US GDP and Value added Price Index

A report published by Bureau of Economic Analysis shows the effect of downturn on Private Services sector and Private goods sectors in US.

Here are the highlights of the analysis report as released by  BEA.

Downturns in durable-goods manufacturing and finance and insurance and a continued contraction in construction were the leading contributors to the downturn in U.S. economic growth in 2009, according to preliminary statistics on the breakout of real gross domestic product (GDP) by industry from the Bureau of Economic Analysis. The economic downturn was widespread: 15 of 22 industry groups contributed to the decline in real GDP growth.

  • Manufacturing value added

    —a measure of an industry’s contribution to GDP—fell 5.9 percent in 2009, a sharper decline than the 3.6 percent drop in 2008. Durable-goods manufacturing turned down for the first time since 2001, decreasing 7.5 percent after growing 0.3 percent in 2008. Nondurable-goods manufacturing fell 3.8 percent, a slower decline than the 8.2 percent drop in 2008.

  • Construction

    value added fell 9.9 percent in 2009, reflecting declines in residential and non-residential activity. Construction contracted for the fifth consecutive year.

  • Finance and insurance

    value added dropped 2.7 percent in 2009, after increasing 3.2 percent in 2008.

Chart 1.  Annual Growth in Real GDP

 

Prices:

Declines in value added prices for mining and agriculture and a sharp deceleration in prices for nondurable-goods manufacturing were the largest contributors to the slowdown in the GDP price index for 2009. Value added prices measure changes in an industry’s labor and capital input prices, including profit margins.

  • Value added prices for mining fell sharply in 2009, decreasing 27.4 percent after increasing 26.4 percent in 2008, primarily reflecting decreases in prices for petroleum.
  • Value added prices for agriculture industries fell 20.1 percent in 2009, after increasing 1.4 percent in 2008, primarily reflecting decreases in prices for crops and livestock.
  • Growth in value added prices for finance and insurance and real estate partially offset the sharp declines in prices for mining and agriculture.

Chart 2. Annual Growth in Value Added Prices

Other highlights:

  • The private goods-producing sector contracted for the second consecutive year, falling 5.3 percent in 2009 after decreasing 2.5 percent in 2008.
  • The private services-producing sector turned down, decreasing 1.9 percent. Real estate and rental and leasing was the largest contributor to the decline in this sector.
  • Value added growth for the Federal government and health care industries helped to partially offset the widespread economic downturn in 2009.
  • Information-communications-technology industries’ value added turned down in 2009, decreasing 0.1 percent after averaging double-digit growth from 1998 through 2007.

Hitesh Anand

I am a post graduate from Newcastle University, UK. I like studying and analyzing economic data and financial health of world.

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