the second 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
III IV I II III IV I II III
1 Gross domestic product1 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 3.2 0.97 0.78 3.03 2.12
3 Goods 21.2 1.6 1.5 8.6 5.3 0.33 0.32 1.74 1.09
4 Durable goods 7.2 1.3 0.3 13.0 8.1 0.09 0.02 0.87 0.56
5 Nondurable goods 14.0 1.7 2.2 6.5 3.9 0.24 0.30 0.87 0.53
6 Services 47.0 1.4 1.0 2.8 2.2 0.65 0.46 1.29 1.02
7 Gross private domestic investment 17.4 3.0 6.2 −6.3 −1.0 0.53 1.09 −1.16 −0.17
8 Fixed investment 17.1 2.7 3.2 −1.4 −0.8 0.46 0.56 −0.25 −0.14
9 Nonresidential 13.4 4.8 4.4 −1.0 −2.3 0.64 0.60 −0.14 −0.31
10 Structures 2.9 −9.0 4.0 −11.1 −9.9 −0.29 0.12 −0.36 −0.30
11 Equipment 5.7 7.4 −0.1 0.8 −3.8 0.42 0.00 0.05 −0.22
12 Intellectual property products 4.7 11.7 10.8 3.6 4.7 0.51 0.48 0.17 0.22
13 Residential 3.7 −4.7 −1.0 −3.0 4.6 −0.18 −0.04 −0.11 0.17
14 Change in private inventories 0.3 ...... ...... ...... ...... 0.07 0.53 −0.91 −0.03
15 Net exports of goods and services −3.0 ...... ...... ...... ...... −0.35 0.73 −0.68 −0.14
16 Exports 11.6 1.5 4.1 −5.7 1.0 0.18 0.49 −0.69 0.11
17 Goods 7.6 2.6 4.6 −5.9 2.1 0.21 0.36 −0.48 0.17
18 Services 4.0 −0.7 3.3 −5.1 −1.3 −0.03 0.13 −0.21 −0.05
19 Imports 14.6 3.5 −1.5 0.0 1.8 −0.53 0.23 0.01 −0.26
20 Goods 11.8 2.3 −2.8 0.1 1.1 −0.28 0.36 −0.02 −0.13
21 Services 2.8 8.9 4.5 −0.7 4.8 −0.24 −0.13 0.02 −0.13
22 Government consumption expenditures and gross investment 17.5 −0.4 2.9 4.8 1.7 −0.07 0.50 0.82 0.30
23 Federal 6.6 1.1 2.2 8.3 3.3 0.07 0.14 0.53 0.22
24 National defense 3.9 5.2 7.7 3.3 2.2 0.20 0.29 0.13 0.09
25 Nondefense 2.7 −4.5 −5.4 16.1 5.0 −0.12 −0.15 0.40 0.13
26 State and local 10.9 −1.2 3.3 2.7 0.7 −0.14 0.36 0.29 0.08
Addenda:
27 Gross domestic income (GDI)2 ...... 0.8 3.2 0.9 2.1 ...... ...... ...... ......
28 Average of GDP and GDI ...... 0.9 3.2 1.4 2.1 ...... ...... ...... ......
29 Final sales of domestic product ...... 1.0 2.6 3.0 2.1 1.02 2.57 2.92 2.13
30 Goods 29.6 4.8 7.3 2.1 4.1 1.39 2.12 0.62 1.20
31 Services 62.2 0.6 1.0 2.7 1.8 0.37 0.66 1.66 1.11
32 Structures 8.2 −7.7 3.9 −3.1 −2.5 −0.67 0.32 −0.26 −0.21
33 Motor vehicle output 2.9 1.3 −7.6 −7.6 34.7 0.04 −0.22 −0.21 0.83
  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 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 downturn 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.

Chart 3. Prices for Gross Domestic Purchases

[Click chart to expand]

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.

