Washington D.C., May 31, 3007
Real gross domestic product -- the output of goods and services produced by labor and property
located in the United States -- increased at an annual rate of 0.6 percent in the first quarter of 2007,
according to preliminary estimates released by the Bureau of Economic Analysis. In the fourth quarter,
real GDP increased 2.5 percent.
The GDP estimates released today are based on more complete source data than were available for
the advance estimates issued last month. In the advance estimates, the increase in real GDP was 1.3
percent (see "Revisions" on page 3).
The increase in real GDP in the first quarter primarily reflected positive contributions from
personal consumption expenditures (PCE) and state and local government spending that were partly
offset by negative contributions from private inventory investment, residential fixed investment, and
federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.
The deceleration in real GDP growth in the first quarter primarily reflected an upturn in imports,
downturns in exports and in federal government spending, and a deceleration in PCE for nondurable
goods that were partly offset by an upturn in equipment and software, a smaller decrease in residential
fixed investment, accelerations in PCE for durable goods and in PCE for services, and a smaller
decrease in private inventory investment.
Final sales of computers subtracted 0.04 percentage point from the first-quarter growth in real
GDP after contributing 0.22 percentage point to the fourth-quarter growth. Motor vehicle output
contributed 0.10 percentage point to the first-quarter growth in real GDP after subtracting 1.18
percentage points from the fourth-quarter growth.
FOOTNOTE.--Quarterly estimates are expressed at seasonally adjusted annual rates, unless otherwise
specified. Quarter-to-quarter dollar changes are differences between these published estimates. Percent
changes are calculated from unrounded data and are annualized. "Real" estimates are in chained (2000)
dollars. Prices indexes are chain-type measures.
This news release is available on BEA's Web site at www.bea.gov/newsreleases/rels.htm.
The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 3.6 percent in the first quarter, the same as in the advance estimate; this index increased 0.2
percent in the fourth quarter. Excluding food and energy prices, the price index for gross domestic
purchases increased 2.8 percent in the first quarter, compared with an increase of 2.4 percent in the
fourth. About 0.2 percentage point of the first-quarter increase in the index was accounted for by the
pay raise for federal civilian and military personnel, which is treated as an increase in the price index of
employee services purchased by the federal government.
Real personal consumption expenditures increased 4.4 percent in the first quarter, compared with
an increase of 4.2 percent in the fourth. Real nonresidential fixed investment increased 2.9 percent, in
contrast to a decrease of 3.1 percent. Nonresidential structures increased 5.1 percent, compared with an
increase of 0.8 percent. Equipment and software increased 2.0 percent, in contrast to a decrease of 4.8
percent. Real residential fixed investment decreased 15.4 percent, compared with a decrease of 19.8
percent.
Real exports of goods and services decreased 0.6 percent in the first quarter, in contrast to an
increase of 10.6 percent in the fourth. Real imports of goods and services increased 5.7 percent, in
contrast to a decrease of 2.6 percent.
Real federal government consumption expenditures and gross investment decreased 3.9 percent in
the first quarter, in contrast to an increase of 4.6 percent in the fourth. National defense decreased 7.3
percent, in contrast to an increase of 12.3 percent. Nondefense increased 3.6 percent, in contrast to a
decrease of 9.6 percent. Real state and local government consumption expenditures and gross
investment increased 3.9 percent, compared with an increase of 2.7 percent.
The real change in private inventories subtracted 0.98 percentage point from the first-quarter
change in real GDP, after subtracting 1.16 percentage points from the fourth-quarter change. Private
businesses decreased inventories $4.5 billion in the first quarter, following increases of $22.4 billion in
the fourth quarter and $55.4 billion in the third.
Real final sales of domestic product -- GDP less change in private inventories -- increased 1.6
percent in the first quarter, compared with an increase of 3.7 percent in the fourth.
Gross domestic purchases
Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 1.6 percent in the first quarter, compared with an increase of 0.8 percent in the
fourth.
Gross national product
Real gross national product -- the goods and services produced by the labor and property supplied
by U.S. residents -- increased 0.4 percent in the first quarter, compared with an increase of 3.5 percent in
the fourth. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which
decreased $7.0 billion in the first quarter after increasing $29.4 billion in the fourth; in the first quarter,
receipts increased $11.0 billion, and payments increased $18.0 billion.
Current-dollar GDP
Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
4.7 percent, or $154.8 billion, in the first quarter to a level of $13,613.0 billion. In the fourth quarter,
current-dollar GDP increased 4.1 percent, or $135.6 billion.
Revisions
The preliminary estimate of the first-quarter increase in real GDP is 0.7 percentage point, or $17.4
billion, lower than the advance estimate issued last month. The downward revision to the percent
change in real GDP primarily reflected a downward revision to private inventory investment and an
upward revision to imports that were partly offset by an upward revision to personal consumption
expenditures.
Advance Preliminary
(Percent change from preceding quarter)
Real GDP............................... 1.3 0.6
Current-dollar GDP.................... 5.3 4.7
Gross domestic purchases price index.. 3.6 3.6
Corporate Profits
Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $20.3 billion in the first quarter, in contrast to a decrease of $4.9
billion in the fourth quarter. Current-production cash flow (net cash flow with inventory valuation and
capital consumption adjustments) -- the internal funds available to corporations for investment --
decreased $4.6 billion in the first quarter, compared with a decrease of $1.1 billion in the fourth.
Taxes on corporate income increased $8.8 billion in the first quarter, in contrast to a decrease of
$14.4 billion in the fourth. Profits after tax with inventory valuation and capital consumption
adjustments increased $11.4 billion in the first quarter, compared with an increase of $9.6 billion in the
fourth. Dividends increased $20.6 billion, compared with an increase of $21.0 billion; current-
production undistributed profits decreased $9.2 billion, compared with a decrease of $11.5 billion.
Domestic profits of financial corporations increased $4.8 billion in the first quarter, compared
with an increase of $20.5 billion in the fourth. Domestic profits of nonfinancial corporations increased
$16.2 billion, in contrast to a decrease of $62.6 billion. In the first quarter, both real gross corporate
value added of nonfinancial corporations and profits per unit of real value added increased. The
increase in unit profits reflected an increase in unit prices that was partly offset increases in both the unit
labor and nonlabor costs that corporations incurred.
The rest-of-the-world component of profits decreased $0.8 billion in the first quarter, in contrast to
an increase of $37.3 billion in the fourth. This measure is calculated as (1) receipts by U.S. residents of
earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated foreign
corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus dividends
paid by U.S. corporations to unaffiliated foreign residents. The first-quarter decrease was accounted for
by a smaller increase in receipts than in payments.
Profits before tax increased $20.9 billion in the first quarter, in contrast to a decrease of $16.4
billion in the fourth. The before-tax measure of profits does not reflect, as does profits from current
production, the capital consumption and inventory valuation adjustments. These adjustments convert
depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to
the current-cost measures used in the national income and product accounts. The capital consumption
adjustment increased $14.4 billion in the first quarter (from -$171.7 billion to -$157.3 billion), in
contrast to a decrease of $9.3 billion in the fourth. The inventory valuation adjustment decreased $15.0
billion (from -$17.5 billion to -$32.5 billion), in contrast to an increase of $20.7 billion.
BEA's national, international, regional, and industry estimates; the Survey of Current Business; and
BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the
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