Gross Domestic Product, 1st quarter 2015 (third estimate); Corporate Profits, 1st quarter 2015 (revised estimate)

Historical release narrative reproduced from the official public-domain U.S. Bureau of Economic Analysis source. Statistical tables, charts, standard technical appendices and administrative material are omitted; formatting is adapted for reading. Figures retain the release's original vintage and may have been revised. Consult the linked source for the complete release and current data.

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- decreased at an annual rate of 0.2 percent in the first quarter of 2015, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent.

The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the second estimate, the decrease in real GDP was 0.7 percent. With the third estimate for the first quarter, exports decreased less than previously estimated, and personal consumption expenditures (PCE) and imports increased more (see "Revisions" on page 3).

The decrease in real GDP in the first quarter primarily reflected negative contributions from exports, nonresidential fixed investment, and state and local government spending that were partly offset by positive contributions from PCE, private inventory investment, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Upcoming Annual Revision of the National Income and Product Accounts

The annual revision of the national income and product accounts will be released along with the "advance" estimate of GDP for the second quarter of 2015 on July 30. In addition to the regular revision of the estimates for the most recent 3 years and for the first quarter of 2015, some series will be revised back further. The June Survey of Current Business contains an article that previews the annual revision, and the August Survey will contain an article that describes the results.

Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2009) dollars. Price indexes are chain-type measures.

Real GDP decreased 0.2 percent in the first quarter of 2015, in contrast to an increase of 2.2 percent in the fourth quarter of 2014. The downturn in the percent change in real GDP reflected a deceleration in PCE and downturns in exports, in nonresidential fixed investment, and in state and local government spending that were partly offset by upturns in private inventory investment and in federal government spending and a deceleration in imports.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.6 percent in the first quarter, the same decrease as in the second estimate; this index decreased 0.1 percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic purchases increased 0.1 percent, compared with an increase of 0.7 percent.

Real personal consumption expenditures increased 2.1 percent in the first quarter, compared with an increase of 4.4 percent in the fourth. Durable goods increased 1.3 percent, compared with an increase of 6.2 percent. Nondurable goods increased 0.8 percent, compared with an increase of 4.1 percent. Services increased 2.7 percent, compared with an increase of 4.3 percent.

Real nonresidential fixed investment decreased 2.0 percent in the first quarter, in contrast to an increase of 4.7 percent in the fourth. Investment in nonresidential structures decreased 18.8 percent, in contrast to an increase of 5.9 percent. Investment in equipment increased 2.6 percent, compared with an increase of 0.6 percent. Investment in intellectual property products increased 4.9 percent, compared with an increase of 10.3 percent. Real residential fixed investment increased 6.5 percent, compared with an increase of 3.8 percent.

Real exports of goods and services decreased 5.9 percent in the first quarter, in contrast to an increase of 4.5 percent in the fourth. Real imports of goods and services increased 7.1 percent, compared with an increase of 10.4 percent.

Real federal government consumption expenditures and gross investment was unchanged in the first quarter, in contrast to a decrease of 7.3 percent in the fourth. National defense decreased 1.2 percent, compared with a decrease of 12.2 percent. Nondefense increased 2.0 percent, compared with an increase of 1.5 percent. Real state and local government consumption expenditures and gross investment decreased 1.0 percent, in contrast to an increase of 1.6 percent.

The change in real private inventories added 0.45 percentage point to the first-quarter change in real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses increased inventories $99.5 billion in the first quarter, following increases of $80.0 billion in the fourth quarter and $82.2 billion in the third.

Real final sales of domestic product -- GDP less change in private inventories -- decreased 0.6 percent in the first quarter, in contrast to an increase of 2.3 percent in the fourth.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 1.7 percent in the first quarter, compared with an increase of 3.2 percent in the fourth.

Gross national product

Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- decreased 1.0 percent in the first quarter, in contrast to an increase of 1.4 percent in the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $30.5 billion in the first quarter, compared with a decrease of $30.7 billion in the fourth; in the first quarter, receipts decreased $30.8 billion, and payments decreased $0.3 billion.

