Posts Tagged 'Bureau of Economic Analyis'

GDP Growth Accelerates in Third Quarter

Real gross domestic product (GDP) increased 4.1 percent in the third quarter of 2013, according to the “third” estimate released by the Bureau of Economic Analysis. The growth rate was 0.5 percentage point more than the “second” estimate released earlier this month. In the second quarter, the growth rate was 2.5 percent.gdp1

GDP highlights
Inventory investment accelerated in the third quarter, accounting for about 40 percent of real GDP growth, compared with about 15 percent in the second quarter.

GDP less inventory investment (real final sales of domestic product) rose 2.5 percent in the third quarter, compared with 2.1 percent in the second
quarter.

Also contributing to the acceleration in growth, imports rose less in the third quarter than in the second quarter. Spending by state and local governments and by consumers accelerated.

Revisions
The upward revision to third-quarter GDP growth was largely accounted for by a revision to consumer spending—to 2.0 percent growth (third estimate), up from 1.4 percent (second estimate). That revision mainly reflected an upward revision to services, especially to health care and to recreation services. Consumer spending on nondurable goods was also revised up, mainly gasoline and other energy goods.

In addition, business investment was revised up, mainly in intellectual property products, specifically software.

Partially offsetting the upward revisions, residential investment was revised down.

Corporate profitsgdp2
The revised estimate of third-quarter corporate profits was little changed from the previous estimate. Profits increased 1.9 percent after increasing 3.3 percent in the second quarter.
• Profits of nonfinancial corporations rose 1.0 percent after rising 3.2 percent.
• Profits of financial corporations rose 2.1 percent after rising 5.7 percent.
• Profits from the “rest of the world” rose 4.1 percent after rising 1.2 percent.

Over the last four quarters, profits rose 5.7 percent.

For more on GDP, read the full report.

Local Area Personal Income: Metropolitan Areas, 2001–2012

Personal income growth slowed in 2012 in most of the nation’s 381 metropolitan statistical areas (MSAs). Personal income growth slowed in 311 MSAs, accelerated in 65 MSAs, and remained unchanged in 5 MSAs. On average, MSA personal income rose 4.2 percent in 2012, after growing 6.0 percent in 2011. Personal income growth ranged from 12.1 percent in Midland, TX, to –1.6 percent in Yuma, AZ, one of only five MSAs where personal income declined in 2012. Inflation, as measured by the national price index for personal consumption expenditures, slowed to 1.8 percent in 2012 from 2.4 percent in 2011.

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For more on local area personal income, read the full report.

What is the Value of Household Work?

The Nobel Prize winner Simon Kuznets presented an original set of estimates to Congress in 1934 that contained a number of caveats about what was omitted from the calculation of national income (and later from the calculation of gross domestic product) that made it an imperfect measure of welfare. One of the principal omissions that he cited was the “services of housewives and other members of the family.” Although the hours men contribute to “household production” have risen, while those of women have declined, it is still true that the exclusion of household production—of men or women—causes a significant understatement in the level of domestic production. Turns out, Mr. Kuznets was correct. New research by the Bureau of Economic Analysis has found that if the value of household production were included in gross domestic product (GDP), it would add approximately $3.8 trillion to the U.S. economy in 2010.

A research paper published in the May issue of the Survey of Current Business found that if “home production”—the value of the time spent cooking, cleaning, watching the kids, and so forth—were counted, it would raise the level of nominal GDP nearly 26 percent in 2010. Back in 1965, when fewer women were in the formal labor force and more were working in the nonmarket sector, GDP would have been raised by 39 percent. Because the inclusion of “home production” would add more to the level of GDP in 1965 than in 2010, factoring in the value of these nonmarket activities was found to reduce the average annual growth rate of GDP over this period.

The paper also found that in 1965, men and women spent an average of 27 hours a week involved in “home production” activities, such as housework, cooking, odds jobs, gardening, shopping, child care, and domestic travel. By 2010, they spent 22 hours a week on such activities.

The overall decline in hours occurred as the amount of time women spent on household activities fell to 26 hours a week in 2010, from 40 hours in 1965, as more and more women took jobs outside the home. While women’s hours have dramatically dropped over that period, men’s hours dedicated to household activities rose slightly to 17 hours a week, from 14, over that same period.

Interestingly, the 2007—2009 recession had little impact on the number of hours U.S. households spent on cooking, cleaning, and other home activities, despite the fact that the number of unemployed people increased during that time.

The paper also found that accounting for household production reduces income inequality because the amount of household production is fairly constant across all households. Since there is little difference in time spent on household activities between lower and higher income households, the effect of accounting for household production is that it raises the incomes of low-income households proportionally more than high-income households.

To learn more, read the full paper called “Accounting for Household Production in the National Accounts, 1965–2010.”