Gross Domestic Product, 3rd quarter 2016 (second estimate); Corporate Profits, 3rd quarter 2016 (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 increased at an annual rate of 3.2 percent in the third quarter of 2016 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4 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 2.9 percent. With the second estimate for the third quarter, the general picture of economic growth remains the same; the increase in personal consumption expenditures was larger than previously estimated (see "Updates to GDP" on page 2).

Real gross domestic income (GDI) increased 5.2 percent in the third quarter, compared with an increase of 0.7 percent in the second (revised). The average of real GDP and real GDI, a supplemental measure of U.S. economic activity that equally weights GDP and GDI, increased 4.2 percent in the third quarter, compared with an increase of 1.1 percent in the second (table 1).

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, private inventory investment, and federal government spending, that were partly offset by negative contributions from residential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

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

Current-dollar GDP increased 4.6 percent, or $207.8 billion, in the third quarter to a level of $18,657.9 billion (table 1 and table 3). In the second quarter, current dollar GDP increased 3.7 percent, or $168.5 billion.

The price index for gross domestic purchases increased 1.5 percent in the third quarter, compared with an increase of 2.1 percent in the second quarter (table 4). The PCE price index increased 1.4 percent, compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index increased 1.7 percent, compared with an increase of 1.8 percent (appendix table A).

Updates to GDP

The upward revision to the percent change in real GDP primarily reflected an upward revision to PCE that was partly offset by downward revisions to nonresidential fixed investment and private inventory investment. For more information, see the Technical Note. For information on updates to GDP, see the “Additional Information” section that follows.

For the second quarter of 2016, the percent change in real GDI was revised up 0.9 percentage point from -0.2 percent to 0.7 percent based on newly available second-quarter tabulations from the BLS Quarterly Census of Employment and Wages program.?

Corporate Profits (table 12)

Profits from current production (corporate profits with inventory valuation adjustment and capital consumption adjustment) increased $133.8 billion in the third quarter, in contrast to a decrease of $12.5 billion in the second.

Profits of domestic financial corporations increased $50.9 billion in the third quarter, compared with an increase of $5.6 billion in the second. Profits of domestic nonfinancial corporations increased $76.5 billion, in contrast to a decrease of $56.1 billion. The rest-of-the-world component of profits increased $6.4 billion, compared with an increase of $38.0 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 third quarter, receipts decreased $0.2 billion, and payments decreased $6.6 billion.