Gross Domestic Product

Answer the following questions in essay form (500 words minimum):

1- What trends in real GDP have occurred in the time period shown in the BEA release highlights document?

2- What time period shown in the document experienced the most significant growth?

3- What time period shown in the document experienced the least amount of growth?

4- Based on the data you have researched, what do you project real GDP will do during the duration of this year? Be specific in your answer.

5- What will be the primary cause that will cause your prediction in the previous question to occur? Why?

National Income and Product Accounts Gross Domestic Product, 3rd quarter 2013 (third estimate);    Corporate Profits, 3rd quarter 2013 (revised estimate)

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 4.1 percent in the third quarter of 2013 (that

is, from the second quarter to the third quarter), according to the "third" estimate released by the Bureau

of Economic Analysis. In the second quarter, real GDP increased 2.5 percent.

The GDP estimate released today is based on more complete source data than were available for

the "second" estimate issued on December 5, 2013. In the second estimate, the increase in real GDP was

3.6 percent (see "Revisions" on page 3). With this third estimate for the third quarter, increases in

personal consumption expenditures (PCE) and in nonresidential fixed investment were larger than

previously estimated.

The increase in real GDP in the third quarter primarily reflected positive contributions from

private inventory investment, PCE, nonresidential fixed investment, exports, residential fixed

investment, and state and local government spending that were partly offset by a negative contribution

from federal government spending. Imports, which are a subtraction in the calculation of GDP,

increased.

The acceleration in real GDP growth in the third quarter primarily reflected an acceleration in

private inventory investment, a deceleration in imports, and accelerations in state and local government

spending and in PCE that were partly offset by a deceleration in exports.

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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 "Revisions to GDP, GDI, and Their Major Components."

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The price index for gross domestic purchases, which measures prices paid by U.S. residents,

increased 1.8 percent in the third quarter, the same increase as in the second estimate; this index

increased 0.2 percent in the second quarter. Excluding food and energy prices, the price index for gross

domestic purchases increased 1.5 percent in the third quarter, compared with an increase of 0.8 percent

in the second.

Real personal consumption expenditures increased 2.0 percent in the third quarter, compared

with an increase of 1.8 percent in the second. Durable goods increased 7.9 percent, compared with an

increase of 6.2 percent. Nondurable goods increased 2.9 percent, compared with an increase of 1.6

percent. Services increased 0.7 percent, compared with an increase of 1.2 percent.

Real nonresidential fixed investment increased 4.8 percent in the third quarter, compared with an

increase of 4.7 percent in the second. Nonresidential structures increased 13.4 percent, compared with

an increase of 17.6 percent. Equipment increased 0.2 percent, compared with an increase of 3.3 percent.

Intellectual property products increased 5.8 percent, in contrast to a decrease of 1.5 percent. Real

residential fixed investment increased 10.3 percent, compared with an increase of 14.2 percent.

Real exports of goods and services increased 3.9 percent in the third quarter, compared with an

increase of 8.0 percent in the second. Real imports of goods and services increased 2.4 percent,

compared with an increase of 6.9 percent.

Real federal government consumption expenditures and gross investment decreased 1.5 percent

in the third quarter, compared with a decrease of 1.6 percent in the second. National defense decreased

0.5 percent, compared with a decrease of 0.6 percent. Nondefense decreased 3.1 percent, the same

decrease as in the second quarter. Real state and local government consumption expenditures and gross

investment increased 1.7 percent, compared with an increase of 0.4 percent.

The change in real private inventories added 1.67 percentage points to the third-quarter change in

real GDP, after adding 0.41 percentage point to the second-quarter change. Private businesses increased

inventories $115.7 billion in the third quarter, following increases of $56.6 billion in the second quarter

and $42.2 billion in the first.

Real final sales of domestic product -- GDP less change in private inventories -- increased 2.5

percent in the third quarter, compared with an increase of 2.1 percent in the second.