Current-dollar GDP

Current-dollar GDP -- the market value of the production of goods and services in the United States -- decreased 0.2 percent, or $10.4 billion, in the first quarter to a level of $17,693.3 billion. In the fourth quarter, current-dollar GDP increased 2.4 percent, or $103.9 billion.

Gross domestic income

Real gross domestic income (GDI), which measures the value of the production of goods and services in the United States as the costs incurred and the incomes earned in production, increased 1.9 percent in the first quarter, compared with an increase of 3.7 percent in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change.

Revisions

The "third" estimate of the first-quarter percent change in GDP is 0.5 percentage point, or $23.6 billion, more than the second estimate issued last month, primarily reflecting upward revisions to exports, to personal consumption expenditures, to private inventory investment, to nonresidential fixed investment, and to state and local government spending that were partly offset by an upward revision to imports.

Corporate Profits

Profits from current production

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $110.8 billion in the first quarter, compared with a decrease of $30.4 billion in the fourth.

Profits of domestic financial corporations decreased $2.1 billion in the first quarter, compared with a decrease of $12.5 billion in the fourth. Profits of domestic nonfinancial corporations decreased $79.6 billion, in contrast to an increase of $18.1 billion. The rest-of-the-world component of profits decreased $29.0 billion, compared with a decrease of $36.1 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the first quarter, receipts decreased $40.0 billion, and payments decreased $11.0 billion.

Taxes on corporate income increased $25.3 billion in the first quarter, in contrast to a decrease of $4.8 billion in the fourth. Profits after tax with IVA and CCAdj decreased $136.1 billion, compared with a decrease of $25.8 billion. The first-quarter changes in taxes on corporate income mainly reflect the expiration of bonus depreciation provisions. For further explanation, see the box below.

Dividends increased $5.8 billion in the first quarter, compared with an increase of $18.6 billion in the fourth. Undistributed profits decreased $141.8 billion, compared with a decrease of $44.3 billion. Net cash flow with IVA -- the internal funds available to corporations for investment -- decreased $135.7 billion, in contrast to an increase of $12.2 billion.

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. The IVA increased $29.0 billion in the first quarter, compared with an increase of $27.5 billion in the fourth. The CCAdj decreased $218.8 billion, in contrast to an increase of $3.9 billion. The first-quarter changes in the CCAdj mainly reflect the expiration of bonus depreciation provisions. For further explanation, see the box below.

Impacts of Bonus Depreciation on the First Quarter of 2015

The first-quarter changes in taxes on corporate income and in the capital consumption adjustment (CCAdj) mainly reflect the expiration of both the 50-percent bonus depreciation provision and increased Section 179 expensing limits claimed under extensions of the 2010 tax acts. For detailed data, see the table "Net Effects of the Tax Acts of 2002, 2003, 2008, 2009, 2010 (and extensions) on Selected Measures of Corporate Profits."

BEA's estimates of profits from current production are not affected by these tax acts because profits from current production do not depend on the depreciation-accounting practices used for federal income tax purposes. BEA's measure of current-production profits reflects economic accounting practices in which depreciation is based on an estimate of the reduction in the value of fixed capital used in the production process. For a more detailed discussion of the effect of tax act provisions on the CCAdj, see FAQ 1002, "How do the economic stimulus acts impact NIPA Corporate Profits?"

Corporate profits with IVA

Profits of domestic financial corporations increased $18.9 billion in the first quarter, in contrast to a decrease of $13.0 billion in the fourth. Profits of domestic nonfinancial corporations increased $118.2 billion, compared with an increase of $14.7 billion. The first-quarter increase in profits of nonfinancial corporations reflected widespread increases across the detailed industries; the largest contributor was manufacturing.

Gross value added of nonfinancial domestic corporate business

Real gross value added of nonfinancial corporations increased in the first quarter. Profits per unit of real gross value added decreased, reflecting increases in unit labor and nonlabor costs and a decrease in unit prices.