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Technical Note

The tables in this note are available in an XLS spreadsheet, and the entire note is available in PDF format.

                         Technical Note
                     Gross Domestic Product
                 First Quarter of 2004 (Final)
                         June 25, 2004
                                

This technical note provides background information about the source data and estimating
methods used to produce the estimates presented in the GDP news release.  The complete
set of estimates for the first quarter is available on BEA's Web site <www.bea.gov>;  a
brief summary of "highlights" is also posted on the Web site.  In a few weeks, the
estimates will be published in BEA's monthly journal, the Survey of Current Business,
along with a more detailed analysis of the estimates ("The Business Situation").  

Sources of Revisions
     
Real GDP growth in the first quarter was revised down from 4.4 percent to 3.9 percent
(annual rate).  The revision reflected an upward revision to imports and a downward
revision to consumer spending that were partly offset by an upward revision to exports:

      .   Upward revisions to imports (which are subtracted in the calculation of GDP)
          and to exports reflected the incorporation of source data from the annual
          revision of international trade in goods and services from the Census Bureau
          and BEA.  The revised trade data reflect late arriving data, corrections, and
          new factors for seasonal adjustments.  The trade data were incorporated on
          a "best change" basis--that is, the changes in the revised source data from
          the fourth quarter of 2003 to the first quarter of 2004 are reflected in the
          estimates released today. 
      .   A downward revision to consumer spending reflected a revision to spending
          for bank service charges based on newly available Federal Deposit Insurance
          Corporation Call Report data. 

The price index for gross domestic purchases increased 3.5 percent in the first quarter,
0.2 percentage point more than in the preliminary estimate.   

      .   The upward revision to the price index for gross domestic purchases
          primarily reflected an upward revision to the implicit price of bank services,
          based on newly available Federal Reserve Board tabulations of Call Report
          data. 

Profits from current production increased 1.7 percent at a quarterly rate, 0.5 percentage
point more than in the preliminary estimate.  The revision reflected upward revisions to
profits from the rest of the world and to profits of domestic nonfinancial corporations that
more than offset a downward revision to profits of domestic financial corporations.


Price Index for Market-Based Personal Consumption Expenditures

Recently there has been considerable interest in a supplementary price index that BEA
introduced on its Web site last December.  The price index for "market-based" personal
consumption expenditures covers household purchases of goods and services for which
explicit prices are charged.  Thus, the index excludes most implicit prices (for example,
the implicit price of bank services that are furnished without payment) and the expenses
of nonprofit institutions.  This index is presented in table 1 of this technical note.


Annual Revision Scheduled for July 30 

The GDP news release on July 30 will present the regular annual revision of the national
income and product accounts, covering the estimates from the first quarter of 2001
through the first quarter of 2004, as well as the advance estimates for the second quarter
of 2004. The revision will incorporate source data that are more complete, more detailed,
and otherwise more appropriate than those previously available, including:

     .    Census Bureau monthly survey of construction and annual surveys of merchant
          wholesale and retail trade, of services, and of state and local governments;
     .    BEA international transactions accounts data;
     .    Federal Government budget data;
     .    Internal Revenue Service tabulations of tax returns for corporations and for sole
          proprietorships and partnerships; and
     .    Department of Agriculture farm income statistics.


Brent R. Moulton  
Associate Director for National Economic Accounts
Bureau of Economic Analysis  
(202) 606-9606 
June 25, 2004


Table 1.  Price Index for Market-Based Personal Consumption Expenditures

        Market-based PCE          Market-based PCE
                                  less food and energy
         Index      Percent           Index    Percent
        [2000=100]   change        [2000=100]   change


2001      101.923      1.9          101.661        1.7
2002      103.110      1.2          103.206        1.5
2003      105.091      1.9          104.447        1.2

        [Seasonally adjusted at annual rates]

2001:I    101.442      2.7          101.052        2.1
2001:II   101.995      2.2          101.389        1.3
2001:III  102.196      0.8          101.877        1.9
2001:IV   102.059     -0.5          102.324        1.8

2002:I    102.191      0.5          102.543        0.9
2002:II   102.954      3.0          102.999        1.8
2002:III  103.430      1.9          103.460        1.8
2002:IV   103.863      1.7          103.820        1.4

2003:I    104.612      2.9          103.982        0.6
2003:II   104.805      0.7          104.274        1.1
2003:III  105.385      2.2          104.663        1.5
2003:IV   105.564      0.7          104.870        0.8

2004:I    106.367      3.1          105.298        1.6

NOTE. -- The price index for "market-based" personal consumption expenditures is
a supplemental measure that is meant to cover household purchases of goods and
services for which explicit prices are charged.  Thus, the index excludes most
implicit prices (for example, the implicit price of services furnished without payment
by financial intermediaries) and the expenses of nonprofit institutions.  More
information is available on BEA's Web site at <www.bea.gov/bea/faq/national/FAQ.htm>.