Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 3.8 percent in the fourth quarter of 2008, (that is, from the third quarter to the fourth quarter), according to advance estimates released by the Bureau of Economic Analysis. In the third quarter, real GDP decreased 0.5 percent.

The Bureau emphasized that the fourth-quarter "advance” estimates are based on source data that are incomplete or subject to further revision by the source agency (see the box on page 4). The fourth-quarter “preliminary” estimates, based on more comprehensive data, will be released on February 27, 2009.

The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by positive contributions from private inventory investment and federal government spending. Imports, which are a subtraction in the calculation of GDP, decreased.

Most of the major components contributed to the much larger decrease in real GDP in the fourth quarter than in the third. The largest contributors were a downturn in exports and a much larger decrease in equipment and software. The most notable offset was a much larger decrease in imports.

Final sales of computers subtracted less than 0.01 percentage point from the change in real GDP after subtracting 0.01 percentage point from the third-quarter change. Motor vehicle output subtracted 2.04 percentage points from the fourth-quarter change in real GDP after contributing 0.16 percentage point to the third-quarter change.

The price index for gross domestic purchases, which measures prices paid by U.S. residents,
decreased 4.6 percent in the fourth quarter, in contrast to an increase of 4.5 percent in the third.
Excluding food and energy prices, the price index for gross domestic purchases increased 1.2 percent in the fourth quarter, compared with an increase of 2.8 percent in the third.

Real personal consumption expenditures decreased 3.5 percent in the fourth quarter, compared with a decrease of 3.8 percent in the third. Durable goods decreased 22.4 percent, compared with a decrease of 14.8 percent. Nondurable goods decreased 7.1 percent, the same as in the third. Services
expenditures increased 1.7 percent, in contrast to a decrease of 0.1 percent.

Real nonresidential fixed investment decreased 19.1 percent in the fourth quarter, compared with a decrease of 1.7 percent in the third. Nonresidential structures decreased 1.8 percent, in contrast to an increase of 9.7 percent. Equipment and software decreased 27.8 percent, compared with a decrease of 7.5 percent. Real residential fixed investment decreased 23.6 percent, compared with a decrease of 16.0 percent.

Real exports of goods and services decreased 19.7 percent in the fourth quarter, in contrast to an increase of 3.0 percent in the third. Real imports of goods and services decreased 15.7 percent, compared with a decrease of 3.5 percent.

Real federal government consumption expenditures and gross investment increased 5.8 percent in the fourth quarter, compared with an increase of 13.8 percent in the third. National defense increased 2.1 percent, compared with an increase of 18.0 percent. Nondefense increased 14.5 percent, compared with an increase of 5.1 percent. Real state and local government consumption expenditures and gross
investment decreased 0.5 percent, in contrast to an increase of 1.3 percent.

The real change in private inventories added 1.32 percentage points to the fourth-quarter change in real GDP after adding 0.84 percentage point to the third-quarter change. Private businesses increased inventories $6.2 billion in the fourth quarter, following a decrease of $29.6 billion in the third quarter and a decrease of $50.6 billion in the second.

Real final sales of domestic product -- GDP less change in private inventories -- decreased 5.1 percent in the fourth quarter, compared with a decrease of 1.3 percent in the third.