Improved Estimates ofthenationalincome andproductaccounts for : Results ofthe ComprehensiveRevision

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1 April 2000 SURVEY OFCURRENT BUSINESS Improved Estimates thenationalincome ProductAccounts for929 99: Results the ComprehensiveRevision ByBrent R.Moulton T HEBUREAUOF EONOMICANALYSIS(BEA) has completedmostitsthcomprehensiverevisionthenationalincomeaccounts (NIPA s)withthereleaserevisednipaestimates for estimates fixed assets consumer durable for 998 (new) for (revised). These estimates incorporate the definitional,statistical, presentational improvementsthatwereintroducedlastoctoberinto the revised estimates beginning with 959. In addition,beahasreleasedrevisedestimatesbeginning with 959 that incorporate corrections apreviouslyannouncedimprovementinmethodology. The article Fixed Assets Consumer DurableGoods: RevisedEstimatesfor in this issue presents the estimatesfixed assets consumerdurable; this articledescribes the revised NIPAestimates. Alist the dataseries released inoctober999 published in the December 999 issue the SURVEYOFCURRENTBUSINESSthathave beencorrected or revised is shown on page 32. NIPAtables that present annual estimates for quarterly estimates for 997:I 999:IV begin on page Tablesthat present estimates gross(gdp)othermajornipaseriesfor begin onpage 26. Forfurther informa-. For the definitionalchanges, including the recognition business government for stware as the reclassification government employee retirement plans, see Brent R. Moulton, Robert P. Parker,Eugene P.Seskin, APreview the 999 Comprehensive Revision thenationalincomeproductaccounts: DefinitionalClassificational Changes, SURVEYOFCURRENTBUSINESS79(August999): Forthestatistical changes, including the incorporation the 992 benchmark input-output accounts, the improved estimates the real value unpriced bank, the incorporation geometric-mean-type consumer price indexes, see BrentR.MoultonEugene P.Seskin, APreviewthe 999Comprehensive Revision the NationalIncome Product Accounts: Statistical Changes, SURVEY 79 (October 999): 6 7. For the presentational changes that were made to reflect the definitional statistical changes, see Brent R. Moulton David F.Sullivan, APreview the 999 Comprehensive Revision the NationalIncome Product Accounts: New Redesigned Tables, SURVEY 79 (September 999): For adiscussion the major sources the revisionsto the NIPAaggregates for959 98,see Eugene P.Seskin, Improved Estimates the NationalIncome Product Accountsfor : Results the ComprehensiveRevision, SURVEY79 (December 999): NIPAtables , showing government by function, are not yet available will be introduced in an article in asubsequent issue the SURVEY. tionontheavailabilitytherevisedestimates,see the boxonpage 2. Tables 3 this article show annual levels, percent changes, revisions topercent changes for current-dollargdp,for real GDP, for the chain-type priceindexes for Revisionstochange. For929 58,theaverageannualgrowthrate real GDP was unrevised at 3.4 percent. The largestrevision to an annualgrowth rate real GDP was +0.5 percentage point for 947, reflecting arevision to Federal gross, which, in turn, reflected arevision to the change in inventories the Commodity Credit Corporation. Other revisions to annual growth rates real GDP were 0.4 percentage point or less in absolute value primarily reflected revisions to the change in inventories to Federal. The revisions to the change in inventories reflected the new methodology for construction inventories that eliminated the double-count construction work-in-progress unsold finished structures. 3 For , revisions to real Federal nondefense reflected the use additional detailed information on prices CommodityCredit Corporation inventorychanges. Beginning with 959, the revisions to real GDP reflected acorrection to real furnished without payment by financial intermediaries. This correction affected real GDP prices, but it did not affect current-dollar GDP.The average annualgrowth rate real GDP over was unrevised at 3.4 percent. For specific years, the revisions were more notable. The largest revision to the annual growth rate GDP was +0.4 percentage point for 976; the growth rate for 993 was revised up 0.3 percentage point. The growth rates for 974, 99, 992, 997 were 3. See Moulton Seskin, StatisticalChanges, 0.

