Real gross domestic product rose 4.9% in third quarter

Real gross domestic product – the output of goods and services produced by labor and property located in the United States – increased at an annual rate of 4.9 percent in the third quarter of 2007, according to final estimates released December 20 by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.8 percent.

 The GDP estimates released December 20 are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was also 4.9 percent.

The increase in real GDP in the third quarter primarily reflected positive contributions from exports, personal consumption expenditures (PCE), private inventory investment, non-residential structures, federal government spending, equipment and software, and state and local government spending that were partly offset by a negative contribution from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

The acceleration in real GDP growth in the third quarter primarily reflected accelerations in exports, in PCE, and in private inventory investment that were partly offset by an upturn in imports, a larger decrease in residential fixed investment, and a deceleration in nonresidential structures.

Final sales of computers contributed 0.28 percentage point to the third-quarter growth in real GDP after contributing 0.21 percentage point to the second-quarter growth. Motor vehicle output contributed 0.36 percentage point to the third-quarter growth in real GDP after contributing 0.03 percentage point to the second-quarter growth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.8 percent in the third quarter, 0.2 percentage point more than the preliminary estimate; this index increased 3.8 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.9 percent in the third quarter, compared with an increase of 1.5 percent in the second.

Real personal consumption expenditures increased 2.8 percent in the third quarter, compared with an increase of 1.4 percent in the second. Real non-residential fixed investment increased 9.3 percent, compared with an increase of 11.0 percent. Non-residential structures increased 16.4 percent, compared with an increase of 26.2 percent. Equipment and software increased 6.2 percent, compared with an increase of 4.7 percent. Real residential fixed investment decreased 20.5 percent, compared with a decrease of 11.8 percent.

Real exports of goods and services increased 19.1 percent in the third quarter, compared with an increase of 7.5 percent in the second. Real imports of goods and services increased 4.4 percent, in contrast to a decrease of 2.7 percent.

Real federal government consumption expenditures and gross investment increased 7.1 percent in the third quarter, compared with an increase of 6.0 percent in the second. National defense increased 10.1 percent, compared with an increase of 8.5 percent. Non-defense increased 1.1 percent, compared with an increase of 0.9 percent. Real state and local government consumption expenditures and gross investment increased 1.9 percent, compared with an increase of 3.0 percent.

The real change in private inventories added 0.89 percentage point to the third-quarter change in real GDP, after adding 0.22 percentage point to the second-quarter change. Private businesses increased inventories $30.6 billion in the third quarter, following increases of $5.8 billion in the second quarter and $100 million in the first.

Real final sales of domestic product – GDP less change in private inventories – increased 4.0 percent in the third quarter, compared with an increase of 3.6 percent in the second.

Gross domestic purchases

Real gross domestic purchases – purchases by U.S. residents of goods and services wherever produced – increased 3.3 percent in the third quarter, compared with an increase of 2.4 percent in the second.

Gross national product

Real gross national product – the goods and services produced by the labor and property supplied by U.S. residents – increased 5.8 percent in the third quarter, compared with an increase of 4.0 percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $25.9 billion in the third quarter after increasing $5.8 billion in the second; in the third quarter, receipts increased $32.0 billion, and payments increased $6.1 billion.

Current-dollar GDP

Current-dollar GDP – the market value of the nation's output of goods and services – increased 6.0 percent, or $201.7 billion, in the third quarter to a level of $13,970.5 billion. In the second quarter, current-dollar GDP increased 6.6 percent, or $216.9 billion.

Revisions

The final estimate of the third-quarter increase in real GDP is the same as the preliminary estimate, primarily reflecting a small upward revision to personal consumption expenditures that was offset by a small downward revision to private non-farm inventory investment.