Gross domestic purchases

Real gross domestic purchases -- purchases by U.S. residents of goods and services wherever

produced -- increased 3.9 percent in the third quarter, compared with an increase of 2.5 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 4.4 percent in the third quarter, compared with an increase of 2.7

percent in the second. GNP includes, and GDP excludes, net receipts of income from the rest of the

world, which increased $12.7 billion in the third quarter after increasing $7.7 billion in the second; in the

third quarter, receipts increased $1.0 billion, and payments decreased $11.7 billion.

Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services -- increased

6.2 percent, or $251.9 billion, in the third quarter to a level of $16,912.9 billion. In the second quarter,

current-dollar GDP increased 3.1 percent, or $125.7 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 1.8 percent in the third quarter,

compared with an increase of 3.2 percent in the second. In the second estimate, the increase in real GDI

was 1.4 percent. 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

personal consumption expenditures and to nonresidential fixed investment that were partly offset by a

downward revision to residential fixed investment.

Advance Estimate Second Estimate Third Estimate

(Percent change from preceding quarter)

Real GDP............................... 2.8 3.6 4.1

Real GDI............................... --- 1.4 1.8

Current-dollar GDP..................... 4.8 5.6 6.2

Gross domestic purchases price index... 1.8 1.8 1.8

Corporate Profits

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and

capital consumption adjustment (CCAdj)) increased $39.2 billion in the third quarter, compared with an

increase of $66.8 billion in the second. Taxes on corporate income decreased $0.4 billion, in contrast to

an increase of $10.0 billion. Profits after tax with IVA and CCAdj increased $39.5 billion, compared

with an increase of $56.9 billion.

Dividends decreased $179.0 billion in the third quarter, in contrast to an increase of $273.5

billion in the second. The large third-quarter decrease primarily reflected dividends paid by Fannie Mae

to the federal government in the second quarter. Undistributed profits increased $218.6 billion, in

contrast to a decrease of $216.6 billion. Net cash flow with IVA -- the internal funds available to

corporations for investment -- increased $231.1 billion, in contrast to a decrease of $205.3 billion.

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BOX.

Profits from current production reflect the depreciation of fixed assets valued at current cost using

consistent depreciation profiles. These profiles are based on used-asset prices and do not depend on the

depreciation-accounting practices used for federal income tax returns. 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.

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Corporate profits by industry

Domestic profits of financial corporations increased $9.7 billion in the third quarter, compared

with an increase of $24.5 billion in the second. Domestic profits of nonfinancial corporations increased

$12.7 billion, compared with an increase of $37.8 billion. The increase in profits of financial

corporations reflected increases in both Federal Reserve banks and "other" financial industries. The

increase in nonfinancial corporations primarily reflected increases in manufacturing and in "other"

nonfinancial corporations that were partly offset by a decrease in information. Within manufacturing,

the largest increases were in "other" durable goods and in food and beverage and tobacco products.

These increases were partly offset by decreases in petroleum and coal products and in chemical

products.

The rest-of-the-world component of profits increased $16.7 billion in the third quarter, compared

with an increase of $4.6 billion in the second. This measure is calculated as the difference between

receipts from the rest of the world and payments to the rest of the world.

Gross value added of nonfinancial domestic corporate business

In the third quarter, real gross value added of nonfinancial corporations increased, and profits per

unit of real value added increased. The increase in unit profits reflected an increase in unit prices that

was partly offset by increases in both the unit nonlabor and labor costs incurred by corporations.

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.

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Next release -- January 30, 2014, at 8:30 A.M. EST for:

Gross Domestic Product: Fourth Quarter and Annual 2013 (Advance Estimate)

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Release dates in 2014

Gross Domestic Product

2013: IV and 2013 annual 2014: I 2014: II 2014: III

Advance... January 30 April 30 July 30 October 30

Second.... February 28 May 29 August 28 November 25

Third..... March 27 June 25 September 26 December 23

Corporate Profits

Preliminary... ...... May 29 August 28 November 25

Revised....... March 27 June 25 September 26 December 23