Report: U.S. Gross Domestic Product Q4 2009
Corporate profits grow $109 billion in Q4.
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 5.6 percent in the fourth quarter of 2009, (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis.
In the third quarter, real GDP increased 2.2 percent.
The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the increase in real GDP was 5.9 percent (see "Revisions").
The increase in real GDP in the fourth quarter primarily reflected positive contributions from private inventory investment, exports, personal consumption expenditures (PCE), and nonresidential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The acceleration in real GDP in the fourth quarter primarily reflected an acceleration in private inventory investment, an upturn in nonresidential fixed investment, an acceleration in exports, and a deceleration in imports that were partly offset by decelerations in PCE and in federal government spending.
Motor vehicle output added 0.45 percentage point to the fourth-quarter change in real GDP after adding 1.45 percentage points to the third-quarter change. Final sales of computers added 0.01 percentage point to the fourth-quarter change in real GDP after subtracting 0.08 percentage point from the third-quarter change.
NOTE--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2005) dollars. Price indexes are chain-type measures.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 2.0 percent in the fourth quarter, 0.1 percentage point more than in the second estimate; this index increased 1.3 percent in the third quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.5 percent in the fourth quarter, compared with an increase of 0.3 percent in the third.
Real personal consumption expenditures increased 1.6 percent in the fourth quarter, compared with an increase of 2.8 percent in the third.
Real nonresidential fixed investment increased 5.3 percent, in contrast to a decrease of 5.9 percent. Nonresidential structures decreased 18.0 percent, compared with a decrease of 18.4 percent. Equipment and software increased 19.0 percent, compared with an increase of 1.5 percent.
Real residential fixed investment increased 3.8 percent, compared with an increase of 18.9 percent.
Real exports of goods and services increased 22.8 percent in the fourth quarter, compared with an increase of 17.8 percent in the third. Real imports of goods and services increased 15.8 percent, compared with an increase of 21.3 percent.
Real federal government consumption expenditures and gross investment were unchanged in the fourth quarter, compared with an increase of 8.0 percent in the third. National defense decreased 3.6 percent, in contrast to an increase of 8.4 percent. Nondefense increased 8.3 percent, compared with an increase of 7.0 percent.
Real state and local government consumption expenditures and gross investment decreased 2.2 percent, compared with a decrease of 0.6 percent.
The change in real private inventories added 3.79 percentage points to the fourth-quarter change in real GDP, after adding 0.69 percentage point to the third-quarter change. Private businesses decreased inventories $19.7 billion in the fourth quarter, following decreases of $139.2 billion in the third quarter and $160.2 billion in the second.
Real final sales of domestic product -- GDP less change in private inventories -- increased 1.7 percent in the fourth quarter, compared with an increase of 1.5 percent in the third.
Gross national product
Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 5.0 percent in the fourth quarter, compared with an increase of 3.0 percent in the third. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $14.5 billion in the fourth quarter after increasing $25.7 billion in the third; in the fourth quarter, receipts increased $20.6 billion, and payments increased $35.1 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 6.1 percent, or $211.7 billion, in the fourth quarter to a level of $14,453.8 billion. In the third quarter, current-dollar GDP increased 2.6 percent, or $90.9 billion.
Revisions
The third estimate of the fourth-quarter increase in real GDP is 0.3 percentage point, or $11.6 billion, lower than the second estimate issued last month, primarily reflecting downward revisions to nonresidential fixed investment, to private inventory investment, and to PCE.
2009 GDP
Real GDP decreased 2.4 percent in 2009 (that is, from the 2008 annual level to the 2009 annual level), in contrast to an increase of 0.4 percent in 2008.
The decrease in real GDP in 2009 primarily reflected negative contributions from nonresidential fixed investment, exports, private inventory investment, residential fixed investment, and personal consumption expenditures (PCE) that were partly offset by a positive contribution from federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
The downturn in real GDP in 2009 primarily reflected downturns in nonresidential fixed
investment and in exports and a larger decrease in private inventory investment that were partly offset by a larger decrease in imports and a smaller decrease in residential fixed investment.
