Decreased 2.1 percent in the first quarter of 2014

WASHINGTON (July 30, 2014) — Real gross domestic product (GDP) — 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. The “second” estimate for the second quarter, based on more complete data, will be released on Aug. 28.

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.

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.