EMBARGOED UNTIL RELEASE AT 8:30 A.M. EST, TUESDAY, DECEMBER 23, 2014
BEA 14-65


* 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
Kate Shoemaker: (202) 606-5564 (Profits) cpniwd@bea.gov
Jeannine Aversa: (202) 606-2649 (News Media)  
National Income and Product Accounts
Gross Domestic Product: Third Quarter 2014 (Third Estimate)
Corporate Profits: Third Quarter 2014 (Revised Estimate)
      Real gross domestic product -- the value of the production of goods and services in the United
States, adjusted for price changes -- increased at an annual rate of 5.0 percent in the third quarter of
2014, according to the "third" estimate released by the Bureau of Economic Analysis.  In the second
quarter, real GDP increased 4.6 percent.

      The GDP estimate released today is based on more complete source data than were available for
the "second" estimate issued last month.  In the second estimate, the increase in real GDP was 3.9
percent.  With the third estimate for the third quarter, both personal consumption expenditures (PCE)
and nonresidential fixed investment increased more than previously estimated (see "Revisions" on page
3).

      The increase in real GDP in the third quarter primarily reflected positive contributions from
PCE, nonresidential fixed investment, federal government spending, exports, state and local government
spending, and residential fixed investment. Imports, which are a subtraction in the calculation of GDP,
decreased.

      The acceleration in the percent change in real GDP reflected a downturn in imports, an upturn in
federal government spending, and an acceleration in PCE that were partly offset by a downturn in
private inventory investment and decelerations in exports, in state and local government spending, in
residential fixed investment, and in nonresidential fixed investment.

_______
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.  For information on revisions, see "The Revisions to GDP, GDI, and Their Major Components"

_______

      The price index for gross domestic purchases, which measures prices paid by U.S. residents,
increased 1.4 percent in the third quarter, unrevised from the second estimate; this index increased 2.0
percent in the second quarter.  Excluding food and energy prices, the price index for gross domestic
purchases increased 1.6 percent in the third quarter, compared with an increase of 1.7 percent.

      Real personal consumption expenditures increased 3.2 percent in the third quarter, compared
with an increase of 2.5 percent in the second.  Durable goods increased 9.2 percent, compared with an
increase of 14.1 percent.  Nondurable goods increased 2.5 percent, compared with an increase of 2.2
percent.  Services increased 2.5 percent, compared with an increase of 0.9 percent.

      Real nonresidential fixed investment increased 8.9 percent in the third quarter, compared with an
increase of 9.7 percent in the second.  Investment in nonresidential structures increased 4.8 percent,
compared with an increase of 12.6 percent.  Investment in equipment increased 11.0 percent, compared
with an increase of 11.2 percent.  Investment in intellectual property products increased 8.8 percent,
compared with an increase of 5.5 percent.  Real residential fixed investment increased 3.2 percent,
compared with an increase of 8.8 percent.

      Real exports of goods and services increased 4.5 percent in the third quarter, compared with an
increase of 11.1 percent in the second.  Real imports of goods and services decreased 0.9 percent, in
contrast to an increase of 11.3 percent.

      Real federal government consumption expenditures and gross investment increased 9.9 percent
in the third quarter, in contrast to a decrease of 0.9 percent in the second.  National defense increased
16.0 percent, compared with an increase of 0.9 percent.  Nondefense increased 0.4 percent, in contrast to
a decrease of 3.8 percent.  Real state and local government consumption expenditures and gross
investment increased 1.1 percent, compared with an increase of 3.4 percent.

      The change in real private inventories subtracted 0.03 percentage point from the third-quarter
change in real GDP after adding 1.42 percentage points to the second-quarter change.  Private
businesses increased inventories $82.2 billion in the third quarter, following increases of $84.8 billion in
the second quarter and $35.2 billion in the first.

      Real final sales of domestic product -- GDP less change in private inventories -- increased 5.0
percent in the third quarter, compared with an increase of 3.2 percent in the second.


Gross domestic purchases

      Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever
produced -- increased 4.1 percent in the third quarter, compared with an increase of 4.8 percent in the
second.


Gross national product

      Real gross national product -- the goods and services produced by the labor and property
supplied by U.S. residents -- increased 5.3 percent in the third quarter, compared with an increase of 4.6
percent in the second.  GNP includes, and GDP excludes, net receipts of income from the rest of the
world, which increased $13.3 billion in the third quarter, compared with an increase of $1.4 billion in
the second; in the third quarter, receipts increased $13.2 billion, and payments increased less than $0.1
billion.