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
IV I II III IV I II III
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
3 Goods −1.4 −1.6 1.6 −0.8 −0.29 −0.34 0.32 −0.16
4 Durable goods −1.1 −0.3 −1.8 −1.2 −0.08 −0.02 −0.12 −0.09
5 Nondurable goods −1.5 −2.3 3.3 −0.5 −0.21 −0.31 0.44 −0.07
6 Services 2.6 1.3 2.8 2.5 1.17 0.60 1.25 1.14
7 Gross private domestic investment 0.7 1.7 2.0 1.1 0.12 0.30 0.35 0.18
8 Fixed investment 0.5 1.8 2.0 1.2 0.09 0.30 0.33 0.19
9 Nonresidential 0.0 1.6 2.0 0.5 0.00 0.20 0.27 0.07
10 Structures 5.6 2.8 4.0 1.6 0.16 0.08 0.11 0.04
11 Equipment −1.1 1.0 0.4 −1.1 −0.06 0.06 0.02 −0.06
12 Intellectual property products −2.2 1.5 2.9 2.0 −0.10 0.07 0.13 0.09
13 Residential 2.5 2.6 1.7 3.4 0.09 0.09 0.06 0.12
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 1.6 0.48 0.22 0.29 0.27
16 Federal 2.8 4.6 −2.1 1.5 0.18 0.29 −0.14 0.10
17 National defense 1.8 1.1 1.5 1.4 0.07 0.04 0.06 0.05
18 Nondefense 4.3 10.0 −7.2 1.7 0.11 0.25 −0.19 0.04
19 State and local 2.9 −0.6 4.1 1.6 0.30 −0.06 0.43 0.17
Addenda:
  Gross domestic purchases:                
20 Food 0.2 3.0 0.7 −0.7 0.01 0.14 0.03 −0.03
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 1.69
  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 ...... ...... ...... ......
  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 2.1 percent in the third quarter of 2019, the same increase as in the second estimate (table 3, line 1). Upward revisions to consumer spending and nonresidential fixed investment were offset by a downward revision to private inventory investment.

  • The upward revision to consumer spending reflected an upward revision to spending on services that was partly offset by a downward revision to spending on goods.
    • Within services, the largest contributors to the upward revision were “other services” (notably personal care) and financial services (notably portfolio management and investment advice).
    • Within goods, the largest contributor to the downward revision was food and beverages.
  • The upward revision to nonresidential fixed investment was more than accounted for by the revision to investment in structures, notably power and communications structures.
  • The largest contributor to the downward revision to private inventory investment was wholesale trade industries, notably nondurable goods.
Table 3. Second and Third Estimates for the Third 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 2.1 2.1 0.0 2.1 2.1 0.0
2 Personal consumption expenditures 2.9 3.2 0.3 1.97 2.12 0.15
3 Goods 5.7 5.3 −0.4 1.17 1.09 −0.08
4 Durable goods 8.3 8.1 −0.2 0.57 0.56 −0.01
5 Nondurable goods 4.3 3.9 −0.4 0.59 0.53 −0.06
6 Services 1.7 2.2 0.5 0.80 1.02 0.22
7 Gross private domestic investment −0.1 −1.0 −0.9 −0.01 −0.17 −0.16
8 Fixed investment −1.0 −0.8 0.2 −0.18 −0.14 0.04
9 Nonresidential −2.7 −2.3 0.4 −0.36 −0.31 0.05
10 Structures −12.0 −9.9 2.1 −0.37 −0.30 0.07
11 Equipment −3.8 −3.8 0.0 −0.22 −0.22 0.00
12 Intellectual property products 5.1 4.7 −0.4 0.24 0.22 −0.02
13 Residential 5.1 4.6 −0.5 0.18 0.17 −0.01
14 Change in private inventories ...... ...... ...... 0.17 −0.03 −0.20
15 Net exports of goods and services ...... ...... ...... −0.11 −0.14 −0.03
16 Exports 0.9 1.0 0.1 0.11 0.11 0.00
17 Goods 2.0 2.1 0.1 0.16 0.17 0.01
18 Services −1.2 −1.3 −0.1 −0.05 −0.05 0.00
19 Imports 1.5 1.8 0.3 −0.22 −0.26 −0.04
20 Goods 0.8 1.1 0.3 −0.09 −0.13 −0.04
21 Services 4.7 4.8 0.1 −0.13 −0.13 0.00
22 Government consumption expenditures and gross investment 1.6 1.7 0.1 0.28 0.30 0.02
23 Federal 3.4 3.3 −0.1 0.22 0.22 0.00
24 National defense 2.2 2.2 0.0 0.09 0.09 0.00
25 Nondefense 5.1 5.0 −0.1 0.13 0.13 0.00
26 State and local 0.5 0.7 0.2 0.06 0.08 0.02
Addenda:
27 Final sales of domestic product 2.0 2.1 0.1 1.96 2.13 0.17
28 Gross domestic income (GDI) 2.4 2.1 −0.3 ...... ...... ......
29 Average of GDP and GDI 2.3 2.1 −0.2 ...... ...... ......
30 Gross domestic purchases price index 1.4 1.4 0.0 ...... ...... ......
31 GDP price index 1.8 1.8 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) decreased $4.7 billion, or 0.2 percent at a quarterly rate, in the third quarter of 2019 after increasing $75.8 billion, or 3.8 percent, in the second quarter (table 4). Profits of domestic financial corporations decreased $4.7 billion, profits of domestic nonfinancial corporations decreased $5.5 billion, and rest-of-the-world profits increased $5.5 billion.

