Archive for the 'National' Category

GDP Turns Up in Second Quarter

Real gross domestic product (GDP) increased 4.0 percent in the second quarter of 2014, according to the “advance” estimate released today by the Bureau of Economic Analysis. In the first quarter, real GDP decreased 2.1 percent (revised).

Second-quarter highlightsGDP_7_30_14
The upturn in real GDP growth was mainly driven by upturns in exports and in private nonfarm inventory investment as well as an acceleration in consumer spending, notably for durable goods.

In addition, state and local government spending and residential investment turned up, and business investment accelerated.

In contrast to these contributions, imports (a subtraction in the calculation of GDP) were higher in the second quarter than in the first quarter.

Annual revision
BEA also released its 2014 annual revision of the national income and products accounts, which updated most components from the first quarter of 2011 to the first quarter of 2014 based on newly available revised source data. In addition, GDP and selected components were revised back to the first quarter of 1999 to incorporate revisions from the international transactions accounts. See the Technical Note.

For 2011–2013, real GDP increased at average annual rate of 2.0 percent, compared with 2.2 percent in the previously published estimates. For the first quarter of 2011 through the first quarter of 2014, the revisions did not change the direction of GDP growth for any quarter.

PricesGDP_Prices_7_30_14
Prices of goods and services purchased by U.S. residents—that is, prices of gross domestic purchases—increased 1.9 percent in the second quarter after increasing 1.4 percent in the first quarter.

Food prices increased 4.2 percent after increasing 1.3 percent, and energy prices increased 5.1 percent after increasing 2.8 percent.

Excluding food and energy, gross domestic purchases prices increased 1.7 percent in the second
quarter, compared with 1.3 percent in the first quarter.

Read the full report.

Real Consumer Spending Rises in February

PersInc_Feb_2014Personal income increased 0.3 percent in February, the same as in January. Wages and salaries, the largest component of personal income, increased 0.2 percent after increasing 0.3 percent.

Current-dollar disposable personal income (DPI), after-tax income, increased 0.3 percent in February, the same as in January.

Real DPI, income adjusted for taxes and inflation, increased 0.3 percent in February after increasing 0.2 percent in January.

Real consumer spending, spending adjusted for price changes, increased 0.2 percent in February after increasing 0.1 percent in January. Spending on nondurable goods increased 0.3 percent after decreasing 0.9 percent.

PCE prices increased 0.1 percent in February, the same increase as in January. Excluding food and energy, PCE prices rose 0.1 percent in February.

Personal saving as a percent of DPI–the personal saving rate–was 4.3 percent in February and 4.2 percent in January.

Read the full report.

PersInc_Feb_2014_Chart

Comprehensive Revisions to NIPA: Reconsidering Treatment of R&D and Entertainment

The Bureau of Economic Analysis (BEA) will release its comprehensive revision of the National Income and Product Accounts (NIPAs) next week.  Among other important changes to estimates will be how the statistical agency treats research and development (R&D) and calculates entertainment in measuring gross domestic product (GDP).  The revision generally occurs every 5 years.  Revisions to GDP estimates are not unusual; in fact, as better source data become available, BEA revises the NIPA series, including GDP, three times every year: for 2 consecutive months following each release, and annually.  In addition, every 5 years, BEA comprehensively revises the data, in part tied to the updates of BEA’s input-output tables, which are based on the Census Bureau’s quinquennial Economic Census.

As part of this process, BEA often revises the underlying NIPA methods and definitions.  On July 31, BEA will broaden the definition of GDP regarding R&D expenditures, which have long been viewed as similar to fixed assets—that is, an asset with defined ownership rights that is long-lasting and used repeatedly in the production process.  BEA estimates that capitalizing R&D would have had a $300 billion impact on the economy in 2007.  This change follows years of research, which included publishing a new framework for measuring intangible innovation and the development of better source data to measure accurately the amount of R&D activity.  With this latest revision, BEA will also begin to treat entertainment, literary, and artistic originals, which are designed to generate many copies and can be usefully employed for more than 1 year, as investment rather than expenditures.  BEA will be making other NIPA changes, too:
•Incorporating the benchmark input-output accounts for 2007, which are derived from the Economic Census and set to be released on their own later this year.
•Adding an accrual treatment of defined-benefit pension plans.
•Making statistical changes including improved measures of commercial banking services.
•Changing the reference year for price indices and inflation-adjusted series from 2005 to 2009.
•Changing intellectual property tables and adding new pension tables.

All told, this month’s NIPA revisions will be “comprehensive,” indeed!