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Gross Domestic Product, 4th quarter and annual 2017 (second estimate)

Summary:
National Income and Product Accounts Gross Domestic Product: Fourth Quarter and Annual 2017 (Second Estimate) Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the fourth quarter of 2017 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.2 percent. The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.6 percent. With this second estimate for the fourth quarter, the general picture of economic growth remains the

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National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2017 (Second Estimate)


Real gross domestic product (GDP) increased at an annual rate of 2.5 percent in the fourth quarter of
2017 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the
third quarter, real GDP increased 3.2 percent.

The GDP estimate released today is based on more complete source data than were available for the
"advance" estimate issued last month.  In the advance estimate, the increase in real GDP was 2.6
percent. With this second estimate for the fourth quarter, the general picture of economic growth
remains the same.

 
Gross Domestic Product, 4th quarter and annual 2017 (second estimate)


The increase in real GDP in the fourth quarter reflected positive contributions from personal
consumption expenditures (PCE), exports, nonresidential fixed investment, residential fixed investment,
state and local government spending, and federal government spending that were partly offset by a
negative contribution from private inventory investment. Imports, which are a subtraction in the
calculation of GDP, increased (table 2).

The deceleration in real GDP growth in the fourth quarter reflected a downturn in private inventory
investment that was partly offset by accelerations in PCE, exports, state and local government spending,
nonresidential fixed investment, and federal government spending, and an upturn in residential fixed
investment. Imports, which are a subtraction in the calculation of GDP, turned up.

Current-dollar GDP increased 4.9 percent, or $235.9 billion, in the fourth quarter to a level of $19,736.5
billion. In the third quarter, current-dollar GDP increased 5.3 percent, or $250.6 billion (table 1 and table
3).

The price index for gross domestic purchases increased 2.5 percent in the fourth quarter, compared
with an increase of 1.7 percent in the third quarter (table 4). The PCE price index increased 2.7 percent,
compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index
increased 1.9 percent, compared with an increase of 1.3 percent (appendix table A).


Updates to GDP

The percent change in real GDP was revised down 0.1 percentage point from the advance estimate,
primarily reflecting a slight downward revision to private inventory investment. For more information,
see the Technical Note. A detailed "Key Source Data and Assumptions" file is also posted for each
release.  For information on updates to GDP, see the "Additional Information" section that follows.


                                         Advance Estimate Second Estimate
                                     (Percent change from preceding quarter)
Real GDP                                       2.6             2.5
Current-dollar GDP                             5.0             4.9
Gross domestic purchases price index           2.5             2.5
PCE price index                                2.8             2.7


2017 GDP

Real GDP increased 2.3 percent in 2017 (that is, from the 2016 annual level to the 2017 annual level),
compared with an increase of 1.5 percent in 2016 (table 1).

The increase in real GDP in 2017 primarily reflected positive contributions from PCE, nonresidential fixed
investment, and exports. These contributions were partly offset by a decline in private inventory
investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The acceleration in real GDP from 2016 to 2017 reflected upturns in nonresidential fixed investment and
in exports and a smaller decrease in private inventory investment.  These movements were partly offset
by decelerations in residential fixed investment and in state and local government spending. Imports,
which are a subtraction in the calculation of GDP, accelerated.

Current-dollar GDP increased 4.1 percent, or $761.7 billion, in 2017 to a level of $19,386.2 billion,
compared with an increase of 2.8 percent, or $503.8 billion, in 2016 (table 1 and table 3).

The price index for gross domestic purchases increased 1.8 percent in 2017, compared with an increase
of 1.0 percent in 2016 (table 4). The PCE price index increased 1.7 percent, compared with an increase
of 1.2 percent. Excluding food and energy prices, the PCE price index increased 1.5 percent, compared
with an increase of 1.8 percent (appendix table A).

During 2017 (measured from the fourth quarter of 2016 to the fourth quarter of 2017), real GDP
increased 2.5 percent, compared with an increase of 1.8 percent during 2016.  The price index for gross
domestic purchases increased 1.9 percent during 2017, compared with an increase of 1.4 percent during
2016 (table 7).



                                 *          *          *

                       Next release:  March 28, 2018 at 8:30 A.M. EDT
           Gross Domestic Product:  Fourth Quarter and Annual 2017 (Third Estimate)
                      Corporate Profits:  Fourth Quarter and Annual 2017

                                 *          *          *



                                 Additional Information

Resources

Additional resources available at www.bea.gov:
•	Stay informed about BEA developments by reading the BEA blog, signing up for BEA’s email
        subscription service, or following BEA on Twitter @BEA_News.
•	Historical time series for these estimates can be accessed in BEA’s Interactive Data Application.
•	Access BEA data by registering for BEA’s Data Application Programming Interface (API).
•	For more on BEA’s statistics, see our monthly online journal, the Survey of Current Business.
•	BEA's news release scheduleNIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation’s economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Gross domestic income (GDI) is the sum of incomes earned and costs incurred in the production of GDP.
In national economic accounting, GDP and GDI are conceptually equal. In practice, GDP and GDI differ
because they are constructed using largely independent source data. Real GDI is calculated by deflating
gross domestic income using the GDP price index as the deflator, and is therefore conceptually
equivalent to real GDP.

Current-dollar estimates are valued in the prices of the period when the transactions occurred—that is,
at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”
Real values are inflation-adjusted estimates—that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, “persons.”

Profits from current production, referred to as corporate profits with inventory valuation adjustment
(IVA) and capital consumption adjustment (CCAdj) in the NIPAs, is a measure of the net income of
corporations before deducting income taxes that is consistent with the value of goods and services
measured in GDP. The IVA and CCAdj are adjustments that convert inventory withdrawals and depreciation
of fixed assets reported on a tax-return, historical-cost basis to the current-cost economic measures
used in the national income and product accounts. Profits for domestic industries reflect profits for
all corporations located within the within the geographic borders of the United States. The rest-of-
the-world (ROW) component of profits is measured as the difference between profits received from ROW
and profits paid to ROW.


For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ “Why does BEA publish estimates at annual rates?”

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ “How is average annual growth calculated?”

Quantities and prices. Quantities, or “real” volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). “Real” dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a “residual” line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  "Advance" estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; “second” and “third” estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.3
Note - Based on estimates from 1993 through 2016. For more information on GDP
updates, see Revision Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.
Bureau of Economic Analysis
The BEA Advisory Committee advises the Director of BEA on matters related to the development and improvement of BEA’s national, regional, industry, and international economic accounts, especially in areas of new and rapidly growing economic activities arising from innovative and advancing technologies, and provides recommendations from the perspectives of the economics profession, business, and government.

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