Gross Domestic Product, 2nd quarter 2016 (advance 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 increased at an annual rate of 1.2 percent in the second quarter of 2016 (table 1), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.8 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 “Source Data for the Advance Estimate” on page 2). The "second" estimate for the second quarter, based on more complete data, will be released on August 26, 2016.

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

Annual Update of the National Income and Product Accounts

The estimates released today reflect the results of the annual update of the national income and product accounts (NIPAs) in conjunction with the "advance" estimate of GDP for the second quarter of 2016. The update covers the first quarter of 2013 through the first quarter of 2016. For more information, see "Information on the 2016 Annual Update" on BEA’s Web site. Additionally, the August Survey of Current Business will contain an article that describes the results in detail.

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

Current-dollar GDP increased 3.5 percent (table 1), or $155.9 billion, in the second quarter to a level of $18,437.6 billion (table 3A). In the first quarter, current dollar GDP increased 1.3 percent (revised), or $58.9 billion.

The price index for gross domestic purchases increased 2.0 percent in the second quarter, compared with an increase of 0.2 percent in the first (revised) (table 4). The PCE price index increased 1.9 percent, compared with an increase of 0.3 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent, compared with an increase of 2.1 percent (Appendix table A).

Disposition of personal income (table 10)

Current-dollar personal income increased $111.4 billion in the second quarter, compared with an increase of $52.8 billion in the first (revised). The acceleration in personal income primarily reflected upturns in wages and salaries, personal dividend income, and farm proprietors’ income that were offset by slowdowns in personal current transfer receipts.

Disposable personal income increased $106.3 billion, or 3.1 percent, in the second quarter, compared with an increase of $83.4 billion, or 2.5 percent, in the first (revised). Real disposable personal income increased 1.2 percent, compared with an increase of 2.2 percent.

Personal saving was $763.1 billion in the second quarter, compared with $847.8 billion in the first (revised). The personal saving rate -- personal saving as a percentage of disposable personal income -- was 5.5 percent in the second quarter, compared with 6.1 percent in the first.

Information on the assumptions used for unavailable source data in the advance estimate 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. For information on updates to GDP, see the “Additional Information” page at the back of this release.

Revisions for the first quarter of 2016

For the first quarter of 2016, real GDP is now estimated to have increased 0.8 percent; in the previously published estimates, first-quarter GDP was estimated to have increased 1.1 percent. The 0.3-percentage point downward revision to the percent change in first-quarter real GDP primarily reflected downward revisions to residential fixed investment, to private inventory investment, and to exports that were partly offset by upward revisions to nonresidential fixed investment, to PCE, to state and local government spending, to imports, and to federal government spending.

Updated estimates of the national income and product accounts (NIPAs), which are usually made each July, incorporate newly available and more comprehensive source data, as well as improved estimation methodologies. This year, the notable revisions primarily reflect the incorporation of newly available and revised source data. The timespan of the revisions is the first quarter of 2013 through the first quarter of 2016. The reference year remains 2009.

With the release of the updated statistics, select NIPA tables will be available on BEA’s Web site (www.bea.gov). 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 2016 Survey of Current Business will contain an article describing these revisions.

Real GDP (Tables 1A, 1B, and 2A)

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

* From 2012 to 2015, real GDP increased at an average annual rate of 2.2 percent; in the previously published estimates, real GDP had increased at an average annual rate of 2.1 percent. From the fourth quarter of 2012 to the first quarter of 2016, real GDP increased at an average annual rate of 2.2 percent, the same as previously published.

* The percent change in real GDP was revised up 0.2 percentage point for 2013, was the same as previously published for 2014, and was revised up 0.2 percentage point for 2015.

o For 2013, upward revisions to inventory investment, exports, and residential and nonresidential fixed investment were partly offset by a downward revision to personal consumption expenditures (PCE).

o For 2014, a downward revision to inventory investment, an upward revision to imports, and a downward revision to state and local government spending were offset by upward revisions to exports, PCE, and residential fixed investment.

o For 2015, upward revisions to state and local government spending and to residential fixed investment, a downward revision to imports, and an upward revision to PCE were partly offset by downward revisions to exports and nonresidential fixed investment.

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

o For 2013, the annual rate of change in GDP was revised up 0.9 percentage point for the first quarter, 0.1 percentage point for the third quarter, and 0.2 percentage point for the fourth quarter; these upward revisions were partly offset by a downward revision of 0.3 percentage point for the second quarter.

o For 2014, upward revisions of 0.7 percentage point for the third quarter and 0.2 percentage point for the fourth quarter were offset by downward revisions of 0.3 percentage point for the first quarter and 0.6 percentage point for the second quarter.

o For 2015, an upward revision of 1.4 percentage point for the first quarter was partly offset by downward revisions of 1.3 percentage point for the second quarter and 0.5 percentage point for the fourth quarter; the growth rate for the third quarter was the same as previously published.

