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Benchmark input-output accounts for the U.S. economy, 1982.

Benchmark Input-Output Accounts for the U.S. Economy, 1982

This article presents the 1982 benchmark input-output (I-O) accounts for the U.S. economy.(1) These accounts show the production of commodities (goods and services) by each industry, try, the use of commodities by each industry, the commodity composition of GNP, and the industry distribution of value added. BEA prepares these accounts primarily on the basis of data collected every 5 years in the economic censuses for agriculture, mining, construction, manufacturing, wholesale trade, retail trade, and selected services; data for other services are from other government reports and surveys and from private sources. The summary tables in this article present estimates for 85 industries, which are roughly equivalent to the two-digit level of the Standard Industrial Classification (SIC) for non-manufacturing and the three-digit SIC level for manufacturing. Information on obtaining the benchmark tables at the 500-industry level is in the box on page 34.

This article is in three sections. The first section describes the I-O accounts and the tables that present related detail. The second section discusses some uses of these estimates, highlighting analytical uses and providing recent examples. The third section is a summary of the sources and methods used to prepare these accounts.

The I-O accounts and related detail

The I-O accounts are typically displayed in matrix form to show compactly the relationships between all industries in the economy and all the commodities they produce and use.(2) Estimates for commodities are typically shown at producers' prices (although they can be shown at purchasers' prices). When producers' prices are used, wholesale and retail trade margins, which are measured as sales less the cost of goods sold, and transportation costs are treated as commodities that are separately produced and used by industries.

Make and use tables. - Two tables are basic to the accounts. The first, referred to as the "make" table, is a matrix showing the industry production of each commodity in the economy (table 1). The second, referred to as the "use" table, is a matrix showing the commodities consumed, or used, by each industry and final consumer (table 2). (Tables of coefficients that are derived from the make and use tables are described in the next section.) Chart 4 provides a schematic representation that highlights the relationship between the make and use tables.

In the make table, the entries in a row represent the dollar value of commodities produced by the industry named at the beginning of the row. In chart 4, each row shows one white cell. That cell, called the diagonal cell, shows the value of production of the commodity for which the industry has been designated the "primary" producer. Any entries in the other cells in the row show the value of production of commodities for which other industries are the primary producers (that is, the value of production of commodities for which the given industry is a "secondary" producer). The entries in a column represent the value of the production by each industry of the commodity named at the head of the column.

The row total in the make table is total industry output, and the column total is total commodity output. As indicated by the shading on the chart, the row totals of the make table equal the column totals of the use table, and the column totals of the make table equal the row totals of the use table.

In the use table, the entries in a row represent the dollar value of the use by each industry of the commodity named at the beginning of the row and of the sales of the commodity to final uses. The industry uses sum to total intermediate use, shown in the far right column of the industries portion. The final uses sum to GNP, shown in the far right column of the final-uses portion. The entries in a column represent the value of the commodities - that is, of raw materials, semifinished products, and services - used and the value added that is generated in production by the industry named at the head of the column. The row total (total commodity output) is the production of the commodity (no matter which industry contributed to that production), and the column total (total industry output) is the production of the industry (no matter what commodity was produced).

The entries in the industries and final-uses portions of the table include imported, as well as domestically produced, commodities.(3) Imports by commodity are treated as negative entries in the imports column in the final-uses portion. The entries in the industries portion exclude capitalized purchases. Purchases of equipment and structures are treated as positive entries in gross private fixed investment or government purchases in the final-uses portion.

Supplementary tables. - Additional detail on I-O commodities and industries is presented in a series of supplementary tables, which are described below.(4)

The personal consumption expenditures by NIPA category table expands the personal consumption expenditures (PCE) component of the use table to show, in both producers' and purchasers' prices, the commodities that make up the detailed PCE categories in the national income and product accounts (NIPA) table 2.4. For example, the table shows relative proportions of agriculture, manufactured food, and chemical (salt and monosodium glutamate) commodities that make up the NIPA PCE category "food purchased for off-premise consumption." This table is essential to analyses that attempt to relate the effects of changes in consumption to industry and commodity output.

The gross private fixed investment by NIPA category table expands the gross private fixed investment component of the use table to show, in both producer's and purchasers' prices, the commodities that make up the detailed categories for structures and for producers' durable equipment purchases in NIPA tables 5.4 and 5.6. For example, the table shows the relative proportions of new office buildings and utility plants that make up the NIPA structures category "electric light and power." This table is essential to analyses that attempt to relate the effects of changes in investment to industry and commodity output.

The capital flows table expands the gross private fixed investment component of the use table to show the type of equipment and structures purchased by industry. Frequently, the analytical use of the I-O accounts requires the construction of a dynamic model in which the purchases of equipment and structures are included in the model as intermediate purchases; this table makes it possible to compute entries in the industries portion that include capitalized purchases.

