EMBARGOED UNTIL RELEASE AT 8:30 A.M. EDT, WEDNESDAY, JULY 30, 2014
BEA 14-34


* See the navigation bar at the right side of the news release text for links to data tables,
contact personnel and their telephone numbers, and supplementary materials.


Lisa S. Mataloni: (202) 606-5304 (GDP) gdpniwd@bea.gov
Jeannine Aversa: (202) 606-2649 (News Media)  
Nicole Mayerhauser: (202) 606-9715 (Revision)  
Brent Moulton: (202) 606-9606  
National Income and Product Accounts
Gross Domestic Product: Second Quarter 2014 (Advance Estimate)
Annual Revision: 1999 through First Quarter 2014
      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 4.0 percent in the second quarter of 2014,
according to the "advance" estimate released by the Bureau of Economic Analysis.  In the first quarter,
real GDP decreased 2.1 percent (revised).

      The Bureau emphasized that the second-quarter advance estimate released today is based on
source data that are incomplete or subject to further revision by the source agency (see the box on page 3
and "Comparisons of Revisions to GDP" on page 10).  The "second" estimate for the second quarter,
based on more complete data, will be released on August 28, 2014.

      The increase in real GDP in the second quarter primarily reflected positive contributions from
personal consumption expenditures (PCE), private inventory investment, exports, nonresidential fixed
investment, state and local government spending, and residential fixed investment.  Imports, which are a
subtraction in the calculation of GDP, increased.

Box.___________
Annual Revision of the National Income and Product Accounts

      The estimates released today reflect the results of the annual revision of the national income and
product accounts (NIPAs) in conjunction with the "advance" estimate of GDP for the second quarter of
2014.  In addition to the regular revision of estimates for the most recent 3 years and the first quarter of
2014, GDP and select components were revised back to the first quarter of 1999 (see the Technical
Note).  More information is available in "Preview of Upcoming NIPA Revision" in the May Survey of
Current Business and on BEA's Web site.  The August Survey will contain an article describing the annual 
revision in detail.
________________

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 (2009)
dollars.  Price indexes are chain-type measures.

      This news release is available on BEA's Web site along with the Technical Note
and Highlights related to this release.
________________


      Real GDP increased 4.0 percent in the second quarter, after decreasing 2.1 percent in the first.
This upturn in the percent change in real GDP primarily reflected upturns in private inventory
investment and in exports, an acceleration in PCE, an upturn in state and local government spending, an
acceleration in nonresidential fixed investment, and an upturn in residential fixed investment that were
partly offset by an acceleration in imports.

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.9 percent in the second quarter, compared with an increase of 1.4 percent in the first.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.7 percent,
compared with an increase of 1.3 percent.

      Real personal consumption expenditures increased 2.5 percent in the second quarter, compared
with an increase of 1.2 percent in the first.  Durable goods increased 14.0 percent, compared with an
increase of 3.2 percent.  Nondurable goods increased 2.5 percent; it was unchanged in the first quarter.
Services increased 0.7 percent in the second quarter, compared with an increase of 1.3 percent in the
first.

      Real nonresidential fixed investment increased 5.5 percent in the second quarter, compared with
an increase of 1.6 percent in the first.  Investment in nonresidential structures increased 5.3 percent,
compared with an increase of 2.9 percent.  Investment in equipment increased 7.0 percent, in contrast to
a decrease of 1.0 percent.  Investment in intellectual property products increased 3.5 percent, compared
with an increase of 4.6 percent.  Real residential fixed investment increased 7.5 percent, in contrast to a
decrease of 5.3 percent.

      Real exports of goods and services increased 9.5 percent in the second quarter, in contrast to a
decrease of 9.2 percent in the first.  Real imports of goods and services increased 11.7 percent,
compared with an increase of 2.2 percent.

      Real federal government consumption expenditures and gross investment decreased 0.8 percent
in the second quarter, compared with a decrease of 0.1 percent in the first.  National defense increased
1.1 percent, in contrast to a decrease of 4.0 percent.  Nondefense decreased 3.7 percent, in contrast to an
increase of 6.6 percent.  Real state and local government consumption expenditures and gross
investment increased 3.1 percent, in contrast to a decrease of 1.3 percent.

