Archive for the 'BEA News' Category



GDP Increases in Second Quarter

Real gross domestic product (GDP) increased 2.3 percent in the second quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised).

GDP highlights
Q2Q Growth in Real GDP July 30The second-quarter increase in real GDP mainly reflected an increase in consumer spending. Spending on both durable goods, notably motor vehicles and parts, and nondurable goods increased. Spending on services, mainly household services, also increased.

Exports, state and local government spending, and residential fixed investment also contributed to the rise in real GDP.

These contributions to the increase in real GDP were partly offset by decreases in federal government spending, inventory investment, and business investment. In addition, imports—a subtraction in the calculation of GDP—increased.

Annual revision
BEA also released its 2015 annual revision of the national income and product accounts, which updated most components for the last 3 years based on newly available and revised source data. For 2011–2014, real GDP rose at an average annual rate of 2.0 percent; in the previously published estimates, the real GDP growth rate was 2.3 percent.

For more information, see the technical note.

PricesQ2Q Percent change July 30
Prices of goods and services purchased by U.S. residents—that is, prices of gross domestic purchases—increased 1.4 percent in the second quarter after decreasing 1.6 percent in the first quarter.

Energy prices rose in the second quarter after falling in the first quarter. Food prices declined more than in the first quarter.

Excluding food and energy prices, gross domestic purchases prices increased 1.1 percent in the second quarter after increasing 0.2 percent in the first quarter.

For more information, read the full report.

Industry in Focus: Transportation and Warehousing

Transportation and warehousing is an industry that is important to everyone, whether you’re an individual flying home to visit family or a business expecting a shipment of raw materials. In the first quarter of 2015, transportation and warehousing subtracted 0.56 percentage point from real Gross Domestic Product, and was the largest contributor to the 0.2 percent decrease in GDP.

That sounds straightforward enough, but what exactly does that mean?

Contribution to growth—or in this case, a contribution to a decline–isn’t solely a matter of looking at the percent change in real value added by an industry. Instead, the contribution is based on both the quarter-to-quarter change and the size of the industry in the economy.

For instance, real (inflation-adjusted) value added for transportation and warehousing fell 17.3 percent, a smaller percentage point decrease than that of the utilities industry, which fell 18.4 percent. However, transportation and warehousing is a larger industry than utilities. Because transportation and warehousing is larger, that 17.3 percent decrease translated to a $20.7 billion decrease, while the smaller utilities industry’s 18.4 percent decrease translated to a $14.4 billion decrease. This explains why the transportation and warehousing sector contributed 0.56 percentage point to the overall decrease in GDP, while the utilities sector contributed 0.34 percentage point.

This distinction is important because looking at the industries that subtract the most from GDP when GDP falls (or, conversely, contribute the most to GDP when GDP increases) typically points us toward those industries where notable things are happening.

In the case of transportation and warehousing, the notable thing that happened in the first quarter was a sharp drop in real gross output – a measure of an industry’s sales or receipts.

If you’re one of the millions of travelers whose flight was canceled during the unusually harsh winter of 2015, this probably isn’t surprising to you. Heavier than normal snow in the Northeast directly impacted air transportation, a component of transportation and warehousing. Of course, the harsh winter began in December, and as you can see here, transportation and warehousing declined in the fourth quarter of 2014 as well even though overall GDP was increasing 2.2 percent. But when you look at relatively milder winters, such as the winter in the first quarter of 2013, you see that transportation and warehousing increased.

Indeed, the weather in the first quarter of 2015 impacted many portions of the transportation and warehousing industry, which also includes rail transportation, water transportation, truck transportation, transit and ground passenger transportation, pipeline transportation, various support activities, couriers and messengers, and warehousing and storage.

Truck transportation, the largest component of transportation and warehousing, was likely affected not only by the harsh weather but also by work slowdowns at several ports along the West Coast.  Slowdowns at the ports translated into less (or no) cargo loaded onto trucks, leaving trucks underutilized (or idle) when they would otherwise be delivering goods.  In addition to the direct impact on the output of the transportation and warehousing industry, trucking is a critical input to the production processes of many other industries. For example, the wholesale and retail trade industries depend heavily on truck transportation, and both showed a notable decline in their purchases of transportation services in the first quarter.

You may have noticed that subtracting 0.56 percentage point from GDP means that transportation and warehousing accounted for more than the actual 0.2% decrease in real GDP.  This is because other industries grew in the first quarter.  BEA’s quarterly GDP-by-industry statistics help us to better see the inner workings of the economy and provide a comprehensive picture of U.S. industrial performance.

Nondurable Goods Manufacturing Led the Downturn in First Quarter Gross Domestic Product by Industry

A deceleration in nondurable goods manufacturing and downturns in both professional, scientific, and technical services and wholesale trade were the leading contributors to the downturn in U.S. economic growth in the first quarter of 2015. Overall, 15 of 22 industry groups contributed to the downturn in the first quarter.

Real Value added by sector July 23

  • Nondurable goods manufacturing decelerated significantly, increasing 0.2 percent in the first quarter, after a larger increase of 9.7 percent in the fourth quarter of 2014.
  • Professional, scientific, and technical services decreased 0.6 percent, after increasing 6.5 percent.
  • Wholesale trade decreased 3.4 percent, after increasing 4.5 percent.

Real Value Added by Industry July 23

For more information, read the full report.