BUSINESS SITUATION.

Larkins, Daniel ; Morris, Ralph W. ; Argueta, Jennifer S. 等

REAL gross domestic product (GDP) increased 0.7 percent in the second quarter, the fourth consecutive period of sub-par growth.(1) From the trough of the business cycle in the first quarter of 1991 to the second quarter of 2000, growth had averaged 3.6 percent and had been led by business investment in high-tech equipment and software, by exports, and by consumer spending fueled by soaring household wealth. Over the past four quarters, investment and exports have been cut back, consumer spending has eased off as household wealth has declined along with stock prices, and GDP growth has slowed to an average of 1.3 percent.

According to the "advance" estimates of the national income and product accounts (NIPA's) for the second quarter:

* The increase in real GDP was about half as large as in the first quarter, which itself was less than in the fourth quarter of 2000 (table 1 and chart 1).(2)

[GRAPHS OMITTED]

Table 1.--Real Gross Domestic Product, Real Gross Domestic Purchases,
and Real Final Sales to Domestic Purchasers

[Seasonally adjusted at annual rates]

 Billions of chained
 (1996) dollars

 Change from
 preceding
 Level quarter

 2001 2000

 II III IV

Gross domestic product 9,351.6 30.7 43.8

Less: Exports of goods and services 1,114.6 28.7 -11.8
Plus: Imports of goods and services 1,522.0 47.2 -2.1

Equals: Gross domestic purchases 9,730.8 47.0 52.9

Less: Change in private inventories -26.9 -27.2 -8.9

Equals: Final sales to domestic
 purchasers 9,744.5 68.9 64.6

 Personal consumption expenditures 6,422.5 65.8 49.0
 Durable goods 935.9 17.6 -4.7
 Nondurable goods 1,880.1 19.2 2.7
 Services 3,625.2 30.6 48.6
 Private fixed investment 1,701.3 10.9 2.0
 Nonresidential 1,324.5 23.4 3.4
 Structures 283.1 9.7 51.0
 Equipment and software 1,046.0 12.7 -3.0
 Residential 379.6 -10.2 -1.0
 Government consumption expenditures
 and gross investment 1,625.0 -7.2 12.8
 Federal 554.4 -15.1 6.1
 National defense 362.0 -9.7 8.7
 Nondefense 192.3 -5.5 -2.5
 State and local 1,069.2 7.5 6.7

Addendum: Final sales of domestic
 product 9,365.1 52.8 55.4

 Billions of chained
 (1996) dollars

 Change from
 preceding quarter

 2001

 I II

Gross domestic product 30.6 17.1

Less: Exports of goods and services -3.4 -29.5
Plus: Imports of goods and services -19.9 -26.6

Equals: Gross domestic purchases 16.0 20.4

Less: Change in private inventories -69.9 0.2

Equals: Final sales to domestic
 purchasers 76.7 20.7

 Personal consumption expenditures 47.4 34.0
 Durable goods 23.0 13.5
 Nondurable goods 11.2 2.1
 Services 16.3 20.1
 Private fixed investment 8.2 -39.0
 Nonresidential -0.6 -49.4
 Structures 8.4 -8.6
 Equipment and software -11.6 -41.7
 Residential 7.6 6.7
 Government consumption expenditures
 and gross investment 20.6 21.6
 Federal 4.3 2.2
 National defense 6.5 1.7
 Nondefense -2.2 0.5
 State and local 16.2 19.2

Addendum: Final sales of domestic
 product 91.1 17.3

 Percent change from
 preceding quarter

 2000 2001

 III IV I II

Gross domestic product 1.3 1.9 1.3 0.7

Less: Exports of goods and services 10.6 -4.0 -1.2 -9.9
Plus: Imports of goods and services 13.0 -0.5 -5.0 -6.7

Equals: Gross domestic purchases 2.0 2.2 0.7 0.8

Less: Change in private inventories ... ... ... ...

