Real gross national product -- the goods and services produced by the labor and property supplied by U.S. residents -- increased 3.0 percent in the second quarter, compared with an increase of 3.9 percent in the first. GNP includes, and GDP excludes, net receipts of income from the rest of the world, which decreased $6.1 billion in the second quarter after increasing $2.4 billion in the first; in the second quarter, receipts increased $19.2 billion, and payments increased $25.3 billion.


Current-dollar GDP

Current-dollar GDP -- the market value of the nation's output of goods and services – increased 5.8 percent, or $174.3 billion, in the second quarter to a level of $12,373.1 billion. In the first quarter, current-dollar GDP increased 7.0 percent, or $203.6 billion.


Revisions

The preliminary estimate of the second-quarter increase in real GDP is 0.1 percentage point, or $3.4 billion, lower than the advance estimate issued last month. The small downward revision to the percentage change in real GDP primarily reflected an upward revision to imports and a downward revision to personal consumption expenditures that were mostly offset by an upward revision to private inventory investment.


Advance Preliminary
(Percent change from preceding quarter)

Real GDP............................... 3.4 3.3
Current-dollar GDP..................... 5.9 5.8
Gross domestic purchases price index... 3.2 3.1




Corporate Profits


Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) increased $79.2 billion in the second quarter. In the first quarter, profits increased $68.7 billion. Current-production cash flow (net cash flow with inventory valuation and capital consumption adjustments) -- the internal funds available to corporations for investment -- increased $54.9 billion in the second quarter, compared with an increase of $95.4 billion in the first.

Taxes on corporate income increased $15.6 billion in the second quarter, compared with an
increase of $69.6 billion in the first. Profits after tax with inventory valuation and capital consumption adjustments increased $63.6 billion in the second quarter, in contrast to a decrease of $0.8 billion in the first. Dividends increased $11.4 billion, in contrast to a decrease of $94.4 billion; current-production undistributed profits increased $52.2 billion, compared with an increase of $93.5 billion.

Domestic profits of financial corporations decreased $8.4 billion in the second quarter, in contrast to an increase of $36.0 billion in the first. Domestic profits of nonfinancial corporations increased $85.5 billion in the second quarter, compared with an increase of $17.8 billion in the first. In the second quarter, real gross corporate product increased, and profits per unit of real product increased. The increase in unit profits reflected an increase in unit prices and decreases in both unit labor and nonlabor costs corporations incurred.

The rest-of-the-world component of profits increased $2.1 billion in the second quarter, compared with an increase of $14.9 billion in the first. 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 second-quarter increase was accounted for by a larger increase in receipts than in payments.

Profits before tax increased $52.3 billion in the second quarter, compared with an increase of $254.2 billion in the first. 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 $6.1 billion in the second quarter (from -$51.0 billion to -$44.9 billion ), in contrast to a decrease of $190.8 billion in the first. The large increase in first-quarter profits before tax and the large decrease in the first-quarter capital consumption adjustment reflect the expiration of the """"bonus"""" depreciation provisions of both the Job Creation and Worker Assistance Act of 2002 and the Jobs and Growth Tax Relief Reconciliation Act of 2003. The inventory valuation adjustment increased $20.7 billion (from -$39.1 billion to -$18.4 billion), compared with an increase of$5.3 billion.

This news release is available on BEA's Web site at www.bea.gov/bea/rels.htm.