2 . 2 April2000 SURVEY OFCURRENT BUSINESS each revised down 0.3 percentage point. The components real GDP GDP prices that were revised as aresult this correction were personal (PCE), exports,federalnondefense, State local government. Revisions to the chain-type price indexes reflected manythe samechanges inmethodology that affected estimates real GDP.For , the average annual growth rate the gross purchases price index was unrevised at.9 percent; revisions to annual growth rates ranged from 0.4 percentage point for 940 to +0.2 percentage point for 942. Beginning with 959, the growthrates prices wererevised in the opposite directiontherevisionstorealgdpgrowthrates that resulted from the correction to real furnished without payment by financial intermediaries ; current-dollar GDP its components were not revised. For , the average annualgrowthrategrosspurchasesprices was unrevised at 4. percent; revisions to annual growth rates ranged from 0.3 percentage point for976to+0.4 percentage point for974. For977 98,thegrowthratesrealgross nonfinancial corporate business its priceindexwererevised,reflectingapreviouslyannounced improvement in methodology in which anew industry-based price index is used for deflation. 4 Previously, the implicit price deflator for structures in GDP was used to deflate this aggregate. The new index better reflects the changing industrial composition this 4. See Moulton Seskin, StatisticalChanges, 3. sector, in which the ion has become increasingly important, it provides better measures ivity,costs, prits per unit gross. For , the average annual growth rate real gross nonfinancialcorporatebusinesswasrevised down from4. percent to3.7 percent; the downwardrevision reflects the tendency for prices, which were not included in the previous deflator, toincrease faster thanprices. Revisions to level. Revisions to the levels current-dollar GDP for were generally small mainly reflected methodological improvements. The revisions ranged from 0. percent for 946 to +0.4 percent for 932 mostly reflected revisions to change in inventories, to government,topce.therevisionstogovernment weremostlytostate localgovernmentfixedcapital (CFC)reflectedtheuseashorterservicelife for depreciating highways streets. 5 For , current-dollar GDP its components were unrevised. Revisions to national income ranged from 0.6 percent for 958 to +0.6 percent for 933. For ,therevisionsprimarilyreflectedrevisions to the capital adjustment (CCAdj) because corrections to pre 925 data on fixed assets prices. For , downward revisions to national income reflected achange in the methodologyforestimating the rentalincome from nonfarm nonresidential properties, which 5. See Moulton Seskin, StatisticalChanges, 3. AvailabilityRevised EstimatesRelatedInformation The estimates shown in the NIPAtables beginning on page36,along withestimatesforearlierperiods(formost tables, back to 929 for annual estimates back to 946 for quarterly estimates), are available on BEA sweb site at < on STAT-USA sweb site at < These estimates incorporate the March 2000 release corrections revisions to the NIPA estimates that were released in October 999. Later this year, the data will be available on acd ROM. In early 200, BEA will publish National Income ProductAccounts the United States, ,which will present the full set NIPAtables, including revised estimates for 997 from this year sannual NIPArevision, will describe definitions statistical conventions. The availability the CD ROM the volume will be announced in the SURVEY OF CURRENT BUSINESS on BEA sweb site. For informationabout thecomprehensiverevision,see thefollowing issues thesurvey: Definitional classificational changes (August 999). New redesignedtables (September999). Statisticalchanges(October999). Improvedestimates thenipa s(december999). Real inventories, sales, inventory-sales ratios (January 2000). Comparison personal income IRS adjusted gross income(february2000). Other information related to the NIPAestimates will be released as the work is completed. The listing below providesapproximateschedules for the release most theremainingestimates. byindustry,947 98(June 2000). byfunction(june 2000).

