Printer Friendly

The business situation.


Economic conditions as reflected in the national income and product accounts (NIPA's) showed improvement in the third quarter of 1991: Real GNP increased 2.4 percent after decreasing 0.5 percent in the second quarter, and real gross domestic purchases increased 4.4 percent after increasing 1.4 percent (chart 1).(1) The (fixed-weighted) price index for gross domestic purchases increased 2.2 percent after increasing 2.4 percent.

One-third of the increase in real GNP was accounted for by motor vehicle output, which increased substantially in the third quarter but not as much as in the second. Autos accounted for most of the third-quarter increase in motor vehicle output; trucks accounted for most of the second-quarter increase. (Auto output in constant dollars is presented in table 1.18 of the "Selected NIPA Tables," and truck output, in table 1.20.)

Among the major components of GNP, personal consumption expenditures, nonresidential fixed investment, and residential investment increased more than in the second quarter, and inventory investment (that is, change in business inventories) increased after a second-quarter decrease. In the third quarter, the increases in these components were partly offset by drops in net exports and in government purchases.


The fixed-weighted price index for gross domestic purchases increased 2.2 percent in the third quarter, about the same as in the second quarter (table 1). Food and energy prices held down the increase in both quarters; prices of gross domestic purchases less food and energy, which may be viewed as measuring the underlying inflation rate in the U.S. economy, increased 3.3 percent in both quarters (chart 2). The fixed-weighted price index for GNP slowed to a 2.1-percent increase in the third quarter from a 3.1-percent increase in the second.

Export prices, which are included in the price index for GNP but not in the index for gross domestic purchases, decreased slightly in the third quarter after a small increase in the second. Import prices, which are subtracted in deriving the price index for GNP but not in deriving the index for gross domestic purchases, increased slightly after a decrease. Among import prices, the price of imported petroleum, which had fluctuated widely in preceding quarters, increased only slightly in the third.

Prices of personal consumption expenditures increased 1.9 percent after a 2.6-percent increase. Food prices decreased, reflecting a drop in the prices of red meats, fruits, and vegetables. Prices of all major categories of energy decreased, but less than in the second quarter. Prices of "other" personal consumption expenditures increased a little more than in the second quarter.

Personal income

Personal income increased $39.7 billion in the third quarter after increasing $48.9 billion in the second (chart 3 and table 2). The slowdown reflected a downswing in farm proprietors' income, which decreased $8.6 billion after increasing $3.3 billion. Federal subsidy payments to farm proprietors and farm proprietors' income excluding subsidy payments contributed about equally to the downswing. Subsidy payments decreased $6.7 billion in the third quarter after decreasing $0.5 billion in the second. Farm proprietors' income excluding subsidies decreased $1.9 billion after increasing $3.8 billion; the decrease reflected lower market prices.

Wage and salary disbursements increased $29.3 billion in the third quarter, a little less than in the second. In manufacturing, wages and salaries increased more than in the second quarter, reflecting a step-up in average weekly hours and an upswing in employment. In the service and distributive industries and in Government, wages and salaries increased less in the third quarter than in the second.

Personal interest income decreased $4.9 billion after decreasing $7.7 billion; the decreases reflected lower interest rates.

Disposable personal income (DPI) increased $39.6 billion, or 4.0 percent, in the third quarter after increasing $46.8 billion, or 4.7 percent, in the second; real DPI slowed less, to 2.0 percent from 2.3 percent, reflecting a deceleration in the deflator for personal consumption expenditures.

A larger increase in personal outlays than in current-dollar DPI led to a $12.5 billion decrease in personal saving in the third quarter. The personal saving rate dropped 0.4 percentage point to 3.8 percent after holding steady at 4.2 percent for four consecutive quarters. Table 1.--Price Indexes (Fixed Weights): Change From Preceding Quarter [Percent change at annual rates; based on seasonally adjusted index numbers (1982=100)]
 1990 1991
GNP 4.7 5.2 3.1 2.1
 Less: Exports 5.0 3.4 1.5 -.3
 Plus: Imports 24.9 -11.8 -6.8 .2
Equals: Gross domestic purchases 6.3 3.7 2.4 2.2

Less: Change in business

inventories Equals: Final sales to domestic
 purchasers 6.3 3.6 2.3 2.2
 Personal consumption expenditures 7.1 3.3 2.6 1.9
 Food 4.9 6.2 5.1 -3.8
 Energy 51.2 -23.6 -14.7 -2.2

Other personal consumption
 expenditures 4.2 5.6 3.6 3.8
 Nonresidential structures 2.2 2.5 1.6 2.1
 Producers' durable equipment 4.9 5.4 .1 .7
 Residential investment -.6 -.3 3.5 2.6
 Government purchases 6.1 4.8 2.2 3.6

 Merchandise imports 34.4 -18.2 -11.3 -1.4
Petroleum and products 346.2 -75.0 -47.5 3.0
 Other merchandise 5.4 4.1 -3.6 -2.0

Note.--Percent changes in major aggregates are found in table 8.1 of the "Selected NIPA Tables." Most index number levels are found in tables 7.1 and 7.3. NOTE.--Quarterly estimates in the national income and product accounts are expressed at seasonally adjusted annual rates, and quarterly changes are differences between these rates. Quarter-to-quarter percent changes are annualized. Real, or constant-dollar, estimates are expressed in 1982 dollars. The advance GNP estimate for the third quarter is based on the following major source data, some of which are subject to revision. (The number of months for which data were available is shown in parentheses.)

Personal consumption expenditures: Sales of retail stores (3), and unit auto and truck sales (3);

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

Residential investment: Construction put in place (2), and housing starts (3);

Change in business inventories: Manufacturing and trade inventories (2), and unit auto inventories (3);

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

Government purchases of goods and services: Federal outlays (2), and State and local construction put in place (2);

GNP prices: Consumer Price Index (3), Producer Price Index (3), nonpetroleum merchandise export and import price indexes (3), and values and quantities of petroleum imports (2). [Charts 1 to 3 Omitted] [Tabular data omitted]

(1.) The regularly featured estimate of real GNP is based on 1982 weights. An alternative estimate of real GNP growth based on more current weights can be calculated using the change in the chain price index, which is published in table 8.1 of the "Selected NIPA Tables." This alternative measure increased 2.1 percent in the third quarter after increasing 0.7 percent in the second.
COPYRIGHT 1991 U.S. Government Printing Office
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1991 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Title Annotation:third quarter of 1991
Publication:Survey of Current Business
Date:Oct 1, 1991
Previous Article:U.S. international sales and purchases of services.
Next Article:National income and product accounts.

Related Articles
The Bureau's business advisory for 1991.
The business situation.
Trend of business.
The business situation.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters