Annual Industry Accounts Overview

George Smith & Nicole MayerhauserCurrent Industry Analysis DivisionBureau of Economic Analysis

Industry Accounts Users’ Conference, October 26, 2007

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Annual Industry Accounts

“Integrated” Annual I-O and GDP by Industry 12 months after year (2006 in Dec 2007)

2005 and 2004 revised 65 industries

“Advance” GDP by Industry 4 months after year (2006 in April 2007) 22 industry groups

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Outline

Uses and products Methods and strengths Challenges and progress What’s ahead Q & A

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Integrated - Uses

Link industry-sector-macro performanceRelative size; relative growth; contribution to growth

Analyze specific industriesKLEMS and productivity analysis

Input to other BEA programsTTSA; GDP by State; Regional I-O Model

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Integrated - Products

Annual time series, 1998-forward Make and use tables Supplementary tables

Direct & total requirements Bridge (PCE, Private investment) Import matrices

Quantity and price decompositionHistorical NAICS estimates, 1947-97

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Integrated – Strengths

Improved consistency I-O framework perspective

Current-dollar: cross-section & time series Quantity and price: time series

Mix of inputs used by industries overall (Step 1)

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Mix of inputs overall (Step 1) INDUSTRY USES FINAL USES

Agriculture Mining Construction

Manufacturing

Transportation

Trade Finance

Services

Other Total PCE PFI CBI X M GOV GDPTotal

Commodity Output

Agriculture

Minerals

Construction

Manufacturing

Transportation

TradeFinanceServices

OtherNoncomp imports

Total interm inputsComp

ValueTaxes on prod & imports, less

AddedGross op surplus

Total

Output

Commodities

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Integrated – Challenges & progress

Mix of inputs, by industry (Step 2) BEA/Census “core expense” initiative

Input categories (e.g., purchased professional and technical services)

Services Annual Survey, beg. 2005 Annual Survey of Manufacturers, beg.

2006

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Mix of inputs, ASM & SAS (Step 2) INDUSTRY USES FINAL USES

Agriculture Mining Construction

Manufacturing

Trade Services (SAS)

Services (Other)

Total PCE PFI CBI X M GOV GDPTotal

Commodity Output

Agriculture

Minerals

Construction

Manufacturing

Transportation

TradeFinanceServices

OtherNoncomp imports

Total interm inputsComp

ValueTaxes on prod & imports, less

AddedGross op surplus

Total

Output

Commodities

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Integrated – Challenges & progress

Mix of inputs, every industry (step 3) Survey coverage of services industries

Private services-producing 68% of GDP Wholesale & retail trade 13% Covered by SAS 30% Not covered by SAS 25%

Budget-contingent 2008 SAS coverage 55%

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Mix of inputs, long run (Step 3)

INDUSTRY USES FINAL USES

Agriculture MiningConstructi

onManufactu

ringTrade

Services (SAS)

Services (Other)

Total PCE PFI CBI X M GOV GDPTotal

Commodity Output

Agriculture

Minerals

Construction

Manufacturing

Transportation

TradeFinanceServices

OtherNoncomp imports

Total interm inputsComp

ValueTaxes on prod & imports, less

AddedGross op surplus

Total

Output

Commodities

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Integrated – Challenges & progress

Quantity and price decomposition PPI services coverage expansion

Retail trade margin output Wholesale trade margin output Budget-contingent

Professional health care servicesComputer-related services

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Integrated – Challenges & progress

Source data inconsistencies Census output, BLS wages, etc. Separate business registers Different industry assignments of

units Data sharing restrictions Micro-data research of payroll

differences

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Integrated – Publication level

Analytical needs Value added

Publication and estimation levels

Work underway

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Integrated – What’s ahead

Comprehensive revision Revised 2002 benchmark I-O (2002

NAICS) Comprehensive NIPA revision due 2009 Census survey data on industry inputs Improved deflation of retail trade output Publish more industries if possible Imported service inputs by type

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Integrated – More information

Featured estimates and articles: www.bea.gov/industry/

index.htm#annual Underlying estimates:

www.bea.gov/industry/more.htm Information guide:

www.bea.gov/industry/iedguide.htm#GPO

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Advance GDP by Industry

Earliest look at most recent year

22 NAICS industry groups Current dollars Chained (2000)dollars Chained-type quantity indexes Chained-type price indexes

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8 months earlier than integrated accounts

Less detailed but good indicator of Direction of change Rate of change

(acceleration/deceleration) Industry growth relative to overall GDP

Advance - Uses

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Advance - UsesIntegration within BEA NIPA current quarterly GDP/National Income

Advance GDP by Industry

Advance GDP by State

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Advance - Current dollar method

Value Added

Advanced estimates Extrapolated by industry Controlled to NIPA GDP

Output – Intermediate Inputs

Compensation

Taxes – Subsidies

Gross Operating Surplus

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Advance - Real estimates

Single deflation Value added deflated with output prices

Output prices NIPA price indexes BLS price indexes Nominal and volume output measures

from government and private sources

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Advance - Limitations

Single deflation Assumption

output and input prices grow at same rate

Misstates real VA growth when output prices and input prices do not

move in the same direction or at the same rate of change

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Advance - Modified single deflation

Output vs input prices

Adjustments to real value added made when known prices differences exist

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Advance - What’s ahead Double deflation

Separate deflation for output and for intermediate inputs

Real Value Added = real Output – real Intermediate Inputs

Requires few assumptions about the relationship between output and intermediate inputs.

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Advance - What’s ahead

Opportunity to compare 2 years: Single-deflation advanced estimates Double-deflated prototype estimates Integrated annual estimates

Assess size of revisions Single-deflation vs double-deflation

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Advance - More information

Press Release http://www.bea.gov/newsreleases/

industry/gdpindustry/gdpindnewsrelease.htm

Survey of Current Business http://www.bea.gov/scb/index.htm