3 SURVEY OFCURRENT BUSINESS April wascarriedbackto For959 98,smallrevisions tonational income reflected revisions to the CCAdj,whichinturnresultedfromacorrectionto CFC. This correction also affected current-dollar real net, but it did not affectgdp.nationalincomewasrevisedupbysmall amounts, reflecting upward revisions to prits from current ion that, in turn, reflected upward revisions to the corporate CCAdj. For 998,nationalincomewasrevised up$2.4billion. Within GDP gross income, the revisions to the CCAdj were largely fset by revisions to CFC. Thus, revisions to the statistical discrepancy the difference between GDP (the -side measure output) gross income (the income-side measure output) mainly reflected the revisions to the changeininventoriestorentalincome persons. For , the statistical discrepancywasrevisedup,reflectingdownwardrevisions to gross income that, in turn, reflected downward revisionstorentalincome. For , gross corporate business was revised down, reflecting acorrection to the allocation indirect business tax nontax liabilities by legal form organization by industry. 7 This correction did not affect GDP,gross income, or national income. The revisionstogrosscorporatebusinessmostly reflectedrevisionstogrossnonfinancial corporate business. For , current-dollar gross nonfinancial corporate business wasreviseddownsubstantiallyforallyears;therevisionsrangedfrom 3.percent for96to.4 percent for988. For , revisions to personal income rangedfrom 0.2percent for955to+0.4percent for943. These revisions mostlyreflected the definitional change in the treatment government employeeretirementplansthemethodological change to rental income. 8 Revisions to disposable personal income (DPI) ranged from +0.2 percent for 955 to +. percent for 938 reflected the redefinition estate gift taxes as capital transfers the definitionalmethodological changes that affected personal income. 9 Revisions to the personal saving rate ranged from +0.3 percentage point for955to+.percentage point for 938. For , personal income, current-dollardpi, personaloutlayswereunrevised,butrealdpirealpcewereaffectedby the correction to real furnished without payment byfinancialintermediaries. 6. See MoultonSeskin, StatisticalChanges,. 7. Current-dollar gross corporate business is measured as the sumthecorporatedistributionsthecomponentsgrossincome. Consequently, it represents an income-side measure value added rather than a -side measure. 8. See Moulton, Parker, Seskin, Definitional Classificational Changes, 2;MoultonSeskin, StatisticalChanges,. 9. See Moulton, Parker, Seskin, Definitional Classificational Changes, 3 4.

4 4 April 2000 SURVEY OF CURRENT BUSINESS Table. Domestic Product: Levels, Percent Change from Preceding Period, Revision to Percent Change Billions dollars Percent change from preceding period Revision to percent change from Preceding period 2 Year , , , , , ,635.2, ,823.9, ,03.4, ,295.9, ,566.4, ,795.6, ,3.3, , , , , , , ,23.0 2, , , , , ,08.3 3, , ,489. 3, , , , , , , , ,38.9 4, , , , , , ,76.4, , , ,969.0, , ,83.2 5,237.5, , , ,524.4, ,056.3, , ,848.6, ,5.9, gross. 2. Revised percent change less the previously published percent change.

5 SURVEY OF CURRENT BUSINESS April Table 2. Real Domestic Product: Levels, Percent Change from Preceding Period, Revision to Percent Change Billions chained (996) dollars Percent change from preceding period Revision to percent change from Preceding period 2 Year Residual , , , , , , , , , , , ,550.9, ,686.6, ,85., ,887.3, ,973.9, ,960.5, ,099.5, ,4., ,83.9, ,62.8, ,39.0, ,376.7, ,432.0, ,578.9, ,690.4, ,846.5, ,028.5, , , , , ,466. 2, ,57.4 2, , , , , , , ,23.4 2, , , , , ,3.7 2, ,5.8 2, , , ,92. 3, , , , , ,02.0 3, , ,99.3 3, , ,32.3 3, , , , , ,77. 3, , ,92.4 3, , ,3.3 4, , , , , ,59.8 4, , , , , , , , , , , , , , , ,928., , , ,075.6, , ,83.2 5,237.5, , ,44.8 5,47.3, ,095.2, , ,68.8,547.4,004.6,222.2, gross. 2. Revised percent change less the previously published percent change. NOTE. Users are cautioned that particularly for components for which relative prices are changing rapidly, the use chained-dollar estimates to calculate component shares or component contributions to real growth may be misleading, even just a few years from the base year. For accurate estimates the contributions to percent changes in real GDP, use NIPA table 8.2.

6 6 April 2000 SURVEY OF CURRENT BUSINESS Table 3. Chain-Type Price Indexes for Domestic Product, Percent Change from Preceding Period, Revision to Percent Change Chain-type price indexes, 996=00 Percent change from preceding period Revision to percent change from Preceding period 2 Year purchases purchases purchases gross. 2. Revised percent change less the previously published percent change.

7 Tablesthrough3follow. SURVEY OF CURRENT BUSINESS April