      The change in real private inventories added 1.66 percentage points to the second-quarter change
in real GDP after subtracting 1.16 percentage points from the first-quarter change.  Private businesses
increased inventories $93.4 billion in the second quarter, following increases of $35.2 billion in the first
quarter and $81.8 billion in the fourth quarter of 2013.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 2.3
percent in the second quarter, in contrast to a decrease of 1.0 percent in the first.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 4.5 percent in the second quarter, in contrast to a decrease of 0.4 percent in the
first.


Disposition of personal income

      Current-dollar personal income increased $208.0 billion in the second quarter, compared with an
increase of $176.6 billion in the first.  The acceleration in personal income primarily reflected an upturn
in personal dividend income and a smaller decrease in farm proprietors' income that were partly offset
by a deceleration in wages and salaries.

      Personal current taxes increased $15.2 billion in the second quarter, compared with an increase
of $24.4 billion in the first.

      Disposable personal income increased $192.7 billion, or 6.2 percent, in the second quarter,
compared with an increase of $152.1 billion, or 4.9 percent, in the first.  Real disposable personal
income increased 3.8 percent in the second quarter, compared with an increase of 3.5 percent in the first.

      Personal outlays increased $138.8 billion in the second quarter, compared with an increase of
$76.1 billion in the first.

      Personal saving -- disposable personal income less personal outlays -- was $682.9 billion in the
second quarter, compared with $629.0 billion in the first.

      The personal saving rate -- personal saving as a percentage of disposable personal income -- was
5.3 percent in the second quarter, compared with 4.9 percent in the first.  For a comparison of personal
saving in BEA's national income and product accounts with personal saving in the Federal Reserve
Board's financial accounts of the United States and data on changes in net worth, go to
www.bea.gov/national/nipaweb/Nipa-Frb.asp.


Current-dollar GDP

      Current-dollar GDP -- the market value of the nation's output of goods and services -- increased
6.0 percent, or $250.7 billion, in the second quarter to a level of $17,294.7 billion.  In the first quarter,
current-dollar GDP decreased 0.8 percent, or $34.3 billion.


Box._____________

      Information on the assumptions used for unavailable source data is provided in a technical note
that is posted with the news release on BEA's Web site.  Within a few days after the release, a detailed
"Key Source Data and Assumptions" file is posted on the Web site.  In the middle of each month, an
analysis of the current quarterly estimate of GDP and related series is made available on the Web site;
click on Survey of Current Business, "GDP and the Economy."  For information on revisions, see
"Revisions to GDP, GDI, and Their Major Components."

_________________


Revisions for the first quarter of 2014

      For the first quarter of 2014, real GDP is now estimated to have declined 2.1 percent; in the
previously published estimates, first-quarter GDP was estimated to have declined 2.9 percent. The 0.8-
percentage point upward revision to the percent change in first-quarter real GDP primarily reflected
upward revisions to private inventory investment, to nonresidential fixed investment, and to PCE.


                                             Previous Estimate    Revised

Real GDP...............................             -2.9           -2.1
Current-dollar GDP.....................             -1.7           -0.8
Real GDI...............................             -2.6           -0.7
Gross domestic purchases price index...              1.3            1.4



                       Revision of the National Income and Product Accounts


      The revised estimates reflect the results of the annual revision of the national income and product
accounts (NIPAs).  In addition to the regular revision of estimates for the most recent 3 years and the
first quarter of 2014, this "flexible" annual revision results in revisions to current-dollar GDP beginning
with the first quarter of 1999.   The reference year remains 2009.  When the estimates for the reference
year (2009) are revised, the levels of the related index numbers and chained-dollar estimates are also
revised for the entire historical period; revisions to percent changes before the first quarter of 1999 are
small and mostly due to rounding.

