Gross Domestic Product, 2nd quarter 2015 (advance estimate); Includes historical revisions

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 -- increased at an annual rate of 2.3 percent in the second quarter of 2015, according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 percent (revised).

The Bureau emphasized that the second-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see the box on page 3 and "Comparisons of Revisions to GDP" on page 10). The "second" estimate for the second quarter, based on more complete data, will be released on August 27, 2015.

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

_____Box.

Annual Revision of the National Income and Product Accounts

The estimates released today reflect the results of the annual revision of the national income and product accounts (NIPAs) in conjunction with the "advance" estimate of GDP for the second quarter of 2015. In addition to the regular revision of the estimates for the most recent 3 years and for the first quarter of 2015, some series are revised back further (see the Technical Note). More information is available in "Preview of the 2015 Annual Revision of the NIPAs" in the June Survey of Current Business and on BEA's Web site. The August Survey will contain an article that describes the results.

_____NOTE. 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.

The acceleration in real GDP growth in the second quarter reflected an upturn in exports, an acceleration in PCE, a deceleration in imports, and an upturn in state and local government spending that were partly offset by downturns in private inventory investment, in nonresidential fixed investment, and in federal government spending and a deceleration in residential fixed investment.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.4 percent in the second quarter, in contrast to a decrease of 1.6 percent in the first. Excluding food and energy prices, the price index for gross domestic purchases increased 1.1 percent, compared with an increase of 0.2 percent.

Real personal consumption expenditures increased 2.9 percent in the second quarter, compared with an increase of 1.8 percent in the first. Durable goods increased 7.3 percent, compared with an increase of 2.0 percent. Nondurable goods increased 3.6 percent, compared with an increase of 0.7 percent. Services increased 2.1 percent, the same increase as in the first quarter.

Real nonresidential fixed investment decreased 0.6 percent in the second quarter, in contrast to an increase of 1.6 percent in the first. Investment in nonresidential structures decreased 1.6 percent, compared with a decrease of 7.4 percent. Investment in equipment decreased 4.1 percent, in contrast to an increase of 2.3 percent. Investment in intellectual property products increased 5.5 percent, compared with an increase of 7.4 percent. Real residential fixed investment increased 6.6 percent, compared with an increase of 10.1 percent.

Real exports of goods and services increased 5.3 percent in the second quarter, in contrast to a decrease of 6.0 percent in the first. Real imports of goods and services increased 3.5 percent, compared with an increase of 7.1 percent.

Real federal government consumption expenditures and gross investment decreased 1.1 percent in the second quarter, in contrast to an increase of 1.1 percent in the first. National defense decreased 1.5 percent, in contrast to an increase of 1.0 percent. Nondefense decreased 0.5 percent, in contrast to an increase of 1.2 percent. Real state and local government consumption expenditures and gross investment increased 2.0 percent, in contrast to a decrease of 0.8 percent.

The change in real private inventories subtracted 0.08 percentage point from the second-quarter change in real GDP after adding 0.87 percentage point to the first-quarter change. Private businesses increased inventories $110.0 billion in the second quarter, following increases of $112.8 billion in the first quarter and $78.2 billion in the fourth.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.4 percent in the second quarter, in contrast to a decrease of 0.2 percent in the first.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.1 percent in the second quarter, compared with an increase of 2.5 percent in the first.

Disposition of personal income

Current-dollar personal income increased $145.0 billion in the second quarter, compared with an increase of $118.9 billion in the first. The acceleration in personal income primarily reflected upturns in personal interest income and in farm proprietors' income that were partly offset by decelerations in government social benefits and in personal dividend income.

Personal current taxes increased $26.3 billion in the second quarter, compared with an increase of $60.2 billion in the first.

Disposable personal income increased $118.6 billion, or 3.7 percent, in the second quarter, compared with an increase of $58.7 billion, or 1.8 percent, in the first. Real disposable personal income increased 1.5 percent, compared with an increase of 3.8 percent.

Personal outlays increased $161.9 billion in the second quarter, in contrast to a decrease of $10.3 billion in the first.

