Technical Note
Gross Domestic Product
Fourth Quarter of 2008 (Advance)
January 30, 2009

ERRATA: “Table A. Key Assumptions for the Advance Estimate of GDP for the Fourth Quarter of 2008” that accompanies the Technical Note for the Fourth Quarter of 2008 (Advance) Gross Domestic Product, released January 30, 2009, has been corrected. The table error affected only the November data for one line on the table: line 5. Change in inventories for nondurable manufacturing.

Gross Domestic Product and the estimate for change in private inventories were not affected.


*See the navigation bar at the right side of the technical note text for supplementary materials.

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 fourth quarter is available on
BEA's Web site at 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 ("GDP and the Economy").

Real GDP

Real GDP decreased 3.8 percent (annual rate) in the fourth quarter, following a
decrease of 0.5 percent in the third quarter.  The larger decrease in real GDP
reflected a downturn in exports and a much larger decrease in business
investment in structures, equipment, and software.

Source Data for the Advance Estimate

The advance GDP estimate for the fourth quarter of 2008 is based on source
data that are incomplete and subject to revision.  Three months of source data
were available for consumer spending on goods; shipments of capital equipment
other than aircraft; motor vehicle sales and inventories; manufacturing durables
inventories; federal government outlays; and consumer, producer, and
international prices.  Only two months of data were available for most other key
data sources; BEA’s assumptions for the third month are shown in table A.
Among those assumptions are the following:

*	an increase in manufacturers’ shipments of complete aircraft, reflecting a
        rebound from the effects of the machinists strike,
*	a decrease in nondurable manufacturing inventories,
*	a decrease in non-motor-vehicle merchant wholesale and retail
        inventories,
*	a decrease in exports of goods, excluding gold, and
*	a decrease in imports of goods, excluding gold.

Prices

The price index for gross domestic purchases decreased 4.6 percent in the fourth
quarter after increasing 4.5 percent in the third quarter.  Excluding food and
energy prices, the price index for gross domestic purchases increased 1.2
percent in the fourth quarter, after increasing 2.8 percent in the third.

Troubled Asset Relief Program

In October 2008, the Emergency Economic Stabilization Act of 2008 established
the Troubled Asset Relief Program (TARP).  Among its provisions, the act
authorized the Department of the Treasury to purchase or insure up to $700
billion in assets to alleviate the financial crisis.  By the end of the fourth quarter,
the program had disbursed $243 billion to banks and other institutions in
exchange for shares of preferred stock and warrants.  The program also
disbursed a $4 billion loan to General Motors in the fourth quarter.

Purchases of financial assets are generally not recorded in the GDP accounts
(though they appear in the Federal Reserve’s flow of funds accounts).  However,
when the Treasury purchases a financial asset (other than a loan) at more
favorable terms than are available in private markets, BEA records a portion of
the purchase as a capital transfer, calculated as the difference between the
actual price paid for the financial asset and an estimate of its market value.  This
treatment is consistent with the recommendations of the newly updated
international guidelines, System of National Accounts 2008.  For the fourth
quarter, in most cases BEA’s estimates of these capital transfers are based on
Congressional Budget Office estimates, which are prepared on a net present
value basis.  The recording of a capital transfer in the GDP accounts does not
affect GDP or net government saving, but does reduce net government lending
or borrowing.

The data on capital transfer payments do not appear in the GDP news release
tables, but will be presented on BEA’s Web site in NIPA tables 3.1 and 3.2 and in
underlying detail table 5.10U.

For further information on the treatment of federal government activities related
to financial crisis, see the FAQ section of BEA’s Web site, www.bea.gov.


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