US Gross Domestic Product 8 GDP (left axis) GDP Price Index (right axis) 3.0 GDP Quarterly % Chg., Annual Rate 6 4 2 0 2.5 2.0 1.5 1.0 Year % Chg. Forecast: 5.5% Consensus: 5.5% Actual: 5.7% GDP Price Index Forecast: 1.1% Consensus: 1.1% Actual: 1.1% -2 Q3-96 Q1-97 Q3-97 Q1-98 Q3-98 Q1-99 Q3-99 GDP was revised higher in Q3, a bit ahead of expectations. The upward revision was concentrated in consumer spending, especially for services, and inventory investment. Downward revisions were mainly in business fixed investment, particularly aircraft deliveries. These data do little to change the overall pattern of economic activity in Q3: strong domestic demand, a widening trade gap, and a rebound in inventory investments. This report, combined with other data that has been released suggest Q4 GDP growth of 4% to 4-1/2% with still robust consumer spending, less trade deterioration and less inventory investment and capital spending. % Change at Annual Rate (unless noted as $) Quarterly Averages Annual Averages Q3-99 Q3-99 Q3-99 Five Ten Final Prelim.Advance Q2-99 Q1-99 Q4-98 Q3-98 1998 1997 Year Year Real GDP 5.7 5.5 4.8 1.9 3.7 5.9 3.8 4.3 4.5 3.8 3.0 Both GDP and consumer spending steadily revised higher. Consumption 4.9 4.6 4.3 5.1 6.5 4.6 3.9 4.9 3.7 3.7 2.9 Business Fixed Investment 10.9 13.3 14.9 7.0 7.8 15.3 0.0 12.7 10.7 10.4 6.4 Residential Investment -3.9-4.9-6.3 5.6 12.8 9.8 8.1 9.2 2.4 4.9 1.9 Inventory Investment ($ Ch 24.0 19.9 14.1-36.1-20.6-5.4 33.0 5.2 39.1 10.9 5.6 Steady upward adjustment. Net Exports ($ Change) -19.2-17.7-24.0-34.5-52.2 5.6-19.5-105.3-20.8-31.0-10.2 Exports 11.5 11.7 12.4 4.0-5.5 16.1-1.7 2.2 12.7 8.4 7.9 Imports 14.9 14.6 17.2 14.4 12.5 10.8 5.2 11.6 13.7 10.8 7.6 Government Purchases 4.6 4.3 3.3 1.3 5.1 2.9 1.2 1.7 2.3 1.1 1.3 Addendum: Real Final Sales 4.5 4.6 4.1 3.4 4.6 6.2 2.4 4.3 4.0 3.7 2.9 Price Index 1.1 1.1 1.0 1.3 2.0 0.9 1.4 1.2 1.7 1.8 2.5 Inflation is very low and relatively steady. Steven A. Wood, (415) 622-1152 Hai T. Hoang, (415) 622-2604 This report is for information purposes only, is not to be construed as advice or a recommendation to invest assets, and is based on information available to the public from sources believed to be reliable, but no representation is made that it is accurate or complete, and no information herein should be relied upon as such. Opinions and projections found in this report reflect our opinion as of the report date and are subject to change without notice. Banc of America Securities LLC is a subsidiary of Bank of America Corporation and is a member of NYSE, NASD and SIPC. 0.5 December 22, 1999 Economic Research
1996 $s GDP % Chg. GDP 8900.6 100.0 4.3% Consumer Spending 6033.3 67.8 5.3% Durable Goods 821.2 9.2 12.3% Nondurable Goods 1779.3 20.0 5.2% Services 3440.6 38.7 4.0% Gross Domestic Private Invesment 1651.6 18.6 6.5% Fixed Investment 1607.3 18.1 9.0% Nonresidential Investment 1234.3 13.9 10.2% Structures 246.1 2.8-2.4% Equipment 996.6 11.2 14.5% Residential Investment 375.1 4.2 5.9% Inventory Investment 38.0 0.4-50.1% Net Exports -338.2-3.8 #N/A Exports 1054.8 11.9 6.2% Imports 1393.0 15.7 13.2% Government Purchases 1536.5 17.3 3.4% Federal Government 539.7 6.1 2.4% National Defense 348.3 3.9 0.2% Nondefense 191.3 2.1 6.5% State and Local Government 996.6 11.2 4.0% Final Sales 8855.8 99.5 4.7% Final Domestic Demand 9172.2 103.1 5.6%
1996 $s Consumption % Chg. Consumer Spending 6033.3 100.0 5.3% Durable Goods 821.2 13.6 12.3% Motor Vehicles & Parts 319.6 5.3 11.5% Furniture & Appliances 346.0 5.7 14.7% Other Durable Goods 157.6 2.6 9.7% Nondurable Goods 1779.3 29.5 5.2% Food & Beverages 850.0 14.1 3.3% Clothing 321.6 5.3 10.1% Gasoline 128.2 2.1-0.2% Fuel Oil & Coal 16.3 0.3 10.9% Other Nondurable Goods 463.5 7.7 6.8% Services 3440.6 57.0 4.0% Housing 828.5 13.7 2.5% Household Operations 364.4 6.0 3.0% Electricity & Gas 135.4 2.2-0.9% Other Household Operations 228.9 3.8 5.4% Transportation 242.4 4.0 3.3% Medical Care 880.9 14.6 2.9% Other Services 892.6 14.8 5.4%