* For the first quarter of 2013 through the first quarter of 2016, the average revision (without regard to sign) in the percent change in real GDP was 0.5 percentage point. The revisions did not change the direction of the change in real GDP (increase or decrease) for any of the quarters.

* For the period of economic expansion from the second quarter of 2009 to the first quarter of 2016, real GDP increased at an average annual rate of 2.1 percent, the same as previously published.

* Current-dollar GDP was revised up for all 3 years: $28.4 billion, or 0.2 percent, for 2013; $45.0 billion, or 0.3 percent, for 2014; and $89.7 billion, or 0.5 percent, for 2015.

Gross domestic income (GDI) and the statistical discrepancy (Tables 1A and 1B)

* From 2012 to 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 2.1 percent. From the fourth quarter of 2012 to the first quarter of 2016, real GDI increased at an average annual rate of 2.1 percent; in the previously published estimates, real GDI had increased at an average annual rate of 2.2 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.

* The statistical discrepancy as a percentage of GDP was revised up from -1.1 percent to -0.8 percent for 2013, was revised down from -1.2 percent to -1.5 percent for 2014, and was revised down from -1.2 percent to -1.4 percent for 2015.

* 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 2012 to 2015, an upward revision of 0.1 percentage point.

Price measures

* Gross domestic purchases - From the fourth quarter of 2012 to the first quarter of 2016, the average annual rate of increase in the price index for gross domestic purchases was 1.0 percent, the same as previously published.

* Personal consumption expenditures - From the fourth quarter of 2012 to the first quarter of 2016, the average annual rate of increase in the price index for PCE was 0.9 percent, the same as previously published; the increase in the “core” PCE price index (which excludes food and energy) was 1.5 percent, the same as previously published.

Income and saving measures (Table 1B)

* National income was revised down $13.5 billion, or 0.1 percent, for 2013, was revised up $77.4 billion, or 0.5 percent, for 2014, and was revised up $119.0 billion, or 0.8 percent, for 2015.

o For 2013, downward revisions to net interest and corporate profits were partly offset by an upward revision to rental income of persons.

o For 2014, upward revisions to corporate profits, business current transfer payments, and supplements to wages and salaries were partly offset by downward revisions to farm proprietors’ income and to rental income of persons.

o For 2015, upward revisions to corporate profits, business current transfer payments, wages and salaries, nonfarm proprietors’ income, and supplements to wages and salaries, were partly offset by a downward revision to farm proprietors’ income.

* Corporate profits was revised down $4.5 billion, or -0.2 percent, for 2013, was revised up $79.1 billion, or 3.8 percent, for 2014, and was revised up $79.1 billion, or 3.9 percent, for 2015.

* Personal income was revised up $5.3 billion, or less than 0.1 percent, for 2013, was revised up $115.5 billion, or 0.8 percent, for 2014, and was revised up $107.8 billion, or 0.7 percent, for 2015.

* From 2012 to 2015, the average annual rate of growth of real disposable personal income was revised up 0.2 percentage point from 1.6 percent to 1.8 percent.

* The personal saving rate (personal saving as a percentage of disposable personal income) was revised up from 4.8 percent to 5.0 percent for 2013, was revised up from 4.8 percent to 5.6 percent for 2014, and was revised up from 5.1 percent to 5.8 percent for 2015.

New and revised source data

The updated statistics incorporated data from the following major federal statistical sources:

Agency Data Years Covered and Vintage

Office of Management and Budget Federal Budget Fiscal years 2015 and 2016

Department of Agriculture Farm statistics 2013–2015 (revised)

BEA International transactions accounts 2013-2015 (revised)

Changes in methodology and presentation

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

* As part of its regular review and update of seasonal adjustment factors, BEA incorporated refined and improved seasonal adjustments for several GDP components. For more information, read Residual Seasonality in GDP and GDI: Findings and Next Steps at www.bea.gov/national

* Beginning with this advance estimate of GDP for the second quarter of 2016, BEA incorporates newly available Census Bureau data on wholesale and retail trade inventories that are scheduled to be released in time for the advance estimates of the NIPAs. BEA previously estimated inventories for the quarter based on Census Bureau-reported inventory data for the first two months of the quarter and BEA assumptions for the third month. The accelerated release of these data by the Census Bureau allows BEA to calculate a more accurate estimate of the change in private inventories component of GDP for the advance estimate.

* In November 2015, the Census Bureau released revised monthly estimates of construction spending for January 2005 through October 2015. BEA uses these data to prepare annual estimates of private fixed investment for residential structures. For this annual update, BEA incorporated revised Census Bureau data into its annual estimates of residential improvements for 2013 through 2015 on a best-change basis. Estimates for earlier years will be revised during a future update of the NIPAs. For details, see the FAQ “How will the revised Census Bureau construction spending data affect BEA’s quarterly and annual estimates of private fixed investment?”