The employment and employee compensation table expands the employee compensation component of the use table to show the number of employees and to separate supplements to wages and salaries from wages and salaries by industry. This table can be used to relate industry output to employment and to calculate employment multipliers.

The exports and imports by balance of payments category table expands the exports and imports component of the use table to show the commodities classified according to the detailed categories in table 2 of BEA's balance-of-payments presentation. This new table shows relative proportions of commodities that make up the categories. For merchandise exports and imports, the table also provides a concordance between I-O commodity codes and the commodity classifications used for data on merchandise trade (Schedule B of the Statistical Classification of Domestic and Foreign Commodities Exported from the United States for exports and the Tariff Schedules of the U.S. Annotated for imports).

The I-O workfile table expands the commodity detail of the use table to show the products within the commodity. The workfile identifies over 7,000 products. Within a consistent definitional framework, it provides the maximum detail on product use for each industry that is permitted by the source data. It also notes the survey, report, or other reference for the source data.

Uses of I-O estimates

I-O accounts, both the benchmark accounts and the annual accounts that are based on them, are less well known than other parts of the Nation's economic accounts. Similarly, their uses are less well known. This section describes two kinds of uses - uses in analyses of the economy and uses in the preparation of economic statistics.

Analytical uses. - The make and use tables, because they completely account for commodity production and use for the entire economy and because they include detailed information for products, provide useful information to market researchers and others who wish to analyze and project the use of particular products. For example, a trade association has used the accounts to estimate import penetration in the apparel industry, and the U.S. Copyright Office has used the accounts to measure the size of U.S. copyright-related industries.

The major analytical use of the estimates in the I-O accounts is in economic analyses that require the measurement of both the direct and indirect effects of changes in demand.(5) Tables, referred to as "coefficient tables," that quantity these direct and indirect effects are calculated using the estimates in the make and use tables. BEA publishes three coefficient tables, which appear in this article at the summary 85-industry level.

The commodity-by-industry direct requirements table is prepared using the use table to relate commodity input for an industry to the industry's output (table 3). The values in this table, referred to as the "direct requirements coefficients," show the amount of a commodity required by the industry to produce a dollar of the industry's output.

The commodity-by-commodity total requirements table is prepared using both the make and use tables (table 4). The values in this table, referred to as "commodity-by-commodity total requirements coefficients," show the production required both directly and indirectly of the commodity named at the beginning of each row per dollar of delivery to final use of the commodity named at the head of the column.

The industry-by-commodity total requirements table is also prepared using both the make and use tables (table 5). The values in this table, referred to as "industry-by-commodity total requirements coefficients," show the production required directly and indirectly from the industry named at the beginning of the row per dollar of delivery to final use of the commodity named at the head of the column.

These coefficient tables can be used, for example, to determine the impact of a disaster on the economy or to compute the effect on employment of an increased demand for imported, rather than domestic, goods. The Federal Emergency Management Agency, the Department of Defense, and the Bureau of the Census have used the accounts for such studies. When the accounts are used in conjunction with regional data, they can be modified to show the regional impacts. For example, a trade association analyzed the economic effect of the fishing industry in areas bordering the Gulf of Mexico, and a real estate developer analyzed the impact of constructing a new airport. BEA's Regional Economic Analysis Division performs such analyses for other government agencies.

Statistical uses. - The I-O accounts are used in several ways in the preparation of economic statistics. First, I-O accounts are a source of weights that can be used to prepare price or output indexes. For example, the Bureau of Labor Statistics uses I-O-based weights to calculate producer price indexes by stage of fabrication. BEA uses I-O-based weights to prepare the constant-dollar estimates of GNP. The weights also can be applied to NIPA totals for nonbenchmark years to estimate commodity composition. For example, the weights from the I-O accounts can be applied to the NIPA expenditure total for drug preparation and sundries to estimate spending on prescription drugs. Second, the I-O accounts are used by BEA to benchmark the national economic accounts. For example, PCE for 1982 will be derived for the 1982 benchmark I-O accounts.(6) Third, the I-O accounts are used to identify data gaps and inconsistencies in economic statistics. For example, discrepancies between construction activity reported in the Census Bureau's value put-in-place survey and that reported in the census of construction and other economic census data were identified during the preparation of the 1982 benchmark I-O accounts. As a result, the Census Bureau undertook a number of special studies, two of which have already led to major improvements in the current statistics.

Sources and methods

There are three major steps in the preparation of the benchmark accounts. Each of these steps and the major source data are described below.

