GDP and the Economy
Second Estimates for the First Quarter of 2023
Real gross domestic product (GDP) increased at an annual rate of 1.3 percent in the first quarter of 2023, according to the “second” estimates of the National Income and Product Accounts (chart 1 and table 1).1 With the second estimate, real GDP growth was revised up 0.2 percentage point from the advance estimate issued in April. In the fourth quarter of 2022, real GDP increased 2.6 percent.
The increase in first-quarter real GDP reflected increases in consumer spending, exports, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased (chart 2 and table 1).2
- The increase in consumer spending reflected increases in both goods (led by motor vehicles and parts) and services (led by health care, food services and accommodations, and financial services and insurance).
- Within exports, an increase in goods (led by consumer goods, except food and automotive and foods, feeds, and beverages) was partly offset by a decrease in services (led by transport services, other business services, and government goods and services).
- The increase in federal government spending reflected increases in both nondefense and defense spending.
- The increase in nondefense spending primarily reflected lower sales of crude oil from the Strategic Petroleum Reserve, based on data from the U.S. Department of Energy. Within the National Economic Accounts, these sales are deducted from government consumption expenditures; therefore, a decrease in sales results in a corresponding increase in consumption expenditures. Because the oil sold by the government enters private inventories, there is no direct net effect on GDP.
- The increase in defense spending was led by spending on intermediate goods and services, notably, services.
- The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees.
- Within nonresidential fixed investment, increases in structures and intellectual property products (led by software) were partly offset by a decrease in equipment.
- The decrease in private inventory investment primarily reflected decreases in wholesale trade and manufacturing.
- Within residential fixed investment, the decrease primarily reflected a decline in new single-family construction that was partly offset by an increase in brokers' commissions and other ownership transfer costs.
- Within imports, the increase reflected an increase in goods (mainly durable consumer goods as well as automotive vehicles, engines, and parts).
Compared to the fourth quarter, the first quarter deceleration in real GDP primarily reflected a downturn in private inventory investment and a slowdown in nonresidential fixed investment. These movements were partly offset by an acceleration in consumer spending, an upturn in exports, and a smaller decrease in residential fixed investment. Imports turned up.
|Line||Series||Share of current-dollar GDP
|Change from preceding period
|Contribution to percent change in real GDP
|1||Gross domestic product (GDP)1||100.0||−0.6||3.2||2.6||1.3||−0.6||3.2||2.6||1.3|
|2||Personal consumption expenditures||68.3||2.0||2.3||1.0||3.8||1.38||1.54||0.70||2.52|
|7||Gross private domestic investment||17.3||−14.1||−9.6||4.5||−11.5||−2.83||−1.80||0.79||−2.14|
|12||Intellectual property products||5.5||8.9||6.8||6.2||5.2||0.46||0.36||0.33||0.28|
|14||Change in private inventories||0.1||---||---||---||---||−1.91||−1.19||1.47||−2.10|
|15||Net exports of goods and services||−3.2||---||---||---||---||1.16||2.86||0.42||0.00|
|22||Government consumption expenditures and gross investment||17.6||−1.6||3.7||3.8||5.2||−0.29||0.65||0.65||0.89|
|26||State and local||11.0||−0.6||3.7||2.6||3.8||−0.06||0.41||0.29||0.41|
|27||Gross domestic income (GDI)2||---||−0.8||2.8||−3.3||−2.3||---||---||---||---|
|28||Average of GDP and GDI||---||−0.7||3.0||−0.4||−0.5||---||---||---||---|
|29||Final sales of domestic product||---||1.3||4.5||1.1||3.4||---||---||---||---|
- The GDP estimates under the contribution columns are also percent changes.
- GDI is deflated by the implicit price deflator for GDP.
The U.S. Bureau of Economic Analysis' (BEA's) featured measure of inflation in the U.S. economy, the price index for gross domestic purchases (goods and services purchased by U.S. residents), increased 3.8 percent in the first quarter after increasing 3.6 percent in the fourth quarter (table 2 and chart 3). Within gross domestic purchases, food prices increased 3.7 percent in the first quarter after increasing 7.1 percent in the fourth quarter. Prices for energy goods and services decreased 10.7 percent after decreasing 13.9 percent. Excluding food and energy, gross domestic purchases prices increased 4.3 percent after increasing 4.1 percent.
The price index for personal consumption expenditures (PCE) increased 4.2 percent in the first quarter after increasing 3.7 percent in the fourth quarter. The increase in PCE prices reflected increases in prices for both goods and services.
- Within goods, the leading contributors to the increase were other nondurable goods (led by pharmaceuticals), food and beverages, and clothing and footwear. These increases were partly offset by decreases in gasoline and other energy goods (led by gasoline) as well as motor vehicles and parts (led by used light trucks).
- Within services, price increases were widespread. The leading contributors were housing and utilities (led by housing), food services and accommodations (led by food services), and financial services and insurance (led by banking and other financial services). Other services (led by professional services), transportation services (led by motor vehicle services), and recreation services (led by membership clubs, sports centers, parks, theaters, and museums) also increased.