Equals: Final sales to domestic
 purchasers 2.9 2.7 3.2 0.9

 Personal consumption expenditures 4.3 3.1 3.0 2.1
 Durable goods 8.2 -2.1 10.6 6.0
 Nondurable goods 4.2 0.6 2.4 0.4
 Services 3.5 5.6 1.8 2.2
 Private fixed investment 2.5 5.0 1.9 -8.7
 Nonresidential 7.1 1.0 -0.2 -13.6
 Structures 15.2 7.6 12.3 -11.2
 Equipment and software 4.7 -1.1 -4.3 -14.5
 Residential -10.4 -1.1 8.5 7.4
 Government consumption expenditures
 and gross investment -1.8 3.3 5.3 5.5
 Federal -10.4 4.6 3.2 1.6
 National defense -10.4 10.5 7.5 1.9
 Nondefense -10.4 -5.1 -4.3 0.9
 State and local 3.0 2.7 6.4 7.5

Addendum: Final sales of domestic
 product 2.3 2.4 4.0 0.7

NOTE.--Chained (1996) dollar series are calculated as the product of
the chain-type quantity index and the 1996 current-dollar value of the
corresponding series, divided by 100. Because the formula for the
chain-type quantity indexes uses weights of more than one period, the
corresponding chained-dollar estimates usually are not additive.
Chained (1996) dollar levels and residuals, which measure the extent of
nonadditivity in each table, are shown in NIPA tables 12, 1.4 and 1.6.
Percent changes are calculated from unrounded data. Percent changes in
major aggregates are shown in NIPA table S.1. (See "National Income and
Product Accounts Tables" in this issue.)

* Gross domestic purchases--a measure of domestic demand for goods and services regardless of where they were produced--increased about as much as GDP.(3)

* Consumer spending and government spending were the biggest contributors to the increase in real GDP in the second quarter, as they were in the two preceding quarters (table 2). The largest offset in the second quarter was a sharp drop in nonresidential fixed investment that subtracted almost 1.9 percentage points from GDP growth.(4)

Table 2.--Contributions to Percent Change in Real Gross
Domestic Product
[Seasonally adjusted at annual rates]

 2000 2001

 III IV I II

Percent change at annual rate:
 Gross domestic product 1.3 1.9 1.3 0.7

Percentage points at annual rates:
 Personal consumption expenditures 2.88 2.14 2.05 1.44
 Durable goods 0.65 -0.17 0.83 0.48
 Nondurable goods 0.84 0.12 0.49 0.08
 Services 1.38 2.19 0.73 0.89
 Gross private domestic investment -0.51 -0.42 -2.28 -1.52
 Fixed investment 0.44 0.09 0.33 -1.55
 Nonresidential 0.91 0.13 -0.02 -1.86
 Structures 0.45 0.24 0.39 -0.40
 Equipment and software 0.46 -0.11 -0.41 -1.45
 Residential -0.47 -0.05 0.35 0.31
 Change in private inventories -0.95 -0.50 -2.61 0.03
 Net exports of goods and services -0.70 -0.39 0.63 -0.14
 Exports 1.13 -0.46 -0.13 -1.13
 Goods 1.36 -0.58 -0.19 -1.13
 Services -0.22 0.12 0.06 -0.01
 Imports -1.84 0.07 0.76 1.00
 Goods -1.48 0.07 0.87 1.03
 Services -0.36 0 -0.11 -0.03
 Government consumption expenditures
 and gross investment -0.32 0.58 0.92 0.95
 Federal -0.66 0.27 0.19 0.09
 National defense -0.42 0.38 0.28 0.07
 Nondefense -0.24 -0.11 -0.09 0.02
 State and local 0.34 0.31 0.73 0.86

NOTE--More detailed contributions to percent change in real gross
domestic product are shown in NIPA table 8.2. Contributions to percent
change in major components of real gross domestic product are shown in
tables 8.3 through 8.6.

* Final sales of domestic product--GDP less inventory investment--increased 0.7 percent, its weakest showing since a 1.1-percent decrease in the first quarter of 1993.

* The production of goods decreased for the third consecutive quarter, and the production of structures slowed; in contrast, the production of services increased as much as in the first quarter (table 3).

Table 3.--Real Gross Domestic Product by Type of Product
[Seasonally adjusted at annual rates]

 Billions of chained (1996) dollars

 Level Change from preceding quarter

 2001 2000 2001

 II III IV I II

Gross domestic product 9,351.6 30.7 43.8 30.6 17.1

 Goods 3,684.0 19.0 -22.6 -24.1 -22.2
 Services 4,842.7 13.1 57.4 26.2 26.6
 Structures 826.5 -0.3 4.4 23.3 8.9

Addenda:
 Motor vehicle output 332.9 -12.2 -19.1 -15.0 14.8
 Gross domestic product
 less motor vehicle
 output 9,017.6 42.1 61.3 44.2 3.6

 Final sales of computers ... ... ... ... ...
 Gross domestic product
 less final sales of
 computers ... ... ... ... ...