1. Determine industry and commodity output totals. - The SIC groups establishments into industries based on their principal product. For most SIC groups, the economic censuses, conducted by the Bureau of the Census, provide detailed data for industries and commodities for establishments with payroll. For 1982, the censuses did not cover finance, insurance, real estate, transportation, utilities, hospitals, and schools; for these industries, survey or regulatory information was used to derive output. To determine the output totals, two adjustments were made to the published data for the censuses-covered industries: Where necessary, they were adjusted by adding estimates of the output of establishments with no payroll, and where the Census Bureau uses tax return records rather than reports that it directly collects, they were adjusted for misreporting.(7)

The SIC-based totals were then adjusted to the industry classification system used in the I-O accounts. The SIC groups require adjustment when the SIC industry's input structure is more heterogeneous than is desirable for I-O analysis. (The I-O industry categories and their composition in terms of the 1972 SIC industries are given in appendix A - see page 68.) These definitional differences usually relate to secondary activity. Adjustments are made, for example, to include all construction work - wherever performed - in the construction industry, all manufacturing performed at trade and service establishments in the manufacturing industry, all services performed by trade establishments in the service industry, and all reselling by any industry in the trade industry. For each of these differences, production is transferred to the appropriate I-O industry. In a few cases, these differences involve primary activity. For instance, chemical establishments primarily producing aluminum oxide are included in the SIC chemical products industry, but they are included in the I-O primary aluminum industry because their primary input is bauxite. After these adjustments, industry output by commodity is summed for all producing industries to derive total commodity output.

2. Derive the GNP components and their commodity composition. - Estimates of some final uses are derived from direct information; for example, imports are from Census Bureau foreign trade statistics. For other estimates, the commodity-flow method is the mostly widely used method. This method first converts domestic sales, which is the value of sales, of commodities produced by domestic firms at producers' prices, to domestic supply, which is the value of sales to domestic purchasers at purchasers' prices and, therefore, includes imports and excludes exports. It then allocates domestic supply among domestic purchasers - that is, persons, business, and government.(8)

3. Estimate the commodities used by industries. - For industries covered by the economic censuses, the data do not always include all intermediate uses, and they are primarily for establishments with payroll (and therefore must be adjusted to cover all establishments). For other industries, the data are from government or private sources. In some cases, the source data provide direct information on the use of a commodity - for example, purchased electricity. In other cases, the data provide a total for a broad category of purchases - for example, office supplies, equipment repairs, or equipment rental. For these totals, estimates of individual commodities are made using commodity-shipment weights and other applicable data. When direct information is not available, estimates of intermediate use are derived using related information. For instance, accounting fees are distributed based on the number of employees, and auto-related expenditures are distributed based on estimates of auto use.

(1.) Annual I-O accounts for 1982 were presented in the April 1988 Survey of Current Business. For an explanation of the relationship between the benchmark and the annual I-O accounts, see the box on BEA's I-O program on page 32.

(2.) In the detail that they provide on industries and commodities, the I-O accounts can be viewed as a deconsolidation of the account in the national income and product accounts (NIPA's) that shows the components that sum of GNP. For a further discussion of the relationship of the I-O accounts to the NIPA's, see U.S. Department of Commerce, Bureau of Economic Analysis, An introduction to National Economic Accounting, Methodology Paper Series MP-1 (Washington, DC:U.S. Government Printing Office, March 1985): 15-16.

(3.) In the summary tables presented in this article, commodity and industry output are shown as domestic output. However, for some analyses, it is preferable to show domestic supply - that is, imports plus domestic output - by eliminating the import column in the use table and adding an import row in the make table. The coefficients from the resulting table are referred to as "total based."

(4.) The availability of the supplementary tables will be announced in the Survey.

(5.) These direct and indirect effects may be illustrated by tracing a few of the impacts resulting from a change in consumer demand for autos. An increase in consumer demand for autos will lead, first, to an increase in the production of autos. The increase in the production of autos will result in more steel production, which in turn will require more chemicals, more iron ore, more limestone, and more coal. The increased production of autos will also require more upholstery fabrics, and the increased production of these fabrics will require more natural fibers, more synthetic fibers, and more plastics. There will be even further impacts; for instance, the increased production of synthetic fibers will require more electricity and containers.

(6.) For more information on the use of the I-O accounts in benchmarking the NIPA's, see U.S. Department of Commerce, Bureau of Economic Analysis, Personal Consumption Expenditures, Methodology Paper Series MP-6 (Washington, DC: U.S. Government Printing Office, June 1990): 31-34.

(7.) See Robert P. Parker, "Improved Adjustments for Misreporting of Tax Return Information Used to Estimate the National Income and Product Accounts, 1977," Survey, 64 (June 1984): 17-25.

(8.) For more information, see Personal Consumption Expenditures, 31-34.
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Publication:Survey of Current Business
Date:Jul 1, 1991
Words:3008
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