Personal saving -- disposable personal income less personal outlays -- was $640.1 billion in the second quarter, compared with $683.3 billion in the first.

The personal saving rate -- personal saving as a percentage of disposable personal income -- was 4.8 percent in the second quarter, compared with 5.2 percent in the first. For a comparison of personal saving in BEA's national income and product accounts with personal saving in the Federal Reserve Board's financial accounts of the United States and data on changes in net worth, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Current-dollar GDP

Current-dollar GDP -- the market value of the production of goods and services in the United States -- increased 4.4 percent, or $191.2 billion, in the second quarter to a level of $17,840.5 billion. In the first quarter, current-dollar GDP increased 0.8 percent, or $33.3 billion.

_____BOX.

Information on the assumptions used for unavailable source data is provided in a technical note that is posted with the news release on BEA's Web site. Within a few days after the release, a detailed "Key Source Data and Assumptions" file is posted on the Web site. In the middle of each month, an analysis of the current quarterly estimate of GDP and related series is made available on the Web site; click on Survey of Current Business, "GDP and the Economy." For information on revisions, see "Revisions to GDP, GDI, and Their Major Components".

Revisions for the first quarter of 2015

For the first quarter of 2015, real GDP is now estimated to have increased 0.6 percent; in the previously published estimates, first-quarter GDP was estimated to have decreased 0.2 percent. The 0.8- percentage point upward revision to the percent change in first-quarter real GDP primarily reflected upward revisions to nonresidential fixed investment, to private inventory investment, to residential fixed investment, and to federal government spending that were partly offset by a downward revision to PCE.

Previous Estimate Revised

A new aggregate, the average of GDP and GDI, is a supplemental measure of U.S. economic activity. In real, or inflation-adjusted, terms this measure increased 0.5 percent in the first quarter of 2015; estimates for the second quarter will be available next month along with the estimate of second- quarter GDI.

The revised estimates reflect the results of the annual revision of the national income and product accounts (NIPAs). These revisions, usually made each July, incorporate newly available and more comprehensive source data, as well as improved estimation methodologies. For this annual revision, the notable revisions primarily reflect the incorporation of newly available and revised source data.

The timespan of the revisions is the first quarter of 2012 through the first quarter of 2015 with two exceptions. First, a new treatment of federal refundable tax credits revised some series, including personal income, personal current taxes, government current receipts, and government current expenditures, back to 1976. Second, an updated presentation of the transfer and tax flows between the United States and the rest of the world resulted in revisions to the foreign transactions estimates back to 1999. The reference year remains 2009. None of the changes affected the current reference year for price and quantity measures; revisions to GDP and its components are limited to 2012 and later.

Because of the additional data shown, tables 3, 11, and 12 of this release are each divided into two separate tables -- 3A and 3B, 11A and 11B, and 12A and 12B. There are also a number of special tables that compare the revised and previously published statistics for select periods:

* Table 1A shows the percent change in real GDP and related measures and table 1B shows revisions to current-dollar GDP, to national income, and to personal income.

* Table 2A shows contributions to the percent change in real GDP.

* Table 4A shows the percent change in the chain-type price indexes for GDP and related measures.

* Table 12C shows revisions to corporate profits by industry.

With the release of the annual revision, statistics for select NIPA tables will be available on BEA's Web site. Shortly after the GDP release, BEA will post a table on its Web site showing the major current-dollar revisions and their sources for each component of GDP, national income, and personal income. Additionally, the August 2015 Survey of Current Business will contain an article describing these revisions.

Revisions to real GDP

The revisions largely reflect the incorporation of newly available and revised source data (see the box below) and improvements to estimating methodologies.

* From 2011 to 2014, real GDP increased at an average annual rate of 2.0 percent; in the previously published estimates, real GDP had increased at an average annual rate of 2.3 percent. From the fourth quarter of 2011 to the first quarter of 2015, real GDP increased at an average annual rate of 2.0 percent; in the previously published estimates, real GDP had increased at an average annual rate of 2.2 percent during this period.