      Because of the additional data shown, tables 3, 11, and 12 of this release are each divided into
two separate tables -- 3A and 3B, 11A and 11B, and 12A and 12B.  There are also a number of special
tables that compare the revised and previously published statistics for select periods:

*	Table 1A shows the percent change in real GDP and related measures; table 1B shows revisions
        to current-dollar GDP, to national income, and to personal income; table 2A shows contributions
        to the percent change in real GDP; and table 4A shows the percent change in the chain-type price
        indexes for GDP and related measures.

*	Tables 7A and 7B show annual levels, percent changes, and revisions to percent changes for
        current-dollar GDP and for real (chained-dollar) GDP, respectively.

*	Table 12C shows revisions to corporate profits by industry.

      With the release of the annual revision, statistics for select NIPA tables will be available on
BEA's Web site (www.bea.gov).  Shortly after the GDP release, BEA will post a table on its Web site
showing the major current-dollar revisions and their sources for each component of GDP, national
income, and personal income.  Additionally, the August 2014 Survey of Current Business will contain an
article describing these revisions.  That issue will also contain an analysis of the current quarterly
estimate of GDP and related series ("GDP and the Economy").


Revisions to real GDP

      For this annual revision, the most notable revisions are generally limited to the period from 2011
through the first quarter of 2014 and largely reflect the incorporation of newly available and revised
source data for the underlying components (see the box below). The revisions for earlier periods are
small.

*	For 2011–2013, real GDP increased at an average annual rate of 2.0 percent; in the previously
        published estimates, real GDP had increased at an average annual rate of 2.2 percent.  From the
        fourth quarter of 2010 to the first quarter of 2014, real GDP increased at an average annual rate
        of 1.8 percent, the same rate as in the previously published estimates.

*	The percent change in real GDP was revised down 0.2 percentage point for 2011, was revised
        down 0.5 percentage point for 2012, and was revised up 0.3 percentage point for 2013.

        o  For 2011, the largest contributors to the downward revision to the percent change in real
           GDP were a downward revision to personal consumption expenditures (PCE) and an
           upward revision to imports.
        o  For 2012, the largest contributors to the downward revision were downward revisions to
           PCE and to state and local government spending.
        o  For 2013, the largest contributors to the upward revision were upward revisions to PCE
           and to state and local government spending; these revisions were partly offset by a
           downward revision to private inventory investment.

*	The revisions to the annual estimates for 2012 and 2013 reflect partly offsetting revisions to the
        quarters within the year.  For 2012, the annual rate of change in GDP was revised down 1.4
        percentage points for the first quarter and was revised down 0.3 percentage point for the third
        quarter, while the growth rate for the second quarter was revised up 0.4 percentage point; the
        growth rate for the fourth quarter was unrevised.  The upward revision to the percent change in
        real GDP for 2013 reflects upward revisions to the first, third, and fourth quarters that were
        partly offset by a downward revision to the second quarter.

*	For the first quarter of 2011 through the first quarter of 2014, the average revision (without
        regard to sign) to the percent change in real GDP was 0.6 percentage point.  The revisions did
        not change the direction of the change in real GDP (increase or decrease) for any of the quarters.

*	For the expansion from the second quarter of 2009 to the first quarter of 2014, real GDP
        increased at an average annual rate of 2.1 percent, the same rate as in the previously published
        estimates.

*	Current-dollar GDP was revised down for all 3 years:  $15.9 billion, or 0.1 percent, for 2011;
        $81.4 billion, or 0.5 percent, for 2012; and $31.6 billion, or 0.2 percent, for 2013.


Revisions to price measures

*	Gross domestic purchases -- From the fourth quarter of 2010 to the first quarter of 2014, the
        average annual rate of increase in the price index for gross domestic purchases was revised up
        from 1.6 percent to 1.7 percent.

*	Personal consumption expenditures -- From the fourth quarter of 2010 to the first quarter of
        2014, the average annual rate of increase in the price index for PCE was 1.7 percent, the same
        rate as in the previously published estimates; the increase in the "core" PCE price index (which
        excludes food and energy) was revised up from 1.5 percent to 1.6 percent.


