Published February 27, 2015
Real gross domestic product (GDP) increased 2.2 percent in the fourth quarter of 2014, according to the “second” estimate released by the Bureau of Economic Analysis. The growth rate was 0.4 percentage point less than the “advance” estimate released in January. In the third quarter, real GDP increased 5.0 percent.
Fourth-quarter GDP highlights
The increase in GDP in the fourth quarter was more than accounted for by consumer spending, which rose 4.2 percent, compared with 3.2 percent in the third quarter. Spending on both goods and services increased in the fourth quarter.
- Business investment increased, notably in intellectual property products.
- Exports of goods and services increased; foods, feeds, and beverages was the largest contributor.
- State and local government spending increased.
Offsetting these contributions to growth, imports increased, and federal government spending on national defense decreased.
The revision to the change in real GDP mainly reflected a downward revision to nonfarm inventory investment and an upward revision to imports. These contributions were partly offset by upward revisions to business investment and to state and local spending. For more information, see the technical note.
Annual GDP highlights
For the year 2014, real GDP rose 2.4 percent after rising 2.2 percent in 2013.
- Contributing to the increase in 2014:
- Consumer spending on both services and goods increased.
- Business investment increased, most notably in equipment.
- Exports of goods increased, notably in industrial supplies and materials.
Offsetting these contributions, imports increased, and federal government spending decreased.
Prices of goods and services purchased by U.S. residents increased 1.4 percent in 2014 after increasing 1.3 percent in 2013.
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Recently, a growing number of articles in the media have noted U.S. corporations announcing that they intend to move their headquarters overseas. This practice is known as a corporate inversion, which occurs when a U.S. corporation that is currently the ultimate owner of its worldwide operations takes steps to become a wholly owned subsidiary of a foreign corporation.
The Bureau of Economic Analysis (BEA) has published a BEA Briefing in the Survey of Current Business that discusses how corporate inversions can affect major aggregates in the international and national economic accounts, including an estimate of the size of the impact of inversions on related BEA statistics.
Below are some highlights from the Briefing. For the full analysis and to view the impact of inversions on activities of multinational enterprises (AMNE) statistics see the BEA Briefing.
- The foreign direct investment position in the United States—which comprises the direct investors’ equity in, and net outstanding loans to, their U.S. affiliates—generally increases after an inversion because the inverting U.S. corporation becomes an asset of a foreign investor.
- The measures of multinational enterprise activities—which include data items such as employment, capital expenditures, value added, and research and development (R&D) expenditures—also generally increase as a result of inversions.
- Corporate inversions may also affect BEA’s U.S. direct investment abroad, or outward direct investment, statistics if the U.S. multinational enterprise transfers the ownership of some or all of its foreign affiliates to its new foreign owner.
- Corporate inversions would generally reduce gross national income, that is, income resulting from the current production of goods and services by U.S.-owned labor and capital.
- Corporate profits, the portion of the total gross national income earned from current production that is accounted for by U.S. corporations, would also generally be reduced by inversions.
Gross domestic income, which is income resulting from the current production of goods and services in the domestic economy, would not be affected by inversions.
The U.S. monthly international trade deficit increased in December 2014 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $39.8 billion in November (revised) to $46.6 billion in December, as exports decreased and imports increased. The previously published November deficit was $39.0 billion. The goods deficit increased $6.9 billion from November to $66.0 billion in December. The services surplus increased $0.1 billion from November to $19.5 billion in December.
Exports of goods and services decreased $1.5 billion in December to $194.9 billion, reflecting a decrease in exports of goods. Exports of services increased.
- The decrease in exports of goods was more than accounted for by a decrease in industrial supplies and materials. An increase in capital goods was partly offsetting.
- The increase in exports of services reflected increases in transport, which includes freight and port services and passenger fares, in financial services, and in travel (for all purposes including education).
Imports of goods and services increased $5.3 billion in December to $241.4 billion, mostly reflecting an increase in imports of goods. Imports of services also increased.
- The increase in imports of goods mostly reflected increases in industrial supplies and materials and in automotive vehicles, parts, and engines.
- The increase in imports of services mostly reflected increases in transport and in travel (for all purposes including education).
Goods by geographic area (seasonally adjusted, Census basis)
- The goods deficit with Canada increased from $1.6 billion in November (revised) to $3.3 billion in December. Exports decreased $0.8 billion to $25.8 billion and imports increased $0.9 billion to $29.0 billion.
- The goods surplus with South and Central America decreased from $4.3 billion in November to $2.6 billion in December. Exports decreased $0.7 billion $14.8 billion and imports increased $1.0 billion to $12.2 billion.
- The goods deficit with Germany decreased from $6.3 billion in November to $5.6 billion in December. Exports increased $0.1 billion to $3.9 billion and imports decreased $0.6 billion to $9.6 billion.
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