* The percent change in real GDP was revised down 0.1 percentage point for 2012, was revised down 0.7 percentage point for 2013, and was unrevised for 2014.

o For 2012, downward revisions to personal consumption expenditures (PCE) and to state and local government spending were partly offset by an upward revision to nonresidential fixed investment. o For 2013, the largest contributors to the downward revision were downward revisions to PCE, to state and local government spending, and to residential fixed investment. o For 2014, an upward revision to PCE was offset by downward revisions to state and local government spending, to federal government spending, and to inventory investment.

* The revisions to the annual estimates typically reflect partly offsetting revisions to the quarters within the year.

o For 2012, the annual rate of change in GDP was revised down 2.0 percentage points for the third quarter, while the rate of change for the first and second quarters were revised up 0.4 percentage point and 0.3 percentage point, respectively; the growth rate for the fourth quarter was unrevised. o For 2013, downward revisions of 0.8 percentage point for the first quarter, 0.7 percentage point for the second quarter, and 1.5 percentage points for the third quarter were partly offset by an upward revision of 0.3 percentage point for the fourth quarter. o For 2014, an upward revision of 1.2 percentage points for the first quarter was offset by downward revisions of 0.7 percentage point for the third quarter and 0.1 percentage point for the fourth quarter; the second quarter was unrevised.

* For the first quarter of 2012 through the first quarter of 2015, the average revision (without regard to sign) to the percent change in real GDP was 0.7 percentage point. The revisions changed the direction of growth in real GDP for only one of the quarters: the first quarter of 2015.

* For the expansion from the second quarter of 2009 to the first quarter of 2015, real GDP increased at an average annual rate of 2.1 percent, 0.1 percentage point less than in the previously published estimates.

* Current-dollar GDP was revised down for all 3 years: $7.9 billion, or less than 0.1 percent, for 2012; $104.9 billion, or 0.6 percent, for 2013; and $70.9 billion, or 0.4 percent, for 2014.

Gross domestic income (GDI) and the statistical discrepancy

* From 2011 to 2014, real GDI increased at an average annual rate of 2.4 percent; in the previously published estimates, real GDI had increased at an average annual rate of 2.6 percent. From the fourth quarter of 2011 to the first quarter of 2015, real GDI increased at an average annual rate of 2.3 percent; in the previously published estimates, real GDI had increased at an average annual rate of 2.7 percent.

* The statistical discrepancy is current-dollar GDP less current-dollar GDI. GDP measures final expenditures -- the sum of consumer spending, private investment, net exports, and government spending. GDI measures the incomes earned in the production of GDP. In concept, GDP is equal to GDI. In practice, they differ because they are estimated using different source data and different methods.

* As a result of the annual revision, the statistical discrepancy as a percentage of GDP was unrevised (-1.3 percent) for 2012, was revised up from -1.3 percent to -1.1 percent for 2013, and was revised down from -1.0 percent to -1.2 percent for 2014.

* The average of GDP and GDI is a supplemental measure of U.S. economic activity. In real, or inflation-adjusted, terms this measure increased at an average annual rate of 2.2 percent from 2011 to 2014.

Revisions to price measures

* Gross domestic purchases -- From the fourth quarter of 2011 to the first quarter of 2015, the average annual rate of increase in the price index for gross domestic purchases was revised up from 1.1 percent to 1.2 percent.

* Personal consumption expenditures -- From the fourth quarter of 2011 to the first quarter of 2015, the average annual rate of increase in the price index for PCE was 1.1 percent, 0.1 percentage point higher than in the previously published estimates; the increase in the "core" PCE price index (which excludes food and energy) was also revised up 0.1 percentage point, from 1.4 percent to 1.5 percent.

