Washington, DC…Real gross domestic product increased at an annual rate of 3.5 percent in the third quarter of 2016(table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.4 percent.

The GDP estimate released today is based on more complete source data than were available for the
“second” estimate issued last month. In the second estimate, the increase in real GDP was 3.2 percent.
With this third estimate for the third quarter, nonresidential fixed investment, personal consumption
expenditures (PCE), and state and local government spending increased more than previously
estimated, but the general picture of economic growth remains the same (see “Updates to GDP” on
page 2).

Real GDP: Percent Change from Preceding Quarter

Real gross domestic income (GDI) increased 4.8 percent in the third quarter, compared with an increase
of 0.7 percent in the second. The average of real GDP and real GDI, a supplemental measure of U.S.
economic activity that equally weights GDP and GDI, increased 4.1 percent in the third quarter,
compared with an increase of 1.1 percent in the second (table 1).

The increase in real GDP in the third quarter primarily reflected positive contributions from PCE, exports, private inventory investment, nonresidential fixed investment, and federal government spending that were partly offset by negative contributions from residential fixed investment. Imports, which are a subtraction in the calculation of GDP, increased (table 2).

The acceleration in real GDP in the third quarter primarily reflected an upturn in private inventory
investment, an acceleration in exports, a smaller decrease in state and local government spending, an
upturn in federal government spending, and a smaller decrease in residential investment, that were
partly offset by a smaller increase in PCE and an acceleration in imports.

Current-dollar GDP increased 5.0 percent, or $225.2 billion, in the third quarter to a level of $18,675.3 billion. In the second quarter, current dollar GDP increased 3.7 percent, or $168.5 billion (table 1 and
table 3).

The price index for gross domestic purchases increased 1.5 percent in the third quarter, compared with
an increase of 2.1 percent in the second quarter (table 4). The PCE price index increased 1.5 percent,
compared with an increase of 2.0 percent. Excluding food and energy prices, the PCE price index
increased 1.7 percent, compared with an increase of 1.8 percent (appendix table A).

Updates to GDP

The upward revision to the percent change in real GDP reflected upward revisions to nonresidential
fixed investment, PCE, and state and local government spending. For more information, see the
Technical Note. For information on updates to GDP, see the “Additional Information” section that
follows.

Profits from current production (corporate profits with inventory valuation adjustment and capital
consumption adjustment) increased $117.8 billion in the third quarter, in contrast to a decrease of $12.5 billion in the second quarter.

Profits of domestic financial corporations increased $50.1 billion in the third quarter, compared with anincrease of $5.6 billion in the second. Profits of domestic nonfinancial corporations increased $66.4
billion, in contrast to a decrease of $56.1 billion. The rest-of-the-world component of profits increased $1.3 billion, compared with an increase of $38.0 billion. This measure is calculated as the difference between receipts from the rest of the world and payments to the rest of the world. In the third quarter,receipts decreased $1.3 billion, and payments decreased $2.6 billion.