Excluding food and energy, the “core” PCE price index increased 5.0 percent in the first quarter after increasing 4.4 percent in the fourth quarter.
|Line||Series||Change from preceding period
|Contribution to percent change in gross domestic purchases prices
|1||Gross domestic purchases1||8.5||4.8||3.6||3.8||8.5||4.8||3.6||3.8|
|2||Personal consumption expenditures||7.3||4.3||3.7||4.2||4.81||2.85||2.46||2.75|
|7||Gross private domestic investment||9.9||7.6||3.3||4.6||1.76||1.30||0.57||0.77|
|12||Intellectual property products||3.9||3.7||−0.6||6.1||0.20||0.19||−0.03||0.32|
|14||Change in private inventories||---||---||---||---||0.03||0.02||−0.10||−0.04|
|15||Government consumption expenditures and gross investment||11.6||3.6||3.6||1.9||1.90||0.62||0.61||0.32|
|19||State and local||15.0||2.9||3.9||0.9||1.52||0.32||0.41||0.10|
|Gross domestic purchases:|
|21||Energy goods and services||53.6||−13.1||−13.9||−10.7||1.37||−0.43||−0.46||−0.33|
|22||Excluding food and energy||6.9||5.0||4.1||4.3||6.41||4.59||3.77||3.99|
|Personal consumption expenditures:|
|23||Food and beverages purchased for off-premises consumption||15.3||13.0||6.9||3.7||---||---||---||---|
|24||Energy goods and services||52.7||−13.3||−12.8||−9.9||---||---||---||---|
|25||Excluding food and energy||4.7||4.7||4.4||5.0||---||---||---||---|
|26||Gross domestic product||9.0||4.4||3.9||4.2||---||---||---||---|
|27||Exports of goods and services||20.0||−9.7||−6.1||0.0||---||---||---||---|
|28||Imports of goods and services||13.2||−4.1||−5.5||−1.3||---||---||---||---|
- The estimated prices for gross domestic purchases under the contribution columns are also percent changes.
Note. Most percent changes are from National Income and Product Accounts (NIPA) table 1.6.7; percent changes for personal consumption expenditures (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. Gross domestic product, export, and import prices are from NIPA table 1.1.7.
Measured in current dollars, personal income increased $251.3 billion in the first quarter, compared to an increase of $271.8 billion (revised) in the fourth quarter (table 3). The increase in the first quarter reflected increases in compensation (led by private wages and salaries) and government social benefits.
Personal current taxes decreased $310.3 billion in the first quarter after decreasing $20.3billion (revised) in the fourth quarter.
Current-dollar disposable personal income (DPI) increased $561.6 billion, or 12.3 percent, in the first quarter after increasing $292.1 billion (revised), or 6.4 percent, in the fourth quarter. Personal outlays increased $380.3 billion after increasing $252.7 billion in the fourth quarter.
Real DPI (chart 4) increased 7.8 percent in the first quarter after increasing 2.5 percent (revised) in the fourth quarter.
The personal saving rate (chart 5)—personal saving as a percentage of DPI—was 4.2 percent in the first quarter, compared with 3.4 percent (revised) in the fourth quarter.
With the release of the second estimate of GDP, BEA also released revised estimates of fourth-quarter wages and salaries, personal taxes, and contributions for government social insurance, based on updated data from the U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages.
- Wages and salaries are now estimated to have increased $52.9 billion in the fourth quarter, a downward revision of $135.4 billion.
- Personal current taxes are now estimated to have decreased $20.3 billion, a downward revision of $16.2 billion.
- Contributions for government social insurance are now estimated to have increased $8.1 billion, a downward revision of $17.4 billion.
- With the incorporation of these new data, real gross domestic income (table 1) is now estimated to have decreased 3.3 percent in the fourth quarter, a downward revision of 2.2 percentage points from the previously published estimate.
|Line||Series||Level||Change from preceding period|
|2||Compensation of employees||13,828.1||13,983.7||155.5||339.8||73.1||155.5|
|3||Wages and salaries||11,413.9||11,543.8||132.5||303.0||52.9||129.8|
|8||Trade, transportation, and utilities||1,751.0||1,776.5||3.9||47.3||2.8||25.5|
|9||Other services-producing industries||6,226.6||6,285.9||88.6||183.4||19.3||59.3|
|11||Supplements to wages and salaries||2,414.2||2,439.9||22.9||36.8||20.2||25.7|
|12||Proprietors' income with IVA and CCAdj||1,882.9||1,892.5||23.9||28.2||19.3||9.6|
|15||Rental income of persons with CCAdj||811.8||841.6||31.0||19.0||16.8||29.8|
|16||Personal income receipts on assets||3,424.0||3,456.3||53.2||35.8||65.2||32.3|
|17||Personal interest income||1,789.0||1,808.8||37.8||29.5||50.9||19.8|
|18||Personal dividend income||1,635.0||1,647.5||15.4||6.3||14.3||12.5|
|19||Personal current transfer receipts||3,998.2||4,049.3||14.5||9.6||105.4||51.1|
|20||Government social benefits to persons||3,928.7||3,978.0||11.5||13.9||105.7||49.3|
|27||Other current transfer receipts, from business (net)||69.5||71.3||3.0||−4.2||−0.3||1.8|
|28||Less: Contributions for government social insurance||1,703.7||1,730.8||19.7||41.2||8.1||27.1|
|29||Less: Personal current taxes||3,216.2||2,905.9||43.0||48.0||−20.3||−310.3|
|30||Equals: Disposable personal income (DPI)||19,025.1||19,586.7||215.4||343.2||292.1||561.6|
|31||Less: Personal outlays||18,377.2||18,757.5||409.2||325.9||252.7||380.3|
|32||Personal consumption expenditures||17,749.9||18,098.7||386.6||281.3||207.2||348.8|
|33||Personal interest payments1||402.6||434.9||19.6||44.1||45.5||32.2|
|34||Personal current transfer payments||224.7||223.9||3.0||0.5||−0.1||−0.8|
|35||Equals: Personal saving||647.9||829.2||−193.8||17.3||39.5||181.3|
|36||Personal saving as a percentage of DPI||3.4||4.2||−1.1||0.0||0.2||0.8|
- Capital consumption adjustment
- Inventory valuation adjustment
- Consists of nonmortgage interest paid by households. Note that mortgage interest paid by households is an expense item in the calculation of rental income of persons.
