Gross Domestic Product, 1st quarter 2016 (third estimate); Corporate Profits, 1st quarter 2016 (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 1.1 percent in the first quarter of 2016, according to the "third" estimate released by the Bureau of Economic Analysis. In the fourth quarter of 2015, real GDP increased 1.4 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 0.8 percent. With the third estimate for the first quarter, the general picture of economic growth remains the same; exports increased more than previously estimated (see "Revisions" on page 2).

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

The deceleration in real GDP in the first quarter primarily reflected a deceleration in PCE, a larger decrease in nonresidential fixed investment, and a downturn in federal government spending that were partly offset by upturns in state and local government spending and exports and an acceleration in residential fixed investment.

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 2.9 percent in the first quarter, compared with an increase of 1.9 percent in the fourth. The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 2.0 percent in the first quarter, compared with an increase of 1.7 percent in the fourth.

Upcoming Annual Revision of the National Income and Product Accounts

The annual revision of the national income and product accounts, covering the first quarter of 2013 through the first quarter of 2016, will be released along with the "advance" estimate of GDP for the second quarter of 2016 on July 29. For more information, see "Preview of the Upcoming Annual NIPA Revision" included in the May Survey of Current Business article on "GDP and the Economy".

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever produced -- increased 0.9 percent in the first quarter, compared with an increase of 1.5 percent in the fourth.

The price index for gross domestic purchases, which measures prices paid by U.S. residents, increased 0.2 percent in the first quarter, compared with an increase of 0.4 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 1.4 percent, compared with an increase of 1.0 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 1.4 percent, or $65.3 billion, in the first quarter to a level of $18,230.1 billion. In the fourth quarter, current-dollar GDP increased 2.3 percent, or $104.6 billion.

Revisions

The upward revision to the percent change in real GDP primarily reflected upward revisions to exports and to nonresidential fixed investment that were partly offset by a downward revision to PCE. 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]) increased $34.7 billion in the first quarter, in contrast to a decrease of $159.6 billion in the fourth.

Profits of domestic financial corporations decreased $11.3 billion in the first quarter, compared with a decrease of $24.0 billion in the fourth. Profits of domestic nonfinancial corporations increased $72.9 billion, in contrast to a decrease of $129.2 billion. The rest-of-the-world component of profits decreased $26.9 billion, compared with a decrease of $6.5 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 increased $8.7 billion, and payments increased $35.6 billion.

Taxes on corporate income increased $4.4 billion in the first quarter, in contrast to a decrease of $32.2 billion in the fourth. Profits after tax with IVA and CCAdj increased $30.3 billion, in contrast to a decrease of $127.4 billion.

Dividends increased $8.2 billion in the first quarter, in contrast to a decrease of $15.1 billion in the fourth. Undistributed profits increased $22.1 billion, in contrast to a decrease of $112.2 billion. Net cash flow with IVA -- the internal funds available to corporations for investment -- increased $33.6 billion, in contrast to a decrease of $101.6 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 $21.6 billion in the first quarter, in contrast to an increase of $13.3 billion in the fourth. The CCAdj decreased $3.0 billion, compared with an increase of $3.6 billion.

Corporate profits with IVA

Profits of domestic financial corporations decreased $10.7 billion in the first quarter, compared with a decrease of $24.0 billion in the fourth. Profits of domestic nonfinancial corporations increased $75.3 billion, in contrast to a decrease of $132.7 billion. The first-quarter increase in profits of nonfinancial corporations primarily reflected an increase in manufacturing of nondurable goods, specifically petroleum and coal products.

Gross value added of nonfinancial domestic corporate business

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