Profits after tax increased $11.1 billion in the third quarter after increasing $66.1 billion in the second 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
III IV I II III IV I II III
  Current production measures:                  
1 Corporate profits with IVA and CCAdj 2,078.0 −18.6 −78.7 75.8 −4.7 −0.9 −3.8 3.8 −0.2
2 Domestic industries 1,534.2 0.7 −86.0 37.2 −10.3 0.0 −5.4 2.5 −0.7
3 Financial 405.0 −6.7 22.2 2.5 −4.7 −1.7 5.8 0.6 −1.2
4 Nonfinancial 1,129.3 7.4 −108.2 34.7 −5.5 0.6 −9.0 3.2 −0.5
5 Rest of the world 543.7 −19.3 7.3 38.7 5.5 −3.8 1.5 7.7 1.0
6 Receipts from the rest of the world 884.6 −5.0 13.7 25.3 −10.0 −0.6 1.6 2.9 −1.1
7 Less: Payments to the rest of the world 340.9 14.3 6.4 −13.4 −15.5 4.1 1.8 −3.6 −4.3
                     
9 Less: Taxes on corporate income 209.3 −11.8 −3.0 9.7 −15.9 −5.1 −1.4 4.5 −7.0
                     
10 Equals: Profits after tax 1,868.7 −6.8 −75.7 66.1 11.1 −0.4 −4.1 3.7 0.6
11 Net dividends 1,339.6 32.8 −37.9 22.2 −7.3 2.5 −2.8 1.7 −0.5
12 Undistributed profits from current production 529.1 −39.6 −37.8 43.9 18.4 −7.3 −7.5 9.4 3.6
                     
13 Net cash flow with IVA 2,444.1 −32.1 23.2 72.9 40.0 −1.4 1.0 3.1 1.7
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) decreased $6.7 billion, or 0.3 percent at a quarterly rate, in the third quarter of 2019 after increasing $80.6 billion, or 4.0 percent, in the second quarter (table 5 and chart 4).

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
III IV I II III IV I II III
  Industry profits:                  
1 Corporate profits with IVA 2,073.9 −13.7 −31.4 80.6 −6.7 −0.7 −1.5 4.0 −0.3
2 Domestic industries 1,530.1 5.6 −38.7 41.9 −12.2 0.4 −2.5 2.8 −0.8
3 Financial 417.7 −6.5 28.1 3.4 −4.6 −1.6 7.2 0.8 −1.1
4 Nonfinancial 1,112.4 12.2 −66.8 38.5 −7.5 1.1 −5.8 3.6 −0.7
5 Utilities −2.0 −5.3 6.6 2.8 −0.6 ...... ...... ...... ......
6 Manufacturing 274.8 4.2 −42.9 5.4 9.2 1.4 −14.2 2.1 3.5
7 Wholesale trade 120.7 11.9 −6.8 4.5 0.1 10.8 −5.5 3.9 0.1
8 Retail trade 164.3 −11.8 21.2 10.3 2.8 −8.3 16.3 6.8 1.7
9 Transportation and warehousing 43.4 10.1 −12.5 −3.0 5.3 23.3 −23.3 −7.4 14.0
10 Information 78.0 −12.8 −2.8 2.9 −33.6 −10.3 −2.5 2.7 −30.1
11 Other nonfinancial 433.3 16.0 −29.6 15.6 9.2 3.8 −6.8 3.8 2.2
12 Rest of the world 543.7 −19.3 7.3 38.7 5.5 −3.8 1.5 7.7 1.0
Addenda:
13 Profits before tax (without IVA and CCAdj) 2,046.0 −40.6 −31.1 69.4 −39.0 −1.9 −1.5 3.4 −1.9
14 Profits after tax (without IVA and CCAdj) 1,836.6 −28.7 −28.0 59.7 −23.1 −1.5 −1.5 3.3 −1.2
15 IVA 27.9 26.8 −0.3 11.2 32.3 ...... ...... ...... ......
16 CCAdj 4.1 −4.9 −47.4 −4.8 1.9 ...... ...... ...... ......
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.”