 Percent change from preceding
 quarter

 2000 2001

 III IV I II

Gross domestic product 1.3 1.9 1.3 0.7

 Goods 2.1 -2.4 -2.6 -2.4
 Services 1.1 4.9 2.2 2.2
 Structures -0.2 2.2 12.3 4.4

Addenda:
 Motor vehicle output -12.8 -20.0 -16.9 20.0
 Gross domestic product
 less motor vehicle
 output 1.9 2.8 2.0 0.2

 Final sales of computers 39.1 30.0 9.0 -27.7
 Gross domestic product
 less final sales of
 computers 1.0 1.6 12.0 1.1

NOTE.--See note to table 1 for an explanation of chained (1996) dollar
series. Chained (1996) dollar levels and residuals for most items are
shown in NIPA table 1.4. Detail on motor vehicle output is shown in
NIPA table 8.9B.

* The second-quarter slowdown in GDP growth reflected bigger decreases in nonresidential fixed investment and in exports than in the first quarter and a slowdown in consumer spending.

* Inventory stocks were liquidated at about the same rate as in the first quarter; in contrast, stocks had accumulated substantially in the fourth quarter.

* Real disposable personal income increased 2.5 percent after increasing 2.7 percent, and the personal saving rate increased to 1.2 percent from 1.1 percent.(5)

* Real final sales of computers decreased sharply, while real motor vehicle output turned up (table 3).

Computers.--Real final sales of computers decreased 27.7 percent, the first decrease in 9 years. Business purchases, exports, and purchases by government all decreased more than in the first quarter. In contrast, consumer purchases accelerated in both quarters.

Computer prices declined less than in the first quarter. Software prices increased slightly in both quarters.

Motor vehicles.--Real motor vehicle output turned up after decreasing for five quarters. Final sales to domestic purchasers increased slightly after a substantial increase in the first quarter, and inventories were reduced considerably less in the second quarter than in the first.

Consumer purchases of motor vehicles changed little after increasing. Financial factors specific to motor vehicle purchases were generally favorable. Manufacturers continued to offer sales-incentive programs on a broad selection of new models. Interest rates on new-car loans at commercial banks decreased for the second consecutive quarter. New motor-vehicle prices decreased after increasing slightly.

Business purchases of new autos and new light trucks increased less than in the first quarter. Purchases of "other" trucks declined for the sixth consecutive quarter.(6)

Motor vehicle inventories decreased less than in the first quarter, but the decrease was still substantial. For the two quarters combined, the liquidation was comparable to that of 1990-91. The inventory-sales ratio for new domestic autos, which is calculated from units data, edged down to 2.1 in the second quarter from 2.2 in the first; the ratio peaked at 2.5 in the fourth quarter of 2000.

Prices

The price index for gross domestic purchases, which measures the prices of goods and services purchased by U.S. residents, increased 1.5 percent in the second quarter after increasing 2.7 percent in the first. Prices of gross domestic purchases less food and energy posted a similar slowdown, from 2.3 percent to 1.1 percent (table 4 and chart 2). The slowdowns reflected decelerations in prices associated with consumer spending and government spending; in contrast, prices of nonresidential fixed investment decreased less than in the first quarter.

[GRAPH OMITTED]

Table 4.--Price Indexes

[Percent change at annual rates; based on seasonally adjusted index
numbers (1996=100)]

 2000 2001

 III IV I II

Gross domestic product 1.9 1.8 3.3 2.3

Less: Exports of goods and services 1.3 0.5 -0.1 -0.5
Plus: Imports of goods and services 4.4 0.4 -3.0 -5.3

Equals: Gross domestic purchases 2.3 1.7 2.7 1.5

Less: Change in private inventories ... ... ... ...

