BEA Bureau of Economic Analysis : Gross Domestic Product, 4th quarter and annual 2016 (advance estimate)

National Income and Product Accounts
Gross Domestic Product: Fourth Quarter and Annual 2016 (Advance Estimate)

Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of
2016 (table 1), according to the 'advance' estimate released by the Bureau of Economic Analysis. In the
third quarter, real GDP increased 3.5 percent.

The Bureau emphasized that the fourth-quarter advance estimate released today is based on source
data that are incomplete or subject to further revision by the source agency (see 'Source Data for the
Advance Estimate' on page 3). The 'second' estimate for the fourth quarter, based on more complete
data, will be released on February 28, 2017.

The increase in real GDP in the fourth quarter reflected positive contributions from personal
consumption expenditures (PCE), private inventory investment, residential fixed investment,
nonresidential fixed investment, and state and local government spending that were partly offset by
negative contributions from exports and federal government spending. Imports, which are a subtraction
in the calculation of GDP, increased (table 2).

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

Current-dollar GDP increased 4.0 percent, or $185.5 billion, in the fourth quarter to a level of $18,860.8
billion. In the third quarter, current dollar GDP increased 5.0 percent, or $225.2 billion (table 1 and table
3).

The price index for gross domestic purchases increased 2.0 percent in the fourth quarter, compared
with an increase of 1.5 percent in the third quarter (table 4). The PCE price index increased 2.2 percent,
compared with an increase of 1.5 percent. Excluding food and energy prices, the PCE price index
increased 1.3 percent, compared with an increase of 1.7 percent (appendix table A).


Personal Income (table 10)

Current-dollar personal income increased $152.0 billion in the fourth quarter, compared with an
increase of $172.3 billion in the third. The deceleration in personal income primarily reflected a
deceleration in wages and salaries.

Disposable personal income increased $130.2 billion, or 3.7 percent, in the fourth quarter, compared
with an increase of $141.5 billion, or 4.1 percent, in the third. Real disposable personal income
increased 1.5 percent, compared with an increase of 2.6 percent.

Personal saving was $791.2 billion in the fourth quarter, compared with $818.1 billion in the third. The
personal saving rate -- personal saving as a percentage of disposable personal income -- was 5.6 percent
in the fourth quarter, compared with 5.8 percent in the third.


2016 GDP

    Real GDP increased 1.6 percent in 2016 (that is, from the 2015 annual level to the 2016 annual
level), compared with an increase of 2.6 percent in 2015 (table 1).

       The increase in real GDP in 2016 reflected positive contributions from PCE, residential fixed
investment, state and local government spending, exports, and federal government spending that were
partly offset by negative contributions from private inventory investment and nonresidential fixed
investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

       The deceleration in real GDP from 2015 to 2016 reflected a downturn in private inventory
investment, a deceleration in PCE, a downturn in nonresidential fixed investment, and decelerations in
residential fixed investment and in state and local government spending that were offset by a
deceleration in imports and accelerations in federal government spending and in exports.

       Current-dollar GDP increased 2.9 percent, or $530.3 billion, in 2016 to a level of $18,566.9
billion, compared with an increase of 3.7 percent, or $643.5 billion, in 2015 (table 1 and table 3).

       The price index for gross domestic purchases increased 1.0 percent in 2016, compared with an
increase of 0.4 percent in 2015 (table 4).

       During 2016 (that is, measured from the fourth quarter of 2015 to the fourth quarter of 2016),
real GDP increased 1.9 percent, the same rate as during 2015.  The price index for gross domestic
purchases increased 1.5 percent during 2016, compared with an increase of 0.4 percent during 2015
(table 7).


Source Data for the Advance Estimate

       Information on the assumptions used for unavailable source data in the advance estimate 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. For
information on updates to GDP, see the 'Additional Information' section that follows.


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                        Next release:  February 28, 2017 at 8:30 A.M. EST
              Gross Domestic Product:  Fourth Quarter and Annual 2016 (Second Estimate)

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                                     Additional Information

Resources

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•   For more on BEA's statistics, see our monthly online journal, the Survey of Current Business.
•   BEA's news release schedule
•   NIPA Handbook:  Concepts and Methods of the U.S. National Income and Product Accounts

Definitions

Gross domestic product (GDP) is the value of the goods and services produced by the nation's economy
less the value of the goods and services used up in production. GDP is also equal to the sum of personal
consumption expenditures, gross private domestic investment, net exports of goods and services, and
government consumption expenditures and gross investment.

