Business situation: preliminary estimates for the third quarter of 2004

Survey of Current Business, Dec, 2004 by Brian C. Moyer, Shelly Smith, David F. Sullivan, Christopher Falcone

"Other current transfer payments to the rest of the world" decreased $1.2 billion after decreasing $10.7 billion. The second-quarter decrease followed a first-quarter increase that included a payment of $2.8 billion ($11.2 billion at an annual rate) to Israel and Egypt for economic support.

Government social benefits increased $11.2 billion after increasing $6.8 billion. The acceleration was mainly accounted for by government social benefits to persons, which increased $11.1 billion after increasing $6.8 billion. Payments for unemployment programs decreased $1.1 billion after decreasing $8.0 billion.

Consumption expenditures increased $12.7 billion after increasing $9.2 billion. The acceleration was more than accounted for by an acceleration in defense consumption expenditures. Nondefense consumption expenditures turned down.

Defense consumption expenditures increased $13.5 billion after increasing $8.4 billion. Expenditures for services accelerated, increasing $11.3 billion alter increasing $6.1 billion. These expenditures include expenditures for research and development, for transportation of materials, for travel, and for other services.

Nondefense consumption expenditures decreased $0.6 billion after increasing $0.7 billion. The downturn was more than accounted for by spending for nondurable goods, which decreased $1.3 billion after increasing $0.4 billion. Commodity Credit Corporation sales, which are treated as deductions from consumption expenditures, increased $3.2 billion after decreasing $1.4 billion.

State and local

Net state and local government saving was $8.5 billion in the third quarter of 2004, decreasing $9.8 billion from $18.3 billion in the second quarter. Current receipts turned down, and current expenditures decelerated.

Current receipts. State and local government current receipts decreased $7.0 billion after increasing $33.3 billion. The downturn was more than accounted for by a downturn in current transfer receipts and by a deceleration in current tax receipts.

Current transfer receipts decreased $14.7 billion after increasing $8.1 billion. The downturn was mostly accounted for by the downturn in Federal grants-in-aid, which decreased $9.8 billion after in creasing $5.9 billion mainly because of a downturn in Medicaid grants. The downturn was also attributable to a downturn in "other" transfer receipts, specifically transfer receipts from business, which decreased $6.4 billion after increasing $0.7 billion, reflecting the effect of the hurricanes on the transactions of state-owned insurance enterprises in Florida and Louisiana.

Current tax receipts increased $7.4 billion after increasing $24.9 billion. The deceleration was mostly accounted for by a deceleration in personal current taxes, which increased $0.8 billion after increasing $10.8 billion, mainly as a result of a deceleration in personal income taxes.

Current expenditures. State and local government current expenditures increased $2.8 billion after increasing $26.9 billion. The deceleration was more than accounted for by a downturn in government social benefits.