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Gross state product by industry, 1977-89.

THIS article presents new current-dollar estimates of gross state product (GSP) by industry and by component for States and regions for 1987-89 and revised estimates for 1977-86 (see tables 4 and 5, which follow the text). These estimates update and extend those published in the May 1988 SURVERY OF CURRENT BUSINESS. (1) Revisions from the previously published estimates for 1977, 1982, and 1986 are shown in table 6. The estimates for 1977-89 are consistent with the revised estimates of gross product by industry for the Nation that were published in the January 1991 and April 1991 issues of the SURVEY. (2)

GSP is the market value of the goods and services produced by labor and property located in a State. It is the State counterpart of the Nation's gross domestic product (GDP) from the national income and product accounts (NIPA's).

BEA prepares GSP estimates for 61 industries (table 1). For each industry, GSP is composed of four components: (1) Compensation of employees (hereafter termed "compensation"); (2) proprietors' income with inventory valuation adjustment and capital consumption allowances ("proprietors' income"); (3) indirect business tax and nontax liability ("IBT"); and (4) other, mainly capital-related, charges ("capital charges"). For the farming, mining, construction, and manufacturing industries, BEA estimates total GSP and three of its four components--compensation, proprietors' income, and IBT--and then it subtracts the three components from total GSP to get capital charges. For the other industries, BEA estimates each of the four components of GSP and then sums the components to get total GSP.

Most of the compensation and proprietors' income components of GSP are primarily based on BEA's estimates of earnings by place of work, an aggregate in the State personal income series. (Table 2 shows in detail how GSP corresponds to earnings and GDP.) The capital charges component of GSP reflects capital stocks and profits by State. The IBT component reflects liabilities charged to business expense, most of which are sales and property taxes levied by State and local governments. (3)

The next section of this article discusses the source data and estimating methods for the GSP series. The final section discusses the impact of the revisions on regional growth trends from 1977 to 1986 and the growth trends during 1986-89.

Sources and Methods

The sources and methods underlying the estimates are similar to those discussed in the May 1988 SURVEY article. (4) One new element is the application of benchmark-year estimation methods to all years for two components: Capital charges for government enterprises--that is, subsidies less current surplus of government enterprises--and IBT. (5) Previously, the estimates of subsidies less current surplus for all nonbenchmark years and the estimates of IBT for 1978-81 and 1986 were interpolated or extrapolated on the basis of movements in related series. For all years, the estimates of subsidies less

Table 1.--Industries for Which GSP Estimates

Are Available
 1972 SIC
 code
Agriculture, forestry, and fisheries A
 Farms 01-02
 Agricultural services, forestry, and fisheries 07-09
Mining B
 Metal mining 10
 Coal mining 11-12
 Oil and gas extraction 13
 Nonmetallic minerals, except fuels 14
Construction C
Manufacturing D
 Durable goods
 Lumber and wood products 24
 Furniture and fixtures 25
 Stone, clay, and glass products 32
 Primary metal industries 33
 Fabricated metal products 34
 Machinery, except electrical 35
 Electric and electronic equipment 36
 Motor vehicles and equipment 371
 Transportation equipment excluding motor vehicles 372-79
 Instruments and related products 38
 Miscellaneous manufacturing industries 39
 Nondurable goods
 Food and kindred products 20
 Tobacco manufactures 21
 Textile mill products 22
 Apparel and other textile products 23
 Paper and allied products 26
 Printing and publishing 27
 Chemicals and allied products 28
 Petroleum and coal products 29
 Rubber and miscellaneous plastic products 30
 Leather and leather products 31
Transportation and public utilities E
 Railroad transportation 40
 Local and interurban passenger transit 41
 Trucking and warehousing 42
 Water transportation 44
 Transportation by air 45
 Pipelines, except natural gas 46
 Transportation services 47
 Communications 48
 Electric, gas, and sanitary services 49
Wholesale trade F
Retail trade G
Finance, insurances, adn real estate H
 Banking 60
 Credit agencies other than banks 61
 Holding companies and investment services 62,67
 Insurance carriers 63
 Insurance agents, brokers, and services 64
 Real estate 65-66
Services I
 Hotels and other lodging places 70
 Personal services 72
 Business services 73
 Auto repair services and garages 75
 Miscellaneous repair services 76
 Motion pictures 78
 Amusement and recreation services 79
 Health services 80
 Legal services 81
 Educational services 82
 Social services and membership organizations 83.86
 Miscellaneous professional services 84.89
 Private households 88
Government
 Federal civilian government
 Federal military government
 State and local government 91-96


current surplus now are based on data for individual enterprises. For all years, the IBT estimates now are based on data for nearly 50 types of taxes--more than twice as many as for the series published in 1988.

Other new elements are the preparation of annual estimates of the capital consumption allowance in proprietors' income and of improved estimates of the rental-income-of-persons portion of capital charges for the real estate industry.

The effect of the new elements is to increase from 70 percent to 80 percent the portion of total GSP for nonbenchmark years that is estimated directly, that is, through the use of source data for each year, rather than being interpolated or extrapolated. For benchmark years, the directly estimated portion of GSP stays at 95 percent.

Compensation and proprietors' income

Annual estimates by State and industry of two components of compensation--wages and salaries and other labor income--as well as of proprietors' income with inventory valuation adjustment are from BEA's State personal income series. (6) Wages and salaries, in turn, is part of the basis for allocating to States the component of compensation not measured in the personal income account--employer contributions for social insurance. For proprietors' income, unpublished income estimates from the Internal Revenue Service are the basis for allocating noncorporate capital consumption allowances to States.

IBT

For all years, IBT estimates are based on the following data on taxes collected: [1] By State and type of tax, from the census of governments (for State and local IBT) and from the Internal Revenue Service (for Federal IBT) and [2] by industry and type of tax, from BEA.

Capital charges

For government enterprises, the sources and methods for estimating capital charges, or subsidies less current surplus, are the same for all years. For Federal Government enterprises, BEA uses data for 20 enterprises to allocate subsidies less current surplus to States. For State and local government

[TABULAR DATA OMITTED]

[TABULAR DATA OMITTED]

enterprises, BEA uses data on current revenues and expenses for 15 types of enterprises from the census of governments to allocate subsidies less current surplus.

For private industries for benchmark years, the sources and methods for estimating capital charges differ by industry group. For 27 goods-producing industries in agriculture, mining, construction, and manufacturing, BEA estimates capital charges by first estimating total GSP and then subtracting compensation, proprietors' income, and IBT. Economic census data on value added in production, adjusted to conform to BEA's NIPA definitions, are the basis for estimating total GSP.

For seven regulated distributive and service industries in transportation, communication, utilities, and finance, data from financial reports filed by firms with regulatory agencies are the basis for estimating capital charges by State. For multistate firms in this group, BEA employs indicators of capital stock or its use--for example, airline boardings--to allocate capital charges to States.

For real estate, BEA mainly uses data from the population and housing censuses and from the U.S. Department of Agriculture to allocate capital charges to States in accordance with the location of real property. BEA estimates the rental-income-of-persons portion of capital charges.

For 23 unregulated distributive and service industries in transportation, trade, finance, insurance, and services, BEA uses economic census data on business receipts or sales and data on wages and salaries to allocate capital charges to States.

For all private industries except farming and real estate for nonbenchmark years, capital charges are interpolated or extrapolated on the basis of movements in wages and salaries. For farming, estimates for all years are based on U.S. Department of Agriculture data. For real estate, estimates for intercensal years are based on data developed in the course of estimating the rental income of persons in BEA's State personal income series.

As resources permit, BEA plans to incorporate data from the Census Bureau's Annual Survey of Manufactures and other annual data, particularly those contained in regulatory agency reports, in the estimates of capital charges for private industries for nonbenchmark years.