Revisions to income and saving measures

*	National income was revised down $43.4 billion, or 0.3 percent, for 2011, was revised up $97.9
        billion, or 0.7 percent, for 2012, and was revised up $34.7 billion, or 0.2 percent, for 2013.

        o  For 2011, downward revisions to corporate profits and to nonfarm proprietors' income
           were partly offset by an upward revision to net interest.
        o  For 2012, upward revisions to net interest, to nonfarm proprietors' income, and to
           corporate profits were partly offset by a downward revision to supplements to wages and
           salaries.
        o  For 2013, upward revisions to nonfarm proprietors' income and to net interest were partly
           offset by downward revisions to farm proprietors' income and to wages and salaries.

*	Corporate profits was revised down $61.1 billion, or 3.3 percent, for 2011, was revised up $13.3
        billion, or 0.7 percent, for 2012, and was revised up $4.8 billion, or 0.2 percent, for 2013.

*	Personal income was revised up $10.7 billion, or 0.1 percent, for 2011, was revised up $143.9
        billion, or 1.0 percent, for 2012, and was revised up $32.2 billion, or 0.2 percent, for 2013.

*	For 2011–2013, the average annual rate of growth of real disposable personal income was
        revised up 0.1 percentage point from 1.7 percent to 1.8 percent.

*	The personal saving rate (personal saving as a percentage of disposable personal income) was
        revised up from 5.7 percent to 6.0 percent for 2011, was revised up from 5.6 percent to 7.2
        percent for 2012, and was revised up from 4.5 percent to 4.9 percent for 2013.


Gross domestic income (GDI) and the statistical discrepancy

*	For 2011–2013, real GDI increased at an average annual rate of 2.6 percent; in the previously
        published estimates, real GDI had increased at an average annual rate of 2.5 percent.  From the
        fourth quarter of 2010 to the first quarter of 2014, real GDI increased at an average annual rate of
        2.2 percent; in the previously published estimates, real GDI had increased at an average annual
        rate of 2.1 percent.

*	The statistical discrepancy is current-dollar GDP less current-dollar GDI.  GDP measures final
        expenditures -- the sum of consumer spending, private investment, net exports, and government
        spending.  GDI measures the incomes earned in the production of GDP.  In concept, GDP is
        equal to GDI.  In practice, they differ because they are estimated using different source data and
        different methods.

*	As a result of the annual revision, the statistical discrepancy as a percentage of GDP was revised
        up from -0.3 percent to -0.2 percent for 2011, was revised down from -0.1 percent to -1.3 percent
        for 2012, and was revised down from -0.8 percent to -1.3 percent for 2013.


New and revised source data

      This annual revision incorporated data from the following major federal statistical sources:

Source Data Agency                                Data                               Years Covered by Data and
                                                                                          Vintage of Data
___________________________________________________________________________________________________________________________
 Census Bureau                   Annual surveys of merchant wholesale trade                2011 (revised)
                                 Annual surveys of retail trade                            2012 (new)

				 Monthly indicators of manufactures, merchant wholesale
                                 trade, and retail trade                                   2011–2013 (revised)

                                 Service annual survey                                     2011 and 2012 (revised)
                                                                                           2013 (new)

                                 Annual surveys of  state and local government finances    Fiscal year (FY) 2011 (revised)
                                                                                           FY 2012 (new)

                                 Monthly survey of construction spending (value put in
                                 place)                                                    2011–2013 (revised)

                                 Quarterly services survey                                 2011–2013 (revised)

                                 Current population survey/housing vacancy survey          2011 and 2012 (revised)
                                                                                           2013 (new)
___________________________________________________________________________________________________________________________
Office of Management and
Budget                           Federal Budget                                            FY 2013 and 2014 (revised)
___________________________________________________________________________________________________________________________

Internal Revenue Service         Tabulations of tax returns for corporations               2011 (revised) 2012 (new)

                                 Tabulations of tax returns for sole proprietorships and
                                 partnerships                                              2012 (new)
___________________________________________________________________________________________________________________________
BLS                              Quarterly census of employment and wages                  2011–2013 ( revised)

                                 Survey of occupational employment                         2012 (new)
___________________________________________________________________________________________________________________________
Department of Agriculture        Farm statistics                                           2011–2013 (revised)
___________________________________________________________________________________________________________________________
BEA                              International transactions accounts                       1999–2013 (revised)
___________________________________________________________________________________________________________________________