Equals: Final sales to domestic purchasers 2.3 1.8 2.6 1.5

 Personal consumption expenditures 2.4 2.0 3.2 1.7
 Durable goods -2.2 -1.2 -0.7 -3.5
 Nondurable goods 2.7 2.0 1.9 2.7
 Services 3.2 2.6 4.7 2.3
 Private fixed investment 1.9 0.8 -0.4 0.3
 Nonresidential 1.3 0 -1.9 -0.3
 Structures 4.7 4.7 6.2 4.3
 Equipment and software 0.2 -1.5 -4.6 -1.9
 Residential 3.7 3.5 4.6 2.1
 Government consumption expenditures and
 gross investment 2.6 1.9 3.5 1.8
 Federal 1.7 0.4 4.4 1.4
 National defense 2.2 1.0 3.6 1.1
 Nondefense 0.6 -0.7 5.8 2.0
 State and local 3.1 2.7 3.0 2.0

Addenda:
 Gross domestic purchases: Food 3.6 1.6 4.1 2.6
 Energy 13.8 11.3 9.3 6.4
 Less food and energy 1.7 1.3 2.3 1.1
 Personal consumption expenditures: Food 3.7 1.6 4.0 2.6
 Energy goods and services (1) 11.7 10.5 11.7 9.3
 Less food and energy 1.6 1.5 2.6 1.1

(1.) Consists of gasoline, fuel oil, and other energy goods, and of
electricity and gas.

NOTE.--Percent changes in maw aggregates are shown in NIPA table 8.1.
Index numbers are shown in tables 7.1, 7.2, and 7.4.

Prices of personal consumption expenditures (PCE) increased 1.7 percent after increasing 3.2 percent. Energy and food prices slowed, and other PCE prices increased less than half as much as in the first quarter. In energy goods and services, prices of electricity and gas turned down, more than offsetting an upturn in prices of gasoline, fuel oil, and other energy goods. In food, price decelerations and downturns were widespread. The deceleration in prices of PCE less food and energy partly reflected a slowdown in prices of medical care and a downturn in motor vehicle prices.

Prices paid by government increased 1.8 percent, about half as much as in the first quarter. Prices paid by the Federal Government slowed sharply after a first-quarter increase that reflected a pay raise for civilian and military personnel.(7) Prices paid by State and local governments increased 2.0 percent after increasing 3.0 percent.

Prices of private nonresidential fixed investment decreased 0.3 percent after decreasing 1.9 percent. Prices of computers and peripheral equipment and of transportation equipment decreased much less than in the first quarter.

The GDP price index, which measures the prices paid for goods and services produced in the United States, increased 2.3 percent after increasing 3.3 percent. This index, unlike the price index for gross domestic purchases, includes the prices of exports and excludes the prices of imports. Import prices and export prices both decreased in the second quarter, but the decrease in import prices was the more pronounced. Prices decreased for all of the major end-use categories of imported goods; the largest drop was for industrial supplies and materials excluding petroleum.

Personal Income

Real disposable personal income (DPI) increased 2.5 percent, almost as much as in the first quarter; in contrast, current-dollar DPI slowed to a 4.2percent increase after increasing 6.0 percent. The smaller slowdown in the real measure reflected the deceleration in PCE prices.

Personal income, which is only available in current-dollars, increased $81.1 billion after increasing $120.6 billion (chart 3 and table 5).

[GRAPHS OMITTED]

Table 5.--Personal Income and Its Disposition

[Billions of dollars; seasonally adjusted at annual rates]

 Level Change from
 preceding
 quarter

 2001

 2000

 II

 III IV

Wage and salary disbursements 5,099.3 77.8 97.4
 Private industries 4,300.4 73.5 93.4
 Goods-producing industries 1,205.2 21.4 22.3
 Manufacturing 850.6 16.0 14.2
 Distributive industries 1,148.0 16.3 23.5
 Service industries 1,947.2 35.9 47.6
 Government 798.9 4.3 4.0

 Other labor income 552.1 7.8 7.0

 Proprietors' income with IVA and CCAdj 747.2 1.4 5.9
 Farm 29.3 -0.9 0.1
 Nonfarm 717.9 2.2 5.9

 Rental income of persons with CCAdj 140.9 -3.1 3.4
 Personal dividend income 411.9 12.5 10.8
 Personal interest income 1,005.7 9.3 39.0