The price index for gross domestic purchases was unchanged in 2009, compared with an increase of 3.2 percent in 2008.
Current-dollar GDP decreased 1.3 percent, or $185.1 billion, in 2009. Current-dollar GDP
increased 2.6 percent, or $363.8 billion, in 2008.
During 2009 (that is, from the fourth quarter of 2008 to the fourth quarter 2009), real GDP
increased 0.1 percent. Real GDP decreased 1.9 percent during 2008. The price index for gross domestic purchases increased 0.6 percent during 2009, compared with an increase of 1.9 percent during 2008.
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $108.7 billion in the fourth quarter, compared with an increase of $132.4 billion in the third quarter. Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- increased $69.1 billion in the fourth quarter, compared with an increase of $28.4 billion in the third.
Taxes on corporate income increased $40.9 billion in the fourth quarter, compared with an
increase of $15.1 billion in the third. Profits after tax with inventory valuation and capital consumption adjustments increased $67.8 billion in the fourth quarter, compared with an increase of $117.3 billion in the third. Dividends increased $29.1 billion, in contrast to a decrease of $6.1 billion; current-production undistributed profits increased $38.7 billion, compared with an increase of $123.5 billion.
Domestic profits of financial corporations increased $65.0 billion in the fourth quarter, compared with an increase of $82.8 billion in the third. Domestic profits of nonfinancial corporations increased $59.8 billion, compared with an increase of $27.6 billion. In the fourth quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real product increased. The increase in unit profits reflected decreases in both unit labor costs and unit nonlabor costs that more than offset a decrease in unit prices.
The rest-of-the-world component of profits decreased $16.1 billion in the fourth quarter, in
contrast to an increase of $22.0 billion in the third. 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 fourth-quarter decrease was accounted for by a larger increase in payments than in receipts.
Profits before tax with inventory valuation adjustment is the best available measure of industry profits because estimates of the capital consumption adjustment by industry do not exist. This measure reflects depreciation-accounting practices used for federal income tax returns. According to this measure, domestic profits of both financial and nonfinancial corporations increased. The increase in nonfinancial reflected increases in manufacturing, in information, in "other" nonfinancial, in wholesale trade, and in transportation and warehousing that were partly offset by decreases in utilities and in retail trade. Within manufacturing, the largest increases were in motor vehicles and in petroleum and coal products.
Profits before tax increased $137.0 billion in the fourth quarter, compared with an increase of $157.9 billion in the third. 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 $0.1 billion in the fourth quarter (from -$118.9 billion to -$118.8 billion), compared with an increase of $9.7 billion in the third. The inventory valuation adjustment
decreased $28.5 billion (from -$17.1 billion to -$45.6 billion), compared with a decrease of $35.2 billion.
Corporate profits in 2009
Profits from current production decreased 3.8 percent in 2009, compared with a decrease of 11.8 percent in 2008. Domestic profits increased 1.4 percent, in contrast to a decrease of 17.6 percent. The rest-of-the-world component of profits decreased 17.3 percent, in contrast to an increase of 8.5 percent.
Taxes on corporate income increased 7.7 percent in 2009, in contrast to a decrease of 35.3 percent in 2008. Profits after tax with inventory valuation and capital consumption adjustments decreased 6.9 percent, compared with a decrease of 2.0 percent. Dividends decreased 16.5 percent, compared with a decrease of 10.1 percent; current-production undistributed profits increased 10.6 percent, compared with an increase of 17.4 percent.
According to the measure of profits before tax with inventory valuation adjustment, domestic profits of financial and nonfinancial corporations increased in 2009. The increase in nonfinancial corporations reflected increases in information, in utilities, in retail trade, in wholesale trade, and in “other” nonfinancial that were partly offset by decreases in manufacturing and in transportation and warehousing. Within manufacturing, the largest decreases were in petroleum and coal products and in “other” durable goods.
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