Current-dollar estimates are valued in the prices of the period when the transactions occurred-that is,
at 'market value.' Also referred to as 'nominal estimates' or as 'current-price estimates.'
Real values are inflation-adjusted estimates-that is, estimates that exclude the effects of price changes.
The gross domestic purchases price index measures the prices of final goods and services purchased by
U.S. residents.

The personal consumption expenditure price index measures the prices paid for the goods and services
purchased by, or on the behalf of, 'persons.'

Personal income is the income received by, or on behalf of, all persons from all sources:  from
participation as laborers in production, from owning a home or business, from the ownership of
financial assets, and from government and business in the form of transfers. It includes income from
domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or
losses.

Disposable personal income is the income available to persons for spending or saving. It is equal to
personal income less personal current taxes.

Personal outlays is the sum of personal consumption expenditures, personal interest payments, and
personal current transfer payments.

Personal saving is personal income less personal outlays and personal current taxes.
The personal saving rate is personal saving as a percentage of disposable personal income. (For a
comparison of personal saving in BEA's national income and product accounts (NIPAs) with personal
saving in the Federal Reserve Board's financial accounts of the United States, go to
www.bea.gov/national/nipaweb/nipa-frb.asp.

For more definitions, see the Glossary: National Income and Product Accounts.


Statistical conventions

Annual rates. Quarterly values are expressed at seasonally-adjusted annual rates (SAAR), unless
otherwise specified. Dollar changes are calculated as the difference between these SAAR values. For
detail, see the FAQ 'Why does BEA publish estimates at annual rates?'

Percent changes in quarterly series are calculated from unrounded data and are displayed at annual
rates, unless otherwise specified. For details, see the FAQ 'How is average annual growth calculated? '

Quantities and prices. Quantities, or 'real' volume measures, and prices are expressed as index
numbers with a specified reference year equal to 100 (currently 2009). Quantity and price indexes are
calculated using a Fisher-chained weighted formula that incorporates weights from two adjacent
periods (quarters for quarterly data and annuals for annual data). 'Real' dollar series are calculated by
multiplying the published quantity index by the current dollar value in the reference year (2009) and
then dividing by 100. Percent changes calculated from real quantity indexes and chained-dollar levels
are conceptually the same; any differences are due to rounding.

Chained-dollar values are not additive because the relative weights for a given period differ from those
of the reference year. In tables that display chained-dollar values, a 'residual' line shows the difference
between the sum of detailed chained-dollar series and its corresponding aggregate.


Updates to GDP

BEA releases three vintages of the current quarterly estimate for GDP:  'Advance' estimates are
released near the end of the first month following the end of the quarter and are based on source data
that are incomplete or subject to further revision by the source agency; 'second' and 'third' estimates
are released near the end of the second and third months, respectively, and are based on more detailed
and more comprehensive data as they become available.

Annual and comprehensive updates are typically released in late July. Annual updates generally cover at
least the 3 most recent calendar years (and their associated quarters) and incorporate newly available
major annual source data as well as some changes in methods and definitions to improve the accounts.
Comprehensive (or benchmark) updates are carried out at about 5-year intervals and incorporate major
periodic source data, as well as major conceptual improvements.
The table below shows the average revisions to the quarterly percent changes in real GDP between
different estimate vintages, without regard to sign.

Vintage                               Average Revision Without Regard to Sign
                                         (percentage points, annual rates)
Advance to second                                     0.5
Advance to third                                      0.6
Second to third                                       0.2
Advance to latest                                     1.1
Note - Based on estimates from 1993 through 2015. For more information on GDP updates, see Revision
Information on the BEA Web site.

The larger average revision from the advance to the latest estimate reflects the fact that periodic
comprehensive updates include major statistical and methodological improvements.

Unlike GDP, an advance current quarterly estimate of GDI is not released because data on domestic
profits and on net interest of domestic industries are not available. For fourth quarter estimates, these
data are not available until the third estimate.