 Transfer payments to persons 1,138.3 8.3 14.4

 Less: Personal contributions for
 social insurance 373.9 3.6 4.7

Personal income 8,721.3 110.5 138.1

Less: Personal tax and nontax payments 1,350.4 22.9 29.6

Equals: Disposable personal income 7,371.0 87.6 108.5

Less: Personal outlays 7,283.4 121.3 88.2

Equals: Personal saving 87.5 -33.6 20.2

Addenda: Special factors in personal
 income:

 In wages and salaries:
 Federal pay raise 5.7 0 0
 In transfer payments to persons:
 Social security retroactive
 payments 0 0.6 0.5
 Cost-of-living adjustments in
 Federal transfer programs 16.6 0 0.3
 In personal tax and nontax payments:
 Federal tax law changes -4.5 0 0
 Refunds and State tax law changes -7.9 -0.5 2.8

 Change from preceding
 quarter

 2001

 I II

Wage and salary disbursements 76.2 49.9
 Private industries 64.0 39.8
 Goods-producing industries 10.8 -1.1
 Manufacturing 1.1 -2.7
 Distributive industries 14.4 7.7
 Service industries 38.8 33.2
 Government 12.2 10.1

 Other labor income 4.4 2.8

 Proprietors' income with IVA and CCAdj 10.0 12.0
 Farm -1.9 -0.5
 Nonfarm 11.9 12.5

 Rental income of persons with CCAdj -2.1 1.3
 Personal dividend income 8.2 7.1
 Personal interest income -2.2 -5.2

 Transfer payments to persons 34.1 15.2

 Less: Personal contributions for
 social insurance 8.0 1.8

Personal income 120.6 81.1

Less: Personal tax and nontax payments 15.4 5.2

Equals: Disposable personal income 105.2 76.0

Less: Personal outlays 101.1 67.2

Equals: Personal saving 4.1 8.7

Addenda: Special factors in personal
 income:

 In wages and salaries:
 Federal pay raise 5.2 0.5
 In transfer payments to persons:
 Social security retroactive
 payments -1.1 0
 Cost-of-living adjustments in
 Federal transfer programs 16.3 0
 In personal tax and nontax payments:
 Federal tax law changes -4.5 0
 Refunds and State tax law changes -0.8 -6.1

NOTE.--Most dollar levels are in NIPA table 2.1.

IVA Inventory valuation adjustment
CCAdj Capital consumption adjustment

Wage and salary disbursements turned down in goods-producing industries, and they increased less than in the first quarter in the distributive and service industries. Government wage and salary disbursements also increased less than in the first quarter; the first-quarter increase reflected the pay raise for Federal civilian and military personnel.

Transfer payments increased about half as much as in the first quarter when they were boosted by cost-of-living increases in social security and other Federal programs.

Personal contributions for social insurance, which is subtracted in calculating personal income, increased substantially less than in the first quarter. The first-quarter increase reflected an increase in the social security taxable earnings base and an increase in the premium for Medicare supplementary medical insurance.

Personal tax and nontax payments also increased less than in the first quarter. A downturn in State and local income taxes reflected the pattern of State tax refunds, and a deceleration in Federal income taxes reflected the pattern of nonwithheld tax collections.

Personal interest income decreased more than in the first quarter. Both decreases reflected declining interest rates.

The personal saving rate (saving as a percentage of current-dollar DPI) increased to 1.2 percent from 1.1 percent.

Second-Quarter 2001 Advance GDP Estimate: Source Data and Assumptions

The "advance" GDP estimate for the second quarter is based
on source data that are incomplete and subject to revision;
as more and better data become available, the GDP estimate
will be revised. The advance estimate is based on the following
major source data. (The number of months for which
data were available is shown in parentheses.)

Personal consumption expenditures: Sales of retail stores
(3), unit auto and truck sales (3), and consumers' shares of
new-car and new-truck purchases (2);

Nonresidential fixed investment:. Unit auto and truck sales
(3), construction put in place (2), manufacturers' shipments
of machinery and equipment other than aircraft (3),
shipments of civilian aircraft (2), and exports and imports
of machinery and equipment (2);

Residential investment:. Construction put in place (2) and
single-family housing starts (3);

Change in private inventories: Trade and nondurable manufacturing
inventories (2), durable manufacturing inventories
(3), and unit auto and truck inventories (3);

Net exports of goods and services: Exports and imports of
goods and services (2);

Government consumption expenditures and gross investment:
Some Federal outlays were available for 2 months,
others for 3, State and local construction put in place (2),
State and local employment (3), and the employment cost
index for the quarter;

GDP prices: Consumer price indexes (3), producer price
indexes (3), U.S. import and export price indexes (3), and
values and quantities of petroleum imports (2).

