GDP Price Index QoQ

The GDP Price Index QoQ is the quarterly percent change in the Gross domestic product price index. The BEA (U.S. Bureau of Economic Analysis, the federal national accounts agency) compiles it in the NIPAs.

The NIPAs (National Income and Product Accounts, the official output framework) organize the national output accounts. It is a National Accounts aggregate from Census, tax, farm and price data, covering United States production including exports, with imports excluded. It does not measure resident purchase prices, and a higher reading means production prices rose, not that real output grew.

Each release covers one quarter in three sequential vintages, starting with the advance (Advance estimate, incomplete detail subject to revision). The second (Second estimate) and third (Third estimate) use fuller and more detailed data.

Releases arrive at 8:30 a.m. Eastern time. The same release also carries real and nominal output, income and companion price tables, and average advance to third revision is 0.6 percentage points.

The index follows prices in the four GDP spending parts, with no fixed weights because chain weights move each quarter.

• Personal consumption expenditures (PCE, household spending): prices of household goods and services; largest share by spending.
• Gross private domestic investment: prices of structures, equipment, intellectual property products and inventory change.
• Net exports of goods and services: export prices are included and import prices are excluded.
• Government consumption expenditures and gross investment: prices of federal plus state and local purchases and investment.

In one teaching quarter, real output fell 0.6% at an annual rate after a 1.6% fall. The index rose 9.0% after 8.3%, while nominal output rose 8.5% to 25.25 trillion dollars. Buyer prices rose 8.5%, household spending prices rose 7.3% and core prices rose 4.7%. Output can shrink two quarters in a row while production prices surge, because the index isolates price change from real growth.

1. Prepare detail: prepare detailed values by deflation (splitting sales into price and volume), quantity extrapolation (volume from related data) or direct valuation (pricing output directly). Seasonally adjust the detail, using source agency adjusted data or Census X-13 ARIMA where needed.

1. Fisher link: compute the quarter to quarter Fisher price link, the geometric mean of Laspeyres and Paasche indexes using both quarters quantities. In one illustrative case with invented data, both links rose together to 1.05833 with steady quantities.

1. Chain and reference: chain links by multiplying the prior index by the new link, with the reference level fixed at 100 before aligning detail. Align quarterly detail to annual detail before computing changes.

1. Express results: show index levels with reference level 100 and quarterly percent changes at annual rates, using compound interest annualization. A 1.05833 link means 5.833% for the quarter and about 25.5% annualized, and price change times quantity change equals nominal change.

1. Tricky detail: change in private inventories uses an alternate detail method when the Fisher root fails, while higher aggregates still compute.