In the second estimate of the first quarter, the growth rate in real GDP was revised up 0.2 percentage point from the advance estimate (table 4). The updated estimates primarily reflected upward revisions to private inventory investment, state and local government spending, nonresidential fixed investment, consumer spending, and exports that were partly offset by a downward revision to residential fixed investment. Imports were revised up.
- The revision to private inventory investment was led by an upward revision to manufacturing.
- The revision to state and local government spending primarily reflected an upward revision to structures investment.
- Within nonresidential fixed investment, the revised estimates primarily reflected an upward revision to intellectual property products. Within intellectual property products, an upward revision to software was partly offset by a downward revision to research and development.
- Within consumer spending, an upward revision to services was partly offset by a downward revision to goods.
- Within services, the leading contributor to the upward revision was health care.
- Within goods, the downward revision was led by motor vehicles and parts (mainly new autos) and food and beverages.
- Within residential fixed investment, the leading contributor to the downward revision was improvements.
- For both exports and imports, the revised estimates primarily reflected updated data from BEA’s International Transactions Accounts as well as new and revised U.S. Census Bureau trade in goods data for March.
- Within exports, both goods and services were revised up. For goods, the leading contributor was nondurable industrial supplies and materials (notably, petroleum and products). For services, transport was the leading contributor.
- Within imports, both goods (led by nondurable consumer goods) and services (led by transport) were revised up.
|Line||Series||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||1.1||1.3||0.2||1.1||1.3||0.2|
|2||Personal consumption expenditures||3.7||3.8||0.1||2.48||2.52||0.04|
|7||Gross private domestic investment||−12.5||−11.5||1.0||−2.34||−2.14||0.20|
|12||Intellectual property products||3.8||5.2||1.4||0.20||0.28||0.08|
|14||Change in private inventories||---||---||---||−2.26||−2.10||0.16|
|15||Net exports of goods and services||---||---||---||0.11||0.00||−0.11|
|22||Government consumption expenditures and gross investment||4.7||5.2||0.5||0.81||0.89||0.08|
|26||State and local||2.9||3.8||0.9||0.31||0.41||0.10|
|27||Final sales of domestic product||3.4||3.4||0.0||---||---||---|
|28||Gross domestic purchases price index||3.8||3.8||0.0||---||---||---|
|29||GDP price index||4.0||4.2||0.2||---||---||---|
- 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 and the capital consumption adjustment) decreased $151.1 billion, or 5.1 percent at a quarterly rate, in the first quarter. In the fourth quarter, profits decreased $60.5 billion, or 2.0 percent (table 5). Domestic profits of financial corporations decreased $25.4 billion, domestic profits of nonfinancial corporations decreased $109.3 billion, and rest-of-the-world profits (net) decreased $16.4 billion.
|Line||Series||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||2,788.4||131.6||−1.3||−60.5||−151.1||4.6||0.0||−2.0||−5.1|
|5||Rest of the world||451.7||25.5||−15.5||21.4||−16.4||5.8||−3.4||4.8||−3.5|
|6||Receipts from the rest of the world||988.5||56.1||1.0||7.2||12.2||6.2||0.1||0.7||1.2|
|7||Less: Payments to the rest of the world||536.8||30.6||16.5||−14.2||28.6||6.4||3.3||−2.7||5.6|
|9||Less: Taxes on corporate income||481.4||−16.4||−21.6||7.3||17.1||−3.3||−4.5||1.6||3.7|
|10||Equals: Profits after tax||2,307.0||148.0||20.4||−67.8||−168.2||6.2||0.8||−2.7||−6.8|
|12||Undistributed profits from current production||652.3||151.2||76.9||−37.6||−169.1||24.0||9.8||−4.4||−20.6|
|13||Net cash flow with IVA||3,099.3||116.4||181.6||10.4||−46.7||4.1||6.1||0.3||−1.5|
- 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.”