BEA made assumptions for source data that were not
available. Table A shows the assumptions for key series; a
more comprehensive list is available on BEA's Web site at
<www.bea.doc.gov> and on STAT-USA's Web site at
<www.stat-usa.gov>.

Table A.--Summary of Major Data Assumptions for Advance Estimates,
2001:II

[Billions of dollars, seasonally adjusted at annual rates]

 2001

 January February March

Private fixed investment
 Nonresidential structures:
 Buildings:
 Value of new nonresidential
 construction put in place 223.8 220.2 225.9
 Equipment and software:
 Manufacturers' shipments of
 complete aircraft 33.8 45.0 39.0

 Residential structures:
 Value of new residential
 construction put in place:
 1-unit structures 239.7 245.6 244.4
 2-unit-or-more 29.4 29.9 29.5

Change in private inventories:
 Change in inventories for
 manufacturing and trade (except
 nonmerchant wholesalers) for
 industries other than motor
 vehicles and equipment in trade 30.5 -17.1 -43.3

Net exports:(2)
 Exports of goods:
 U.S. exports of goods,
 international-transactions-
 accounts basis 783.7 789.0 766.6
 Excluding gold 777.9 782.2 759.0
 Imports of goods:
 U.S. imports of goods,
 international-transactions-
 accounts basis 1,253.2 1,204.3 1,232.0
 Excluding gold 1,247.0 1,198.4 1,225.8
 Net exports of goods -469.5 -415.4 -465.4
 Excluding gold -469.1 -416.2 -466.8

Government:
 State and local:
 Structures:
 Value of new construction
 put in place 178.6 179.4 180.7

 2001

 April May June(1)

Private fixed investment
 Nonresidential structures:
 Buildings:
 Value of new nonresidential
 construction put in place 217.4 210.3 212.3
 Equipment and software:
 Manufacturers' shipments of
 complete aircraft 33.6 37.9 42.2

 Residential structures:
 Value of new residential
 construction put in place:
 1-unit structures 245.4 247.5 250.5
 2-unit-or-more 29.7 30.4 30.7

Change in private inventories:
 Change in inventories for
 manufacturing and trade (except
 nonmerchant wholesalers) for
 industries other than motor
 vehicles and equipment in trade -17.0 3.1 -35.2

Net exports:(2)
 Exports of goods:
 U.S. exports of goods,
 international-transactions-
 accounts basis 746.0 753.9 757.3
 Excluding gold 738.2 746.0 750.8
 Imports of goods:
 U.S. imports of goods,
 international-transactions-
 accounts basis 1,197.9 1,166.7 1,183.2
 Excluding gold 1,192.3 1,158.9 1,176.7
 Net exports of goods -451.9 -412.8 -425.9
 Excluding gold -454.1 -412.9 -425.9

Government:
 State and local:
 Structures:
 Value of new construction
 put in place 191.6 200.3 195.3

(1.) Assumption.

(2.) Nonmonetary gold is included in balance-of-payments-basis exports
and imports but is not used directly in the estimation of NIPA exports
and imports.
Selected NIPA Definitions

Gross domestic product (GDP), the featured measure of
U.S. output, is the market value of the goods and services
produced by labor and property located in the United States.(1)
Because the labor and property are located in the United
States, the suppliers (that is, the workers and, for property,
the owners) may be either U.S. residents or residents of the
rest of the world.

GDP is measured as the sum of personal consumption
expenditures, gross private domestic investment (including
change in private inventories and before deduction of
charges for CFC), net exports of goods and services
(exports less imports), and government consumption
expenditures and gross investment. GDP excludes intermediate
purchases of goods and services by business.

Gross domestic purchases is the market value of goods and
services purchased by U.S. residents, regardless of where
those goods and services were produced. It is GDP minus
net exports of goods and services; equivalently, it is the sum
of PCE, gross private domestic investment, and government
consumption expenditures and gross investment.

