U.S. GDP rises 3% in Q1 2010
Corporate profits grow $81 billion; inventories increase $34 billion.
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 3.0 percent in the first quarter of 2010, (that is, from the fourth quarter to the first quarter), according to the "second" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP had increased 5.6 percent.
The GDP estimates released today 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 3.2 percent.
The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from state and local government spending and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP in the first quarter primarily reflected decelerations in private
inventory investment and in exports, a downturn in residential fixed investment, a larger decrease in state and local government spending, and a deceleration in nonresidential fixed investment that were partly offset by an acceleration in PCE and a deceleration in imports.
Motor vehicle output added 0.49 percentage point to the first-quarter change in real GDP after adding 0.45 percentage point to the fourth-quarter change. Final sales of computers added 0.18 percentage point to the first-quarter change in real GDP after adding 0.01 percentage point to the fourth-quarter change.
The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.7 percent in the first quarter, the same increase as in the advance estimate; this index increased 2.0 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 percent in the first quarter, compared with an increase of 1.5 percent in the fourth.
The federal pay raise for civilian and military personnel added 0.2 percentage point to the
first-quarter increase in the gross domestic purchases price index.
Real personal consumption expenditures increased 3.5 percent in the first quarter, compared with an increase of 1.6 percent in the fourth. Real nonresidential fixed investment increased 3.1 percent, compared with an increase of 5.3 percent.
Nonresidential structures decreased 15.3 percent, compared with a decrease of 18.0 percent. Equipment and software increased 12.7 percent, compared with an increase of 19.0 percent. Real residential fixed investment decreased 10.7 percent, in contrast to an
increase of 3.8 percent.
Real exports of goods and services increased 7.2 percent in the first quarter, compared with an increase of 22.8 percent in the fourth. Real imports of goods and services increased 10.4 percent, compared with an increase of 15.8 percent.
Real federal government consumption expenditures and gross investment increased 1.2 percent in the first quarter, compared with no change in the fourth. National defense increased 1.1 percent, in contrast to a decrease of 3.6 percent. Nondefense increased 1.5 percent, compared with an increase of 8.3 percent.
Real state and local government consumption expenditures and gross investment decreased 3.9 percent, compared with a decrease of 2.2 percent.
The change in real private inventories added 1.65 percentage points to the first-quarter change in real GDP, after adding 3.79 percentage points to the fourth-quarter change. Private businesses increased inventories $33.9 billion in the first quarter, following decreases of $19.7 billion in the fourth quarter and $139.2 billion in the third.
Real final sales of domestic product -- GDP less change in private inventories -- increased 1.4 percent in the first quarter, compared with an increase of 1.7 percent in the fourth.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 3.6 percent in the first quarter, compared with an increase of 5.2 percent in the fourth.
Gross national product
Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- increased 3.9 percent in the first quarter, compared with an increase of 5.0 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which increased $27.7 billion in the first quarter after decreasing $14.5 billion in the fourth; in the first quarter, receipts increased $22.7 billion, and payments decreased 5.0 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased 4.1 percent, or $147.6 billion, in the first quarter to a level of $14,601.4 billion. In the fourth quarter, current-dollar GDP increased 6.1 percent, or $211.7 billion.
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $81.4 billion in the first quarter, compared with an increase of $108.7 billion in the fourth quarter.
Current-production cash flow (net cash flow with inventory valuation adjustment) -- the internal funds available to corporations for investment -- increased $30.8 billion in the first quarter, compared with an increase of $69.1 billion in the fourth.
Taxes on corporate income increased $57.7 billion in the first quarter, compared with an increase of $40.9 billion in the fourth quarter.
Profits after tax with inventory valuation and capital consumption adjustments increased $23.7 billion in the first quarter, compared with an increase of $67.8 billion in the fourth. Dividends decreased $26.2 billion, in contrast to an increase of $29.1 billion; current-production undistributed profits increased $49.9 billion, compared with an increase of $38.7 billion.
Domestic profits of financial corporations increased $7.4 billion in the first quarter, compared with an increase of $65.0 billion in the fourth quarter. Domestic profits of nonfinancial corporations increased $44.5 billion in the first quarter, compared with an increase of $59.8 billion in the fourth. In the first quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real value added increased.
The increase in unit profits reflected decreases in both the unit labor and nonlabor costs corporations incurred that more than offset a decrease in unit prices.
The rest-of-the-world component of profits increased $29.5 billion in the first quarter, in contrast to a decrease of $16.1 billion in the fourth quarter. 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 first-quarter increase was accounted for by an increase in receipts and a slight decrease in payments.
Profits before tax increased $180.9 billion in the first quarter, compared with an increase of $137.0 billion in the fourth quarter. 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 decreased $107.2 billion in the first quarter (from -$118.8 billion to -$226.0 billion), in contrast to an increase of $0.1 billion in the fourth. The inventory valuation adjustment increased $7.7 billion (from -$45.6 billion to -$37.9 billion), in contrast to a decrease of $28.5 billion.
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