GDP and the Economy: Third Estimates for the Fourth Quarter of 2014

EAL GROSS domestic product (GDP) increased 2.2 percent at an annual rate in the fourth quarter of 2014, according to the third estimates of the national income and product accounts (NIPAs) (chart 1 and table 1).1 In the third quarter, real GDP increased 5.0 percent. The third estimate of real GDP growth was unrevised from the second estimate, and the general picture of the economy for the fourth quarter remains the same (see table 2). The increase in real GDP in the fourth quarter reflected positive contributions from consumer spending, nonresidential fixed investment, exports, state and local government spending, and residential fixed investment that were partly offset by negative contributions from federal government spending and inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.2 ●Prices of goods and services purchased by U.S. residents, as measured by the gross domestic purchases price index, decreased 0.1 percent in the fourth quarter, the same decrease as in the second estimate; in the third quarter, this index increased 1.4 percent. The downturn partly reflected a larger decrease in energy prices in the fourth quarter. Excluding food and energy, prices increased 0.7 percent after increasing 1.6 percent. ●Real disposable personal income (DPI) increased 3.6 percent in the fourth quarter, 0.2 percentage point lower than the second estimate. In the third quarter, real DPI increased 2.4 percent. Current-dollar DPI increased 3.2 percent after increasing 3.6 percent. ●Real gross domestic income rose 3.1 percent in the fourth quarter after increasing 5.2 percent in the third quarter. ●Corporate profits from current production decreased $30.4 billion in the fourth quarter after increasing $64.5 billion in the third quarter (see table 3).