Final sales of domestic product is GDP minus change in
private inventories; equivalently, it is the sum of PCE, private
fixed investment, government consumption expenditures
and gross investment, and net exports of goods and
services.

Personal income is the income received by persons from
all sources--that is, from participation in production, from
both government and business transfer payments, and
from government interest (which is treated like a transfer
payment). "Persons" consists of individuals, nonprofit
institutions that primarily serve individuals, private non-insured
welfare funds, and private trust funds. Personal
income is calculated as the sum of wage and salary
disbursements, other labor income, proprietors' income with
IVA and CCAdj, rental income of persons with CCAdj, personal
dividend income, personal interest income, and
transfer payments to persons, less personal contributions
for social insurance.

Personal tax and nontax payments is tax payments (net of
refunds) by U.S. residents that are not chargeable to business
expense and certain other personal payments to government
agencies (except government enterprises) that are
treated like taxes. Personal taxes includes taxes on income,
including realized net capital gains, and on personal property.
Nontaxes includes donations and fees, fines, and forfeitures.
Personal contributions for social insurance is not
included. Taxes paid by U.S. residents to foreign governments
and taxes paid by foreigners to the U.S. Government
are both included in transfer payments to the rest of the
world (net).

Disposable personal income is personal income less personal
tax and nontax payments. It is the income available to
persons for spending or saving.

U.S. residents are individuals, governments, business
enterprises, trusts, associations, nonprofit organizations,
and similar institutions that have the center of their economic
interest in the United States and that reside or expect
to reside in the United States for 1 year or more. (For example,
business enterprises resident in the United States
include U.S. affiliates of foreign companies.) In addition,
U.S. residents include all U.S. citizens who reside outside
the United States for less than 1 year and U.S. citizens residing
abroad for 1 year or more who meet one of the following
criteria: Owners or employees of U.S. business
enterprises who reside abroad to further the enterprises'
business and who intend to return within a reasonable
period; U.S. Government civilian and military employees
and members of their immediate families; and students
who attend foreign educational institutions.

(1.) In the N1PA's, the United States consists of the 50 States
(before 1960, Alaska and Hawaii were not included), the District
of Columbia, and U.S. military installations, embassies, and
consulates abroad.

NOTE.--These definitions are from the soon-to-be-available updated
guide to the NIPA's, which will be posted on BEA's Web site at
<www.bea.doc.gov>.

(1.) Estimates for the first quarter of 2001, along with estimates for 1998-2000, have been revised as part of the annual revision of the national income and product accounts. See Brent R. Moulton, Eugene P. Seskin, and David F. Sullivan, "Annual Revision of the National Income and Product Accounts: Annual Estimates, 1998-2000, and Quarterly Estimates, 1998:1-2001:1" in this issue.

(2.) Quarterly estimates in the NIPA's are expressed at seasonally adjusted annual rates. Quarter-to-quarter dollar changes are the differences between the published estimates. Quarter-to-quarter percent changes are annualized and are calculated from unfounded data unless otherwise specified.

Real estimates are calculated using a chain-type Fisher formula with annual weights for all years and quarterly weights for all quarters; real estimates are expressed both as index numbers (1996=100) and as chained (1996) dollars. Price indexes (1996=100) are also calculated using a chain-type Fisher formula.

(3.) Gross domestic purchases is calculated as the sum of personal consumption expenditures, gross private domestic investment, and government consumption expenditures and gross investment; thus, gross domestic purchases includes imports of goods and services, which are subtracted in the calculation of GDP, and does not include exports of goods and services, which are added in the calculation of GDP.

(4.) In the NIPA's, consumer spending is shown as personal consumption expenditures, government spending is shown as government consumption expenditures and gross investment, and inventory investment is shown as change in private inventories.

(5.) The personal saving rate is measured as personal saving as a percentage of current-dollar disposable personal income. The second-quarter estimate of the national saving rate (which is measured as gross saving as a percentage of gross national product) will be available at the end of August along with the "preliminary" estimate of second-quarter GDP.

(6.) "Other" trucks have a gross vehicle weight of over 10,000 pounds; these trucks range from medium-duty general delivery trucks to heavy-duty diesel tractor-trailers.

(7.) In the NIPA's, an increase in the rate of Federal employee compensation is treated as an increase in the price of employee services purchased by the Federal Government.