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Technical Note
Gross Domestic Product
First Quarter of 2018 (Third Estimate)
June 28, 2018
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 and a summary of "highlights" are available on BEA's Web site at www.bea.gov. The
source data and assumptions for the "third" estimate are shown in a "Key Source Data and
Assumptions" table. In a few weeks, the Survey of Current Business, BEA’s online monthly journal, will
publish a more detailed analysis of the estimates ("GDP and the Economy").

Sources of Revision to GDP

Real GDP increased 2.0 percent (annual rate) in the first quarter of 2018, a downward revision of 0.2
percentage point from the second estimate. The revision primarily reflected less consumer spending on
services and less private inventory investment. Revised data also showed more nonresidential fixed

*	The downward revision to consumer spending on services primarily reflected a revision to
        healthcare spending by nonprofits, based on new first-quarter data from the Census Bureau’s
        Quarterly Services Report (QSR). In addition, spending on finance and insurance services was
        revised down, based primarily on new Census QSR data for financial services.

*	The downward revision to private inventory investment was largely attributable to retail trade
        inventories, based on revised March book value data from the Census Monthly Retail Trade

*	The upward revision to nonresidential investment was mostly accounted for by intellectual
        property products, specifically research and development (R&D), based on updated R&D
        expense data from company financial reports.

Today’s GDP release also reflects the incorporation of data from the annual update of BEA’s
International Transactions Accounts (ITAs), which were incorporated on a best-change basis. The revised
estimates showed fewer exports and more imports in the first quarter than previously estimated.

The price index for GDP increased 2.2 percent in the first quarter, an upward revision of 0.3 percentage
point. The upward revision primarily reflected a downward revision to import prices, notably imported
petroleum prices, based on updated ITA data.

Gross Domestic Income and Corporate Profits

Real gross domestic income (GDI) increased 3.6 percent in the first quarter, an upward revision of 0.8
percentage point. The upward revision primarily reflected an upward revision to corporate profits,
based on revised Census Quarterly Financial Report data and updated publicly available company
financial reports.

Profits from current production increased $39.5 billion, or 1.8 percent (quarterly rate), in the first
quarter. Domestic profits of financial corporations increased $7.0 billion, domestic profits of
nonfinancial corporations increased $28.8 billion, and rest-of-the-world profits increased $3.7 billion.

National after-tax profits without inventory valuation and capital consumption adjustments (shown in
line 45 of NIPA table 1.12 “National Income by Type of Income”), conceptually closest to S&P 500
profits, increased $178.7 billion in the first quarter, following a $178.1 billion decrease in the fourth

Comprehensive Update Scheduled for July 27

On July 27, BEA will present the results of its 15th comprehensive (or benchmark) update of the National
Income and Product Accounts (NIPAs), in addition to presenting the advance estimate of GDP for the
second quarter of 2018. The full historical time span of the NIPAs, 1929-2017 and the first quarter of
2018, will be open for revision. More details on the scope of the update are available in the April Survey
of Current Business article "Preview of the 2018 Comprehensive Update of the National Income and
Product Accounts."

The comprehensive update will reflect:

*	The incorporation of the 2012 benchmark input-output accounts
*	Improved seasonally adjusted estimates
*	Improved price indexes for software, medical equipment, and communications equipment
*	The introduction of new not seasonally adjusted estimates for GDP, GDI, and their major
*	An updated reference year for chain-type quantity and price indexes and chained-dollar
        estimates from 2009 to 2012.

Erich H. Strassner
Associate Director, National Economic Accounts
Bureau of Economic Analysis
(301) 278-9612