1996 $s Investment % Chg. Gross Domestic Private Investment 1651.6 100.0 6.5% Fixed Investment 1607.3 97.3 9.0% Nonresidential 1234.3 74.7 10.2% Structures 246.1 14.9-2.4% Nonresidential Buildings 177.2 10.7-3.8% Utilities 38.5 2.3 1.6% Mining Exploration 24.3 1.5 0.4% Other Structures 6.3 0.4 6.8% Producers' Durable Equipment 996.6 60.3 14.5% Information Processing 526.0 31.8 23.1% Industrial Equipment 150.0 9.1 0.9% Transportation Equipment 204.0 12.4 24.2% Other Equipment 130.1 7.9-3.7% Residential 375.1 22.7 5.9% Structures 365.9 22.2 5.8% Producers' Durable Equipment 9.2 0.6 9.5% Inventory Investment 38.0 2.3-50.1% Farm -3.8-0.2 #N/A Nonfarm 41.2 2.5-46.8%
1996 $s Exports, Imports % Chg. Net Exports of Goods & Services -337.4 100.0-135.2 Exports 1007.1 100.0 3.6% Goods 760.1 75.5 4.7% Foods, feeds, & beverages 44.2 4.4 6.0% Industrial supplies & materials 129.7 12.9-0.8% Capital goods except automotives 421.5 41.9 8.2% Automotive vehicles, engines & pa 70.2 7.0 2.2% Consumer goods except automoti 76.2 7.6-0.1% Other goods 43.9 4.4 11.1% Services 251.5 25.0 1.1% Imports 1344.5 100.0 10.4% Goods 1172.3 87.2 11.8% Foods, feeds, & beverages 41.1 3.1 7.3% Industrial supplies & materials exc 141.1 10.5 2.8% Petroleum & products 77.2 5.7 3.6% Capital goods except automotives 491.0 36.5 15.6% Automotive vehicles, engines & pa 162.0 12.0 21.0% Consumer goods except automoti 229.5 17.1 6.5% Other goods 66.5 4.9 23.4% Services 177.3 13.2 3.7%
1996 $s Government % Chg. Government Purchases 1536.5 100.0 3.4% Federal 539.7 35.1 2.4% National Defense 348.3 22.7 0.2% Consumption expenditures 294.0 19.1 0.1% Gross investment 54.5 3.5 0.9% Nondefense 191.3 12.5 6.5% Consumption expenditures 149.8 9.7 4.8% Gross investment 41.9 2.7 13.6% State and Local 996.6 64.9 4.0% Consumption expenditures 804.9 52.4 3.5% Gross investment 191.7 12.5 6.3%
$s Rec., Exp. % Chg. RECEIPTS 2800.5 100.0 6.27% Personal tax 1160.4 41.4 6.63% Corporate profits tax 259.4 9.3 6.18% Indirect business tax 718.3 25.6 6.16% Contibutions for social insurance 662.3 23.6 5.78% EXPENDITURES 2617.8 100.0 3.64% Consumption expenditures 1341.5 51.2 6.03% Transfer payments 1000.1 38.2 3.46% Net interest paid 259.2 9.9-6.56%
Leakages between Total and Personal Income, 1998 Billions Transfers from of Concept Leakage into Savings Leakage into Taxes Government Dollars Gross Domestic Product 8,760.0 less Depreciation -1,066.9 equals Net Domestic Product 7,693.1 less Indirect Business Taxes -677.0 plus Minor items +30.4 equals Domestic Income 7,046.5 less Retained earnings -257.6 less Contributions for social insurance -622.0 less Corporate profits tax liability -240.2 plus Transfer payments +954.8 plus Net Interest +462.1 plus Minor items +15.2 equals Personal Income 7,358.8 less Personal Income Taxes -1,072.6 equals Disposable Personal Income 6,286.2 less Personal Savings -229.7 equals Personal Outlays 6,056.5 less Interest Paid -185.7 less Personal Transfer Payments -22.3 equals Consumption Expenditures 5,848.5
The Decomposition of Personal Income Billions of Dollars Share of Personal Income Personal Income 7,358.8 100.0 Wage and salary disbusements 4,186.0 56.9 Other labor income 515.7 7.0 Proprietors' income 606.1 8.2 Rental income 137.4 1.9 Personal dividend income 348.3 4.7 Personal interest income 897.8 12.2 Transfer payments to persons 983.6 13.4 less: Personal contributions for social insurance 316.0 4.3
The Decomposition of National Income Billions of Dollars Share of National Income National Income 7,036.4 100.0 Labor Income 5,011.2 71.2 Compensation of employees 5,011.2 71.2 Wages and salaries 4,189.5 Supplements 821.7 Capital Income 2,025.3 28.8 Corporate profits 846.1 12.0 Net interest 435.7 6.2 Rental income 137.4 2.0 Proprietors' income 606.1 8.6
Shares of National Income 80 70 Percent of National Income 60 50 40 30 Labor Share of National Income Profit Share of National Income 20 10 Q1-60 Q1-65 Q1-70 Q1-75 Q1-80 Q1-85 Q1-90 Q1-95 Q1-00