Changes in methodology and presentation

      The annual revision also incorporated improvements to estimating methodologies and to the
presentation of the NIPA estimates, including the following:

*	Beginning with the estimates for 1999, the presentation of foreign transactions in the NIPAs is
        changed to reflect the comprehensive restructuring of BEA's international transactions accounts
        (ITAs), released in June.  The new presentation of both goods and services in the foreign
        transactions tables is consistent with the corresponding items in the ITAs. The definition of
        exports and imports of travel is broadened to include travel for health and for education and
        expenditures by short-term workers; these services had previously been included in the exports
        and imports of "other" private services. The new presentation of foreign transactions enhances
        the quality and the usefulness of BEA's international accounts statistics and brings them into
        closer alignment with new international statistical guidelines.

*	The presentation of the pension sector is expanded to include a table of transactions of defined
        contribution pension plans and a table that presents transactions of both defined benefit and
        defined contribution pension plans. (Tables presenting the transactions associated with defined
        benefit pension plans were introduced in last year's comprehensive revision.)

                                           *          *          *

      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 site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.


                                           *          *          *


                            Next release -- August 28, 2014 at 8:30 A.M. EDT for:
                        Gross Domestic Product:  Second Quarter 2014 (Second Estimate)
                        Corporate Profits:  Second Quarter 2014 (Preliminary Estimate)




		                       Comparisons of Revisions to GDP

     Quarterly estimates of GDP are released on the following schedule:  the "advance" estimate, based on
source data that are incomplete or subject to further revision by the source agency, is released near the end of the
first month after the end of the quarter; as more detailed and more comprehensive data become available,
the "second" and "third" estimates are released near the end of the second and third months, respectively.
The "latest"” estimate reflects the results of both annual and comprehensive revisions.

     Annual revisions, which generally cover the quarters of the 3 most recent calendar years, are usually carried
out each summer and incorporate newly available major annual source data.  Comprehensive (or benchmark)
revisions are carried out at about 5-year intervals and incorporate major periodic source data, as well as
improvements in concepts and methods that update the accounts to portray more accurately the evolving U.S.
economy.

The table below shows comparisons of the revisions between quarterly percent changes of current-dollar
and of real GDP for the different vintages of the estimates.  From the advance estimate to the second estimate (one
month later), the average revision to real GDP without regard to sign is 0.5 percentage point, while from the
advance estimate to the third estimate (two months later), it is 0.6 percentage point.  From the advance estimate to
the latest estimate, the average revision without regard to sign is 1.3 percentage points.  The average revision
(with regard to sign) from the advance estimate to the latest estimate is 0.3 percentage point, which is larger
than the average revisions from the advance estimate to the second or to the third estimates.  The larger average
revisions to the latest estimate reflect the fact that comprehensive revisions include major improvements, such as
the incorporation of BEA’s latest benchmark input-output accounts.  The quarterly estimates correctly indicate the
direction of change of real GDP 97 percent of the time, correctly indicate whether GDP is accelerating or
decelerating 72 percent of the time, and correctly indicate whether real GDP growth is above, near, or below trend
growth more than four-fifths of the time.

                           Revisions Between Quarterly Percent Changes of GDP: Vintage Comparisons
                                                     [Annual rates]

       Vintages                                   Average         Average without     Standard deviation of
       compared                                                    regard to sign      revisions without
                                                                                         regard to sign

____________________________________________________Current-dollar GDP_______________________________________________

Advance to second....................               0.2                 0.5                  0.4
Advance to third.....................                .2                  .7                   .4
Second to third......................                .0                  .3                   .2

Advance to latest....................                .3                 1.3                  1.0

________________________________________________________Real GDP_____________________________________________________

Advance to second....................               0.1                 0.5                  0.4
Advance to third.....................                .1                  .6                   .4
Second to third......................                .0                  .2                   .2

Advance to latest....................                .3                 1.3                  1.0

NOTE.  These comparisons are based on the period from 1983 through 2010.