Revisions to income and saving measures

* National income was revised down $7.6 billion, or 0.1 percent, for 2012, was revised down $118.7 billion, or 0.8 percent, for 2013, and was unrevised for 2014.

o For 2012, downward revisions to corporate profits and to proprietors' income were partly offset by an upward revision to net interest. o For 2013, downward revisions to corporate profits, to proprietors' income, and to rental income of persons were partly offset by upward revisions to taxes on production and imports, to net interest, and to current surplus of government enterprises. o For 2014, offsetting revisions of note include downward revisions to proprietors' income, to rental income of persons, and to corporate profits and upward revisions to net interest, to wages and salaries, and to current surplus of government enterprises.

* Corporate profits was revised down $24.6 billion, or 1.2 percent, for 2012, was revised down $69.5 billion, or 3.3 percent, for 2013, and was revised down $16.9 billion, or 0.8 percent, for 2014.

* Personal income was revised up $27.4 billion, or 0.2 percent, for 2012, was revised down $98.5 billion, or 0.7 percent, for 2013, and was revised down $39.7 billion, or 0.3 percent, for 2014.

* From 2011 to 2014, the average annual rate of growth of real disposable personal income was revised down 0.3 percentage point from 1.8 percent to 1.5 percent.

* The personal saving rate (personal saving as a percentage of disposable personal income) was revised up from 7.2 percent to 7.6 percent for 2012, was revised down from 4.9 percent to 4.8 percent for 2013, and was revised down from 4.9 percent to 4.8 percent for 2014.

New and revised source data

This annual revision incorporated data from the following major federal statistical sources:

Agency Data Years Covered and Vintage

Census Bureau Annual survey of wholesale trade 2012 (revised) and 2013 (new)

Annual survey of retail trade 2012 (revised) and 2013 (new)

Annual survey of manufactures 2013 (new)

Economic census 2012 (new)

Monthly surveys of manufactures, merchant wholesale trade, and retail trade 2012-2014 (revised)

Service annual survey 2012 and 2013 (revised), 2014 (new)

Annual surveys of state and Fiscal years 2012 (revised) local government finances and 2013 (new)

Monthly survey of construction spending (value put in place) 2013 and 2014 (revised)

Quarterly services survey 2012-2014 (revised)

Current population survey/housing vacancy survey 2012 and 2013 (revised), 2014 (new)

Office of Management Federal Budget Fiscal years 2014 and 2015 and Budget

Internal Revenue Service Tabulations of tax returns for corporations 2012 (revised) and 2013 (new)

Tabulations of tax returns for sole 2012 (revised) and 2013 (new) proprietorships and partnerships

BLS Quarterly census of employment and wages 2012-2014 ( revised)

Department of Agriculture Farm statistics 2012-2014 (revised)

BEA International transactions accounts 2012-2014 (revised)

Changes in methodology and presentation

The annual revision also incorporated improvements to estimating methodologies and to the presentation of the NIPA estimates, including the following:

* Two new statistics that facilitate the analysis of macroeconomic trends in the U.S. economy are now presented in BEA's current quarterly GDP news release and data tables. "The average of GDP and GDI" provides a supplemental measure of U.S. production that reflects timing and measurement variations between GDP and GDI. "Final sales to private domestic purchasers" provides a measure of private demand in the U.S. economy. It reflects consumer spending and investment spending by private businesses and excludes spending by governments, net exports, and private inventory investment.

* BEA introduced new seasonal adjustments and refinements to existing seasonal adjustment methods for a number of GDP and GDI components, including federal defense spending, consumer spending on services, net interest, and corporate profits.

* BEA used Bureau of Labor Statistics producer price indexes for portfolio management services, for investment advice services, and for commercial bank trust services to deflate consumer spending on these financial services. These new price indexes replaced the use of input cost indexes and better reflect the prices charged by providers of these financial services.

* BEA reclassified federal government refundable tax credits as government social benefits and no longer records the portion of these tax credits that reduce a person's tax liability as reductions in the income taxes paid by persons. This new treatment allows users to see the full costs and benefits of these tax policies to the government and to recipients. This reclassification had offsetting impacts to personal income and to personal current taxes beginning with 1976; the personal saving rate was not impacted by this change.

* For more information about these changes, see "Preview of the 2015 Annual Revision of the NIPAs" in the June Survey of Current Business.