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Selected national income and product estimates, 1929-85.

Selected National Income and Product Estimates, 1929-85 IN December 1985, the Bureau of Economic Analysis released the results of a comprehensive revision of the national income and product accounts (NIPA's). The lead article in the December SURVEY OF CURRENT BUSINESS contained descriptions of the two kinds of changes--definitional and classificational, and statistical--incorporated in the revised estimates. It focused on the estimates for 1972-84, the period in which the revisions were concentrated. Tables 1 and 2 of this note provide the basis for a brief discussion of the revisions to NIPA estimates prior to 1972. Tables 3 through 6 contain selected revised estimates for 1929-85 in a convenient reference format.

GNP in current dollars was revised up in all years, and national income and personal income were revised up in most years (table 1). The revisions in GNP were smaller in the early years, ranging from 0.5 percent in 1929 to 1.6 percent in 1959, compared with 2.3 percent in 1972 and 3.1 percent in 1984. Prior to the early 1950's, most of the revisions in GNP reflected definitional changes, four of which extended back to 1929. Over this period, the capitalization of replacement railroad track and the capitalization of major replacements to residential structures had the largest effect in raising GNP. From the early 1950's to 1972, statistical changes, particularly the improved adjustments for misreporting on tax returns, contributed substantially to raising GNP. Among the definitional changes, the capitalization of major residential replacements and the imputation of a social insurance fund for military retirement also contributed. The upward revisions in national income, and, in turn, in personal income, were largely due to the definitional and statistical changes that also raised GNP. In addition, personal income was raised, beginning in the early 1950's, by the definitional change that reclassified medical vendor payments.

For constant-dollar estimates and for price indexes, it is necessary to examine the revisions in terms of rates of change rather than in terms of differences in levels as was done for current dollars. (See pp. 12-13 of the December article for an explanation of this approach.) Table 2 provides an overview, for selected periods, of the revisions in rates of change in constant-dollar, or real, GNP and in the GNP fixed-weighted price index, as well as in current-dollar GNP and in the GNP implicit price deflator. For 1929-84, the average annual rate of increase in real GNP was revised down 0.1 percentage point to 2.9 percent. For 1959-84, the average annual rate of increase in the GNP fixed-weighted price index was revised down 0.6 percentage point to 4.3 percent. (Estimates of the GNP fixed-weighted price index extend back only to 1959, because price information is not available at the level of detail necessary to prepare comparable estimates for earlier periods.) Much of the revisions in real GNP and in GNP prices reflected the impact of shifting the base period from 1972 to 1982.

For 1929-48, the average annual rate of increase in real GNP was revised up 0.1 percentage point to 2.4 percent. In fixed investment, the rate of increase in nonresidential structures was revised up due to the impact of shifting the base period, and that of residential investment was revised up due to the capitalization of major replacements. Imports were revised up and Federal purchases were revised down, due to improved deflation procedures.

For 1948-59, the average annual increase in real GNP was unrevised from 3.6 percent. Among the major components, the rate of increase in personal consumption expenditures was revised up, largely due to the improved adjustments for misreporting on income tax returns and the reclassification of medical vendor payments. Nonresidential structures and producers' durable equipment were revised down, the former due to current-dollar revisions and the latter due to the shift in the base period. Within net exports, imports were revised up substantially, reflecting more detailed deflation. Government purchases were revised down, reflecting definitional changes that imputed social insurance funds for military retirement and for Federal unemployment insurance for military personnel, as well as the improved deflation procedures.

For 1959-72, the average annual increase in real GNP was revised down 0.2 percentage point to 3.7 percent; the revision largely reflected the impact of shifting the base period. In fixed investment, the rates of increase in nonresidential structures and in producers' durable equipment were revised down substantially due to the shift in the base period. In government, State and local purchases were revised down, largely reflecting the reclassification of medical vendor payments.

The average annual increase in the GNP fixed-weighted price index for 1959-72 was revised down 0.5 percentage point to 2.3 percent. The revision reflected the impact of shifting the base period and the incorporation of a new price index for computers in the estimates of producers' durable equipment. (See the editor's note on page 36 of the January SURVEY for information about the articles that present this index.)
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Title Annotation:effects of recent revision on GNP data for 1929-85
Publication:Survey of Current Business
Date:Feb 1, 1986
Words:830
Previous Article:The business situation, fourth quarter 1985.
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