Current-dollar GDP

      Current-dollar GDP -- the market value of the production of goods and services in the United
States -- increased 6.4 percent, or $271.6 billion, in the third quarter to a level of $17,599.8 billion.  In
the second quarter, current-dollar GDP increased 6.8 percent, or $284.2 billion.


Gross domestic income

      Real gross domestic income (GDI), which measures the output of the economy as the costs
incurred and the incomes earned in the production of GDP, increased 4.7 percent in the third quarter,
compared with an increase of 4.0 percent in the second.  For a given quarter, the estimates of GDP and
GDI may differ for a variety of reasons, including the incorporation of largely independent source data.
However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of
change.


Revisions

      The upward revision to the percent change in real GDP primarily reflected upward revisions to
PCE, to nonresidential fixed investment, and to private inventory investment.




                                         Advance Estimate     Second Estimate     Third Estimate
					       (Percent change from preceding quarter)
Real GDP...............................         3.5                 3.9                 5.0
Current-dollar GDP.....................         4.9                 5.3                 6.4
Real GDI...............................          --                 4.5                 4.7
Gross domestic purchases price index...         1.3                 1.4                 1.4



                                            Corporate Profits


Profits from current production

      Profits from current production (corporate profits with inventory valuation adjustment (IVA) and
capital consumption adjustment (CCAdj)) increased $64.5 billion in the third quarter, compared with an
increase of $164.1 billion in the second.

      Profits of domestic financial corporations increased $16.1 billion in the third quarter, compared
with an increase of $33.3 billion in the second.  Profits of domestic nonfinancial corporations increased
$32.0 billion, compared with an increase of $134.3 billion.  The rest-of-the-world component of profits
increased $16.5 billion, in contrast to a decrease of $3.6 billion.  This measure is calculated as the
difference between receipts from the rest of the world and payments to the rest of the world.  In the third
quarter, receipts increased $14.4 billion, and payments decreased $2.1 billion.

      Taxes on corporate income decreased $5.5 billion in the third quarter, in contrast to an increase
of $45.7 billion in the second.  Profits after tax with IVA and CCAdj increased $70.1 billion, compared
with an increase of $118.4 billion.

 	Dividends decreased $3.9 billion in the third quarter, compared with a decrease of $0.5 billion in
the second.  Undistributed profits increased $73.9 billion, compared with an increase of $118.8 billion.
Net cash flow with IVA -- the internal funds available to corporations for investment -- increased $46.9
billion, compared with an increase of $133.4 billion.

      The IVA and CCAdj are adjustments that convert inventory withdrawals and depreciation of
fixed assets reported on a tax-return, historical-cost basis to the current-cost economic measures used in
the national income and product accounts.  IVA increased $16.7 billion in the third quarter, compared
with an increase of $11.9 billion in the second.  CCAdj increased $0.9 billion, in contrast to a decrease
of $0.8 billion.


Corporate profits with IVA

      Profits of domestic financial corporations increased $16.2 billion in the third quarter, compared
with an increase of $33.7 billion in the second.  Profits of domestic nonfinancial corporations increased
$31.1 billion, compared with an increase of $134.7 billion.  The increase in profits of financial
corporations primarily reflected an increase in "other" financial industries.  The increase in profits of
nonfinancial corporations primarily reflected increases in manufacturing, in wholesale trade, and in
"other" nonfinancial industries that were partly offset by a decrease in information.  Within
manufacturing, the increase was widespread; the largest increase was in "other" durable goods
industries.  The largest offset was a decrease in chemical products.


Gross value added of nonfinancial domestic corporate business

      In the third quarter, both real gross value added of nonfinancial corporations and profits per unit
of real gross value added increased.  The increase in unit profits reflected an increase in unit prices and a
decrease in unit labor costs that were partly offset by an increase in unit nonlabor costs.



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                                          *          *          *


                           Next release -- January 30, 2015 at 8:30 A.M. EST for:
                   Gross Domestic Product:  Fourth Quarter and Annual 2014 (Advance Estimate)




Release dates in 2015


Gross Domestic Product

                 2014: IV and 2014 annual     2015: I          2015: II          2015: III

Advance....           January 30              April 29         July 30           October 29
Second.....           February 27             May 29           August 27         November 24
Third......           March 27                June 24          September 25      December 22


Corporate Profits

Preliminary...        ..                      May 29           August 27         November 24
Revised.......        March 27                June 24          September 25      December 22