National accounts and Census data

8/14/2019 National accounts and Census data

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GDP, the National Accounts,

and Census Economic Data

Brent Moulton

March 15, 2007


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What are the NIPAs?

The National Income and Product Accounts (NIPAs)are a set of economic accounts that track economicflows within the U.S. economy.

Two key NIPA measures are:

Gross domestic product (GDP): Measures the totalvalue of goods and services produced within the U.S.in a period.

Gross domestic income (GDI): Measures theincomes earned and the costs incurred in producingthose goods and services.


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The Circular Flow

Households Businesses

Goods and services

Labor

Income

Expenditures


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NIPA seven-account summary

Domestic Income and Product AccountPrivate Enterprise Income AccountPersonal Income and Outlay Account

Government Receipts and ExpendituresAccountForeign Transactions Current Account

Domestic Capital AccountForeign Transactions Capital Account


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GDP as value added

Value added is measured as:Output less intermediate consumption

Example: Wheat to flour to bread.

GDP is value of bread.Equals sum of value added of farmer, miller, andbaker.

GDP: the sum of industry value added

Also equals sum of final expendituresAlso equals sum of income earned inproduction


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Account 1. Domestic Income and ProductPersonal consumption expenditures

Gross private domestic investment

Net exports of goods and services

Government consumptionexpenditures and grossinvestment

Compensation of employees,

paid

Taxes on production andimports

Less: Subsidies

Net operating surplus

Consumption of fixed capital

Gross Domestic Income Gross Domestic Product


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Expenditure components of GDP (2005)

GDP = C + I + G + X - M

= GDP

Consumption

70.0%

Investment

16.9%

Government

18.9%

Exports

10.4%

Imports

16.2%

+ + + -


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Income components of GDP (2005)

= GDP

Compensation

57.1%

TOPI lesssubsidies

6.8%

Net operatingsurplus

23.2%Consumption

of fixedcapital

12.6% Statisticaldiscrepancy

0.3%+ + + +


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Account 1. Domestic Income and ProductPersonal consumption expenditures

Gross private domestic investment

Net exports of goods and services

Government consumption expendituresand gross investment

Compensation of employees,

paidTaxes on production andimports

Less: SubsidiesNet operating surplus

Consumption of fixed capital

Gross domestic income

Statistical discrepancy

Gross Domestic Product Gross Domestic Product


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Account 2. Private Enterprise Income

Provides information on the sourcesand uses of the income of privateenterprises.

Includes current-production corporateprofits and proprietors income.


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Account 3. Personal Income and Outlays

Provides information on the sourcesand uses of income received bypersons.

Includes personal income and personalsaving.Can derive disposable personal income

and personal saving rate


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Account 4. Government Receipts and Expenditures

Provides information on thetransactions of the FederalGovernment and state and local

governments.Includes social benefits andgovernment saving.


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Account 5. Foreign Transactions

Provides information on trade in goodsin services with the rest of the world.Includes imports, exports, and the

balance on the current account.


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Account 6. Domestic Capital

Provides information on saving andinvestment for the U.S. economy.Key measures: Gross saving, which is

net saving plus the consumption of fixed capital, and net saving, which isa measure of saving that is available

for adding to the Nations net stock of fixed assets.


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Account 7. Foreign Transactions Capital

Provides information on thetransactions with the rest of the worldthat are linked to acquisition or

disposition of fixed assets.


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Features of national accounts

Inflation-adjusted (real GDP)

Quarterly frequency

Seasonally adjusted

Annualized


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Estimation cycle

Advance estimates are releasedabout 3 1/ 2 weeks after a calendarquarter concludes.

Preliminary and final estimatesare released 30 and 60 days after theadvance.


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Annual revisions and benchmarking

Annual revisions are released in Julyof non-comprehensive revision years.

Comprehensive revisions occur aboutevery 4-5 years.


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GDP by Sector, 2005

Business

77.3%

Households andinstitutions

11.5%

Government

11.2%


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Featured measures

Real GDP growth, as indicated by the percentchange in the chain-type quantity index.

Contributions to real GDP growth reflect the rolethat individual components of GDP play in producing

the growth in GDP.Gross domestic purchases price index (and personalconsumption expenditures price index)inflationmeasures that reflect prices of goods and services

purchased by U.S. residents.


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Other important GDP-related measures

Current-dollar GDP represents thevalue of production at a point in time.

GDP percentage shares provide ameasure of the size and importance of a component.


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Chained-Dollar GDP

Chained-dollar GDP is the product of current-dollar GDP in the referenceyear and the GDP quantity index(divided by 100).Chained-dollar components do not addto the total.See Chained-Dollar Indexes from theNovember 2003 Survey of CurrentBusiness .


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NBER Recessions

-10

-5

0

5

10

15

20

1970-I 1973-I 1976-I 1979-I 1982-I 1985-I 1988-I 1991-I 1994-I 1997-I 2000-I 2003-I

P e r c e n

t

Real GDP growth
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Census data: Economic census

Primary source data for benchmarkinput-output accounts.

Estimates supply of products by industry

and use of products by industry and finalexpenditures.Critical because it provides detailsnecessary to separate intermediate consumption from final expenditures.


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Annual Census source dataAnnual Retail Trade Survey

Personal consumption expenditures (PCE) forgoods; inventories

Services Annual Survey PCE servicesAnnual Survey of Manufactures

Investment in equipment; inventoriesValue of construction put in place structuresAnnual Trade Survey inventories

Foreign trade dataGovernment Finances Survey


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Example Equipment investment

Commodity flow method:ASM data on shipments of detailed durablegoods product categoriesSubtract those going to intermediate uses.

Add imports: domestic supplySubtract goods going to exports,government, PCEAdd margins

Result is estimate of private investment inequipment.


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Example retail trade

Sales by retail industryMerchandise lines (products) data byindustry from last economic census

Estimate products, controlling thetotal to total retail sales for categoriesselling primarily to consumers.Deflate using detailed CPIsResult is estimate of PCE for goods.


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Quarterly source data

Census indicator surveys:M3 shipments and inventories forequipment investment, mfg inventories

Monthly retail trade for PCE goods,retail inventoriesWholesale trade inventories

Value put in place for structuresForeign trade data


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Data issues

Business births may not be promptlycaptured or included in samples.Non-participation in voluntary surveys

may be problemExamplesRespondents may not followinstructions.

Example may report worldwideshipments or inventories


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Diagnosing data problems

Statistical discrepancy is high levelindicator of problems.Monitor revisions persistent large

revisions or revisions in the samedirection.Research on data issues.

Examples