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Technical Note

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                         Technical Note
                     Gross Domestic Product
              Second Quarter of 2004 (Preliminary)
                        August 27, 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 second 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 Revision to Real GDP
     
Real GDP growth in the second quarter was revised from 3.0 percent to 2.8 percent.  The
downward revision to the percent change in real GDP reflected a downward revision to
exports and an upward revision to imports that were partly offset by upward revisions to
personal consumption expenditures, to private inventory investment, and to equipment
and software investment. 

.    Exports were revised down and imports were revised up, mainly reflecting newly
     available Census Bureau data on goods for June.
.    Personal consumption expenditures were revised up, mainly reflecting revised Census
     retail sales data for May and June.
.    Inventory investment was revised up, mainly reflecting newly available Census data
     on wholesale and retail trade inventories for June and revised data for May.
.    Equipment and software investment was revised up, mainly reflecting newly available
     Census data on exports and imports for June.

    
Revisions to Wages and Salaries and Related Series

In addition to presenting preliminary estimates for the second quarter, today's news
release also presents revised estimates of first-quarter wages and salaries, personal taxes, and
contributions for government social insurance that incorporate newly available Bureau of Labor Statistics
tabulations of wages and salaries of employees covered by state unemployment insurance.

Wages and salaries are now estimated to have increased $51.8 billion in the first quarter, a downward
revision of $21.8 billion, and real disposable personal income (DPI) is now estimated to have increased
2.4 percent in the first quarter, a downward revision of 0.8 percentage point.  Real DPI in the second
quarter is now estimated to have increased 2.5 percent, a downward revision of 0.4 percentage point. 


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

               Table A. SOURCE DATA FOR THE ADVANCE AND PRELIMINARY
                      ESTIMATES OF GDP FOR THE SECOND QUARTER OF 2004
                                                                                     
This table shows the actual data used for the preliminary estimate of GDP for the second quarter of 2004. 
For these key series, actual data for June were not available in time for inclusion in the advance GDP
estimate released on July 30, 2004, and BEA made assumptions for these source data.  The numbers in
brackets show the June values that had been assumed for the advance estimate.  For most series, the data
incorporated for May and, in some cases, for April were preliminary, and the numbers shown in brackets are
the values used last month.

All series shown in the table are in billions of dollars, seasonally adjusted at annual rates, and are published
by the Bureau of the Census.                                                           
                              
                                                                                  2004
                                                 Jan.         Feb.         Mar.       Apr.        May         Jun.
 Private fixed investment:

  Nonresidential structures:
1  Value of new total private
    construction put in place less
    residential (inc. improvements)...           210.1        215.7        216.5      221.6       219.4       219.5
                                                                                     {219.7}     {218.9}     {219.3}
  Equipment and software:
2  Manufacturers' shipments of
    complete aircraft...................          26.8         26.6         27.7       24.6        31.3        25.7
                                                                                                  {31.3}      {23.7}
  Residential structures:
   Value of new residential
    construction put in place:
3    Single family .....................         348.0        348.1        353.5       360.0      365.9        364.6
                                                                                      {360.1}    {364.9}      {361.3}
     
4    Multifamily........................          35.6         36.8         37.6        37.8       37.9         38.4
                                                                                       {37.5}     {37.7}       {37.4}

  Change in private inventories: 
   
5  Change in inventories for nondurable
    manufacturing.......................          13.4         17.9          8.7         6.3       13.7         10.4
                                                                                                  {10.5}       {11.9}
5a Change in inventories for merchant
    wholesale and retail industries other
    than motor vehicles and equipment..            1.0         53.0         41.0        34.9       72.0         57.4
                                                                                                  {60.8}       {36.2}

 Net exports:
                                                           
  Exports of goods:
6  U.S. exports of goods,
    international-transactions-
    accounts basis.......................        740.2        779.2        807.6       791.4      824.3        771.0
                                                                                                 {824.5}      {822.6}

6a   Excluding gold......................        735.1        775.3        803.5       787.9      820.6        767.7
                                                                                                 {820.8}      {819.0}

  Imports of goods:
7  U.S. imports of goods,
    international-transactions-
    accounts basis.......................       1335.3       1376.4       1424.5      1427.2     1442.0        1492.9
                                                                                                {1434.2}      {1452.7}

7a   Excluding gold......................       1331.2       1372.0       1420.7      1423.4     1439.2        1489.7
                                                                                                {1431.4}      {1449.1}
     
8  Net exports of goods..................       -595.1       -597.2       -616.9      -635.9     -617.7        -721.9
                                                                                                {-609.7}      {-630.0}
   
8a   Excluding gold......................       -596.2       -596.7       -617.3      -635.5     -618.6        -722.0
                                                                                                {-610.6}      {-630.0}
                                 
 Government:

  State and local:
   Structures:
9   Value of new construction put
     in place............................        205.4        204.5        218.1       221.1      220.7        221.1
                                                                                      {219.9}    {219.7}      {219.8}




Table B.  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      101.941      1.9          101.668        1.7
2002      103.113      1.1          103.185        1.5
2003      105.040      1.9          104.388        1.2

        [Seasonally adjusted at annual rates]

2001:I    101.479      2.8          101.072        2.1
2001:II   102.003      2.1          101.408        1.3
2001:III  102.205      0.8          101.890        1.9
2001:IV   102.079     -0.5          102.304        1.6

2002:I    102.242      0.6          102.560        1.0
2002:II   102.966      2.9          103.011        1.8
2002:III  103.424      1.8          103.449        1.7
2002:IV   103.820      1.5          103.722        1.1

2003:I    104.601      3.0          103.952        0.9
2003:II   104.768      0.6          104.238        1.1
2003:III  105.294      2.0          104.572        1.3
2003:IV   105.496      0.8          104.790        0.8

2004:I    106.334      3.2          105.261        1.8
2004:II   107.295      3.7          105.801        2.1


NOTE. -- The price index for "market-based" personal consumption expenditures (PCE)
is a supplemental measure prepared by the Bureau of Economic Analysis that is based
on household expenditures for which there are observable price measures.  It excludes
most implicit prices (for example, the services furnished without payment by financial
intermediaries) and the expenses of nonprofit institutions.  More information is
available on BEA's Web site at http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=83.