Gross Domestic Product, 3rd quarter 2015 (second estimate); Corporate Profits, 3rd quarter 2015 (preliminary 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 2.1 percent in the third quarter of 2015, according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9 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 1.5 percent. With the second estimate for the third quarter, the decrease in private inventory investment was smaller than previously estimated (see "Revisions" on page 2).

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

The deceleration in real GDP in the third quarter primarily reflected a downturn in private inventory investment and decelerations in exports, in PCE, in nonresidential fixed investment, in state and local government spending, and in residential fixed investment that were partly offset by a deceleration in imports.

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 3.1 percent in the third quarter, compared with an increase of 2.2 percent (revised) in the second. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.6 percent in the third quarter, compared with an increase of 3.0 percent (revised) in the second. _____ NOTE. Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise specified. Percent changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2009) dollars. Price indexes are chain-type measures.

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 2.2 percent in the third quarter, compared with an increase of 3.6 percent in the second.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 1.3 percent in the third quarter, compared with an increase of 1.5 percent in the second. Excluding food and energy prices, the price index for gross domestic purchases increased 1.3 percent, compared with an increase of 1.2 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 3.4 percent, or $151.0 billion, in the third quarter to a level of $18,064.7 billion. In the second quarter, current-dollar GDP increased 6.1 percent, or $264.4 billion.

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

Advance Estimate Second Estimate (Percent change from preceding quarter)

For the second quarter of 2015, real GDI was revised up 1.5 percentage points, from 0.7 percent to 2.2 percent, primarily reflecting an upward revision to private wages and salaries based on newly available second-quarter tabulations from the BLS quarterly census of employment and wages.

Corporate Profits

Profits from current production

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $22.7 billion in the third quarter, in contrast to an increase of $70.4 billion in the second.

Profits of domestic financial corporations decreased $8.5 billion in the third quarter, in contrast to an increase of $34.6 billion in the second. Profits of domestic nonfinancial corporations increased $15.8 billion, compared with an increase of $24.3 billion. The rest-of-the-world component of profits decreased $30.0 billion, in contrast to an increase of $11.4 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 third quarter, receipts decreased $7.2 billion, and payments increased $22.7 billion.

Taxes on corporate income increased $2.3 billion in the third quarter, compared with an increase of $31.3 billion in the second. Profits after tax with IVA and CCAdj decreased $25.0 billion, in contrast to an increase of $39.2 billion.

Dividends increased $27.1 billion in the third quarter, compared with an increase of $1.2 billion in the second. Undistributed profits decreased $52.2 billion, in contrast to an increase of $38.0 billion. Net cash flow with IVA -- the internal funds available to corporations for investment -- decreased $34.9 billion, in contrast to an increase of $48.1 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 $35.3 billion in the third quarter, in contrast to a decrease of $78.7 billion in the second. The CCAdj decreased $1.4 billion, in contrast to an increase of $7.7 billion.

Gross value added of nonfinancial domestic corporate business

Real gross value added of nonfinancial corporations increased in the third quarter. Unit profits from current production (profits per unit of real value added) were unchanged, reflecting an increase in unit prices and a decrease in unit nonlabor costs that were offset by an increase in unit labor costs.