Regional Growth Trends,

1977-89

The trends in regional growth in 1977-86 shown by the revised GSP estimates are similar to, but more pronounced than, the trends shown by the previously published estimates: From 1977 to 1986, the share of GSP generated in the Nation's interior regions declined, and the share generated in regions along the Atlantic and Pacific coasts increased. The revisions now show that the share in the interior regions declined (and that the share in the coastal regions increased) 3.8 percentage points during 1977-86, compared with 3.2 percentage points before the revision (table 3). The 1977-86 trends in regional growth in GSP continued in 1986-89: The share of GSP generated in the interior regions declined by an additional 1.6 percentage points, and the share generated in the coastal regions increased by an offsetting amount.

The 0.6-percentage-point revision in the change in share between coastal and interior regions from 1977 to 1986 largely reflected GSP revisions in four regions: In the Mideast, as a result of upward revisions in the gain in share in New Jersey and the District of Columbia; in the coastal Southeast, an upward revision in the gain in share in North Carolina; in the Far West, an upward revision in the gain in share in California; and in the Southwest, upward revisions in the loss in share in Texas and Oklahoma.

Changes in estimating methods contributed to the revisions in changes in share in New Jersey, the District of Columbia, and California. In New Jersey, the upward revision partly reflected the effect on capital charges for real estate of the improved annual estimates of rental income of persons. In the District of Columbia, the upward revision partly reflected the effect on Federal Government enterprises of the improved estimates of subsidies less current surplus. In California, the upward revision partly reflected the effects on GSP for real estate of the new annual estimates of the capital consumption allowance in proprietors' income and of the improved IBT estimates.

The revised national estimates of GDP by industry contributed to the revisions in North Carolina, Texas, and Oklahoma. In North Carolina, the upward revision partly reflected revisions in GDP for tobacco manufactures; North Carolina is the Nation's leading tobacco-producing State. In the oil-producing States of Texas and Oklahoma, revisions in GDP for oil and gas extraction led to an upward revision in the loss in share of the Nation's all-industry GSP attributable to these States.

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[TABULAR DATA OMITTED]

(1) Vernon Renshaw, Edward A. Trott, Jr., and Howard L. Friedenberg, "Gross State Product by Industry, 1963-36," SURVEY OF CURRENT BUSINESS 68 (May 1988): 30-46. See also "Errata: Gross State Product," SURVEY 68 (October 1988): 37.

(2) Frank de Leeuw, Michael F. Mohr, and Robert P. Parker, "Gross Product by Industry, 1977-88: A Progress Report on Improving the Estimates," SURVEY 71 (January 1991): 23-37; and Michael F. Mohr, "Gross National Product by Industry, 1987-89," SURVEY 71 (April 1991): 25-27.

(3) Property taxes on owner-occupied housing are included because owner-occupied housing is treated as a business in BEA's national income and product accounts.

(4) For a more extensive discussion of sources and methods, see Experimental Estimates of Gross State Product by Industry, Bureau of Economic Analysis Staff Paper 42 (Washington, DC: U.S. Government Printing Office, May 1985). The paper is available from the National Technical Information Services, 5285 Port Royal Road, Springfield, VA 22161: Accession No. PB85-240885, price $26 (paper copy), $9 (microfiche).

(5) Benchmark years in the GSP series correspond with those in the national income and product accounts (NIPA's). The estimates in this article reflect benchmark-year estimation for 1977 and 1982; they do not reflect the recent comprehensive, or benchmark, revision of the NIPA's for 1987.

(6) See U.S. Department of Commerce, Bureau of Economic Analysis, State Personal Income, 1929-87: Estimates and a Statement of Sources and Methods (Washington, DC: U.S. Government Printing Office, 1989). The publication is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402: GPO Stock No. 003-010-00197-6, price $16.
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Author:Trott, Edward A., Jr.; Dunbar, Ann E.; Friedenberg, Howard L.
Publication:Survey of Current Business
Article Type:Illustration
Date:Dec 1, 1991
Words:2100
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