The final estimate of the first-quarter increase in real GDP is 0.1 percentage point, or $1.7 billion, higher than the preliminary estimate issued last month. The small upward revision to the percent change in real GDP primarily reflected upward revisions to exports, to personal consumption expenditures, and to equipment and software that were largely offset by an upward revision to imports and a downward revision to private nonfarm inventory investment.

Corporate Profits

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) decreased $5.2 billion in the first quarter, compared with a decrease of $52.9 billion in the fourth quarter. Current-production cash flow (net cash flow with inventory valuation and capital consumption adjustments) -- the internal funds available to corporations for investment -- increased $15.1 billion in the first quarter, in contrast to a decrease of $55.7 billion in the fourth.

Taxes on corporate income decreased $32.6 billion in the first quarter, compared with a decrease of $15.0 billion in the fourth. Profits after tax with inventory valuation and capital consumption adjustments increased $27.3 billion, in contrast to a decrease of $37.9 billion. Dividends increased $16.8 billion, compared with an increase of $21.7 billion; current-production undistributed profits increased $10.6 billion, in contrast to a decrease of $59.5 billion.

Domestic profits of financial corporations increased $14.2 billion in the first quarter, in contrast to a decrease of $74.4 billion in the fourth. Domestic profits of nonfinancial corporations increased $3.4 billion, in contrast to a decrease of $34.3 billion. In the first quarter, real gross corporate value added increased. Profits per unit of real value added were unchanged, reflecting an increase in unit prices and a decrease in unit nonlabor costs that were offset by an increase in unit labor costs.

The rest-of-the-world component of profits decreased $22.8 billion in the first quarter, in contrast to an increase of $55.8 billion in the fourth. This measure is calculated as (1) receipts by U.S. residents of earnings from their foreign affiliates plus dividends received by U.S. residents from unaffiliated foreign corporations minus (2) payments by U.S. affiliates of earnings to their foreign parents plus dividends paid by U.S. corporations to unaffiliated foreign residents. The first-quarter decrease was accounted for by a much smaller increase in receipts than in payments.

Profits before tax decreased $144.2 billion in the first quarter, in contrast to an increase of $0.2 billion in the fourth (see ?Provisions of the Economic Stimulus Act of 2008? below). The before-tax measure of profits does not reflect, as does profits from current production, the capital consumption and inventory valuation adjustments. These adjustments convert depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to the current-cost measures used in the national income and product accounts. The capital consumption adjustment increased $167.7 billion in the first quarter (from -$241.5 billion to -$73.8 billion), in contrast to a decrease of $4.1 billion in the fourth. The inventory valuation adjustment decreased $28.7 billion (from -$69.4 billion to -$98.1 billion), compared with a decrease of $49.1 billion.

Profits before tax with inventory valuation adjustment is the best available measure of industry profits because estimates of the capital consumption adjustment by industry do not exist. This measure reflects depreciation-accounting practices used for federal income tax returns. According to this measure, domestic profits of financial and nonfinancial corporations decreased. The decrease in nonfinancial corporations reflected decreases in all the aggregate industries shown except information; the largest decrease was in manufacturing. Within manufacturing, all the detailed industries shown decreased except petroleum; the largest decrease was in """"other durable goods.""""


Available at:

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm