Gross Domestic Product, 2nd quarter 2015 (third estimate); Corporate Profits, 2nd 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 goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes -- increased at an annual rate of 3.9 percent in the second quarter of 2015, according to the "third" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6 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 increase in real GDP was 3.7 percent. With the third estimate for the second quarter, the general picture of economic growth remains the same; personal consumption expenditures (PCE) and nonresidential fixed investment increased more than previously estimated (see “Revisions” on page 2).

The increase in real GDP in the second quarter primarily reflected positive contributions from PCE, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased.

Real GDP increased 3.9 percent in the second quarter, after increasing 0.6 percent in the first. The acceleration in real GDP in the second quarter reflected an upturn in exports, an acceleration in PCE, a deceleration in imports, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment that were partly offset by decelerations in private inventory investment and in federal government spending.

Real gross domestic income (GDI) -- the value of the costs incurred and the incomes earned in the production of goods and services in the nation’s economy -- increased 0.7 percent in the second quarter, compared with an increase of 0.4 percent in the first. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.3 percent in the second quarter, compared with an increase of 0.5 percent in the first.

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 3.6 percent in the second quarter, compared with an increase of 2.5 percent in the first.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.5 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 1.2 percent, compared with an increase of 0.2 percent.

Current-dollar GDP -- the market value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production -- increased 6.1 percent, or $264.4 billion, in the second quarter to a level of $17,913.7 billion. In the first quarter, current-dollar GDP increased 0.8 percent, or $33.3 billion.

Revisions

The upward revision to the percent change in real GDP primarily reflected upward revisions to PCE, to nonresidential fixed investment, and to residential fixed investment that were partly offset by a downward revision to private inventory investment. For information on revisions, see "The Revisions to GDP, GDI, and Their Major Components."

Corporate Profits

Profits from current production

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) increased $70.4 billion in the second quarter, in contrast to a decrease of $123.0 billion in the first.

Profits of domestic financial corporations increased $34.6 billion in the second quarter, in contrast to a decrease of $23.4 billion in the first. Profits of domestic nonfinancial corporations increased $24.3 billion, in contrast to a decrease of $70.5 billion. The rest-of-the-world component of profits increased $11.4 billion, in contrast to a decrease of $29.0 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 second quarter, receipts increased $24.9 billion, and payments increased $13.4 billion.

Taxes on corporate income increased $31.3 billion in the second quarter, compared with an increase of $5.5 billion in the first. Profits after tax with IVA and CCAdj increased $39.2 billion, in contrast to a decrease of $128.4 billion.

Dividends increased $1.2 billion in the second quarter, compared with an increase of $6.3 billion in the first. Undistributed profits increased $38.0 billion, in contrast to a decrease of $134.7 billion. Net cash flow with IVA -- the internal funds available to corporations for investment -- increased $48.1 billion, in contrast to a decrease of $135.5 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 decreased $78.7 billion in the second quarter, in contrast to an increase of $45.7 billion in the first. The CCAdj increased $7.7 billion, in contrast to a decrease of $208.1 billion.

Corporate profits with IVA

Profits of domestic financial corporations increased $34.3 billion in the second quarter, in contrast to a decrease of $3.1 billion in the first. Profits of domestic nonfinancial corporations increased $17.0 billion, compared with an increase of $117.3 billion. The second-quarter increase in profits of nonfinancial corporations primarily reflected an increase in “other” nonfinancial industries that was partly offset by a decrease in retail trade industries. A small increase in manufacturing industries reflected an increase in durable goods that was mostly offset by a decrease in nondurable goods.

Gross value added of nonfinancial domestic corporate business

Real gross value added of nonfinancial corporations decreased slightly in the second quarter. Profits per unit of real value added increased, reflecting an increase in unit prices and a decrease in unit nonlabor costs that were partly offset by an increase in unit labor costs.