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 2.5 percent in the third quarter of 2010, (that is, from the second quarter to the third quarter), according to the "second" estimate released November 23 by the U.S. Bureau of Economic Analysis. In the second quarter, real GDP increased 1.7 percent.
The GDP estimates released November 23 are based on more complete source data than were available for the advance estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent.
The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, non-residential fixed investment, exports, and federal 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 in the third quarter primarily reflected a sharp deceleration in imports and accelerations in private inventory investment and in PCE that were partly offset by a downturn in residential fixed investment and decelerations in non-residential fixed investment and in exports.
Motor vehicle output added 0.56 percentage point to the third-quarter change in real GDP after subtracting 0.06 percentage point from the second-quarter change. Final sales of computers added 0.27 percentage point to the third-quarter change in real GDP after adding 0.03 percentage point to the second-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.8 percent in the third quarter, the same increase as in the advance estimate; this index increased 0.1 percent in the second quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.6 percent in the third quarter, compared with an increase of 0.8 percent in the second.
Real personal consumption expenditures increased 2.8 percent in the third quarter, compared with an increase of 2.2 percent in the second. Real non-residential fixed investment increased 10.3 percent, compared with an increase of 17.2 percent. Non-residential structures decreased 5.7 percent, compared with a decrease of 0.5 percent. Equipment and software increased 16.8 percent, compared with an increase of 24.8 percent. Real residential fixed investment decreased 27.5 percent, in contrast to an increase of 25.7 percent.
Real exports of goods and services increased 6.3 percent in the third quarter, compared with an increase of 9.1 percent in the second. Real imports of goods and services increased 16.8 percent, compared with an increase of 33.5 percent.
Real federal government consumption expenditures and gross investment increased 8.9 percent in the third quarter, compared with an increase of 9.1 percent in the second. National defense increased 8.5 percent, compared with an increase of 7.4 percent. Non-defense increased 9.5 percent, compared with an increase of 12.8 percent. Real state and local government consumption expenditures and gross investment increased 0.8 percent, compared with an increase of 0.6 percent.
The change in real private inventories added 1.30 percentage points to the third-quarter change in real GDP, after adding 0.82 percentage point to the second-quarter change. Private businesses increased inventories $111.5 billion in the third quarter, following increases of $68.8 billion in the second quarter and of $44.1 billion in the first.
Real final sales of domestic product – GDP less change in private inventories – increased 1.2 percent in the third quarter, compared with an increase of 0.9 percent in the second.
Gross domestic purchases
Real gross domestic purchases – purchases by U.S. residents of goods and services wherever produced – increased 4.2 percent in the third quarter, compared with an increase of 5.1 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 2.3 percent in the third quarter, compared with an increase of 1.8 percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $5.4 billion in the third quarter after increasing $3.7 billion in the second; in the third quarter, receipts increased $7.7 billion, and payments increased $13.1 billion.
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $44.4 billion in the third quarter, compared with an increase of $47.5 billion in the second quarter. Current-production cash flow (net cash flow with inventory valuation adjustment) – the internal funds available to corporations for investment – decreased $57.8 billion in the third quarter, in contrast to an increase of $61.1 billion in the second.
Taxes on corporate income increased $31.8 billion in the third quarter, compared with an increase of $2.4 billion in the second. Profits after tax with inventory valuation and capital consumption adjustments increased $12.6 billion in the third quarter, compared with an increase of $45.2 billion in the second. Dividends increased $8.2 billion compared with an increase of $8.1 billion; current-production undistributed profits increased $4.4 billion, compared with an increase of $37.1 billion.
Domestic profits of financial corporations increased $33.3 billion in the third quarter, in contrast to a decrease of $3.4 billion in the second. Domestic profits of nonfinancial corporations increased $18.6 billion in the third quarter, compared with an increase of $48.2 billion in the second. In the third quarter, real gross value added of nonfinancial corporations decreased, and profits per unit of real value added increased. The increase in unit profits reflected a larger increase in unit prices than in the unit labor costs and the unit non-labor costs corporations incurred.
The rest-of-the-world component of profits decreased $7.5 billion in the third quarter, in contrast to an increase of $2.8 billion in the second. This measure is calculated as (1) receipts by U.S. residents of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The third-quarter decrease was accounted for by a larger increase in payments than in receipts.
Profits before tax increased $76.3 billion in the third quarter, compared with an increase of $15.3 billion in the second. The before-tax measure of profits does not reflect, as does profits from current production, the capital consumption and inventory valuation adjustments. These adjustments convert depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to the current-cost measures used in the national income and product accounts. The capital consumption adjustment increased $1.4 billion in the third quarter (from -$170.7 billion to -$169.3 billion), in contrast to a decrease of $0.8 billion in the second. The inventory valuation adjustment decreased $33.2 billion (from -$3.5 billion to -$36.7 billion), in contrast to an increase of $32.9 billion.
