Archive for the 'gdp growth' Category

GDP Increases in Third Quarter

Real gross domestic product (GDP) increased 3.3 percent in the third quarter of 2017, according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter of 2017, real GDP increased 3.1 percent.

GDP highlightsQ2Q GDP Nov 29
The increase in real GDP reflected increases in consumer spending, inventory investment, business investment, and exports. A notable offset to these increases was a decrease in housing investment. Imports, which are a subtraction from GDP, decreased.

The increase in consumer spending reflected increases in spending on both goods and services. The increase in goods was primarily attributable to motor vehicles. The increase in services primarily reflected increases in health care, financial services and insurance, and recreation services.

The increase in inventory investment primarily reflected increases in the manufacturing and wholesale trade industries. The increase in business investment reflected increases in equipment and intellectual property products; these increases were partly offset by a decrease in structures.

The decrease in housing investment primarily reflected a decrease in brokers’ commissions.

Corporate profitsQ2Q Corporate Nov 29
Corporate profits increased 4.3 percent at a quarterly rate in the third quarter of 2017
after increasing 0.7 percent in the second quarter.

• Profits of domestic nonfinancial corporations increased 1.0 percent after increasing 4.9 percent.
• Profits of domestic financial corporations increased 13.7 percent after decreasing 7.1
• Profits from the rest of the world increased 4.5 percent after decreasing 2.5 percent.
Corporate profits increased 5.4 percent from the third quarter of 2016.

For more information, read the full report.

Industry in Focus: Construction on the Rise

Although the U.S. economy has changed considerably over time, construction is an industry that’s maintained its importance. We no longer depend on telegraphs as we once did, but we’ll always need a place to live. Construction also is an industry in which the products can differ to a great degree. While cellphones may be quite similar to one another, office buildings take shapes ranging from the Empire State Building to a one-story structure in the suburbs. Moreover, the construction industry is unusually sensitive to regional and seasonal differences. Buildings in Chicago, Honolulu and Anchorage can look quite different from each other, and the amount of time that can be spent building in those cities differs as well.

In the first quarter of this year, construction was the largest contributor to the U.S. economy’s growth of 1.1 percent. Construction contributed 0.36 percentage point to inflation-adjusted, or real, GDP growth. The industry’s growth in real value added accelerated to 9.0%, after increasing 7.6% in the previous quarter.  Construction has expanded for six consecutive quarters, and when you compare construction’s performance since the beginning of 2015 with industries that may get more attention in the news (such as two of our previous Industry in Focus subjects, information and health care), you see the construction industry has performed well (see the blue bar in the chart below).  Charts like these are just one of the many tools you can create automatically using BEA’s interactive data retrieval application, iTables.

Price changes in chain-type july 21

Industry in Focus: Finance and Insurance and More

This quarter, Industry in Focus is actually Industries in Focus. Beginning with this quarterly GDP by Industry release, we’re delighted to introduce a new set of products—the Quarterly Underlying Detail Tables.  Previously, quarterly GDP by industry statistics were only available for 22 industries.  The new underlying detail tables provide the same data for 71 industries, allowing for even more in-depth analysis of economic trends.

The industries we’ll discuss this quarter highlight some of the advantages of these new data. In the second quarter of 2015, the finance and insurance industry was the largest contributor to GDP growth, contributing 0.84 percentage point to the overall 3.9 percent increase in real GDP.  Finance and insurance is an aggregate of four detailed industries—Federal Reserve banks and credit intermediation; securities, commodity contracts, and investments; insurance carriers; and funds, trusts, and other financial vehicles.  With the new underlying detail tables, we can now see that these industries exhibited differing behavior, with three of the four finance and insurance industries showing strong growth.  Federal Reserve banks and credit intermediation grew 18.2 percent, contributing 0.48 percentage point to the growth in real GDP; insurance carriers grew 13.2 percent, contributing 0.33 percentage point; and funds, trusts, and other financial vehicles grew 69.0 percent, contributing 0.13 percentage point.  At the more detailed 71-industry level, these three industries were the second, fourth, and thirteenth largest contributors to growth.   This helps to explain why the aggregate finance and insurance industry was the largest contributor to growth at the 22-industry level.

However, you may have noticed that securities, commodity contracts, and investments actually contracted in the second quarter, decreasing 6.6 percent and subtracting 0.10 percentage point from real GDP growth. Without the underlying detail data, this piece of information would go unnoticed.  Growth in finance and insurance was strong because of the three other industries, but underlying detail lets us see that not all of the finance and insurance industries had a strong quarter.

A logical question to ask is, “Why would one industry contract in the second quarter when three related industries grew?” The answer is that each of the four industries has a different focus, even though all four relate to finance or insurance.  The securities and commodity contracts industry includes establishments that underwrite and make markets for securities and commodities, act as agents between buyers and sellers of securities and commodities, and manage portfolios of assets.  If you own shares of a company’s stock or follow the Dow Jones Industrial Average, you’re well acquainted with the activities of this industry.

Federal Reserve banks and credit intermediation, on the other hand, encompass two activities that don’t work directly with securities. Federal Reserve banks and similar monetary authorities manage the country’s money supply, while credit intermediation involves much of what you typically think of as consumer and commercial banking—taking in deposits and lending funds.  While the Federal Reserve banks and credit intermediation industry and the securities and commodity contracts industry both relate to finance, and while the two industries can have an impact on each other, they don’t necessarily exhibit the same growth.

In the second quarter of 2015, for example, the decline in the securities and commodity contracts industry may be traced to concerns in the stock market, perhaps reflecting worries about the Greek debt crisis and uncertainty about whether or not the Federal Reserve would raise interest rates. This may have led investors to pull money out of the stock market, as both the S&P 500 and Dow Jones Industrial Average fell during the quarter.

Where did that money go? Some of it may have gone to regular savings banks, as evidenced by the growth in credit intermediation.  The FDIC reported that in the second quarter, net income for FDIC-insured institutions (which includes your neighborhood bank) was the highest on record.  This was reflected in the industry’s strong growth.  Concerns about the stock market can lead investors to pull their money out of the market and place it in the more stable accounts offered by savings institutions.  Conversely, a strong stock market can lead investors to put more of their money into securities.

You can see this in our historical data. In nine of the past fourteen quarters, Federal Reserve banks and credit intermediation moved in the opposite direction of securities and commodity contracts.  So while the two industries broadly deal with finance, their differing roles within finance mean they often differ in growth.  This example illustrates some of the many benefits of the quarterly underlying detail tables.  The new detail enhances economic analysis much in the same way that quarterly GDP-by-industry data provides more tools to analyze national GDP.  The standard quarterly GDP-by-industry data allow users to see differing patterns among industries; similarly, the quarterly underlying detail tables enhance the ability of users to see differing patterns within industries.

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