Gross Domestic Product, 3rd quarter 2015 (third estimate); Corporate Profits, 3rd 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 2.0 percent in the third quarter of 2015, according to the "third" 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 "second" estimate issued last month. In the second estimate, the increase in real GDP was 2.1 percent. With the third estimate for the third quarter, the general picture of economic growth remains the same; private inventory investment decreased more 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, and in state and local government spending that were partly offset by a deceleration in imports.

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 2.7 percent in the third quarter, compared with an increase of 2.2 percent 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 2.3 percent in the third quarter, compared with an increase of 3.0 percent in the second.

_____ FOOTNOTE. 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 3.3 percent, or $146.5 billion, in the third quarter to a level of $18,060.2 billion. In the second quarter, current-dollar GDP increased 6.1 percent, or $264.4 billion.

Revisions

The small downward revision to the percent change in real GDP primarily reflected a downward revision to private inventory investment, based primarily on revised Census inventory data. For more information, see the Technical Note. 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)) decreased $33.0 billion in the third quarter, in contrast to an increase of $70.4 billion in the second.

Profits of domestic financial corporations increased $1.8 billion in the third quarter, compared with an increase of $34.6 billion in the second. Profits of domestic nonfinancial corporations decreased $11.8 billion, in contrast to an increase of $24.3 billion. The rest-of-the-world component of profits decreased $23.1 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 $3.5 billion, and payments increased $19.5 billion.

Taxes on corporate income decreased $6.9 billion in the third quarter, in contrast to an increase of $31.3 billion in the second. Profits after tax with IVA and CCAdj decreased $26.2 billion, in contrast to an increase of $39.2 billion.

Dividends increased $26.0 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 $35.1 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 $35.9 billion in the third quarter, in contrast to a decrease of $78.7 billion in the second. The CCAdj decreased $1.3 billion, in contrast to an increase of $7.7 billion.

Corporate profits with IVA

Profits of domestic financial corporations increased $2.5 billion in the third quarter, compared with an increase of $34.3 billion in the second. Profits of domestic nonfinancial corporations decreased $11.1 billion, in contrast to an increase of $17.0 billion. The third-quarter decrease in profits of nonfinancial corporations primarily reflected a decrease in manufacturing of durable goods, specifically motor vehicles and machinery, and a decrease in utilities.

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) decreased, reflecting an increase in unit labor costs that was partly offset by an increase in unit prices; unit nonlabor costs were unchanged in the third quarter.