Revised estimates of new plant and equipment expenditures in the United States, 1947-83.
This comprehensive revision is the fourth in the history of the P&E survey. Comprehensive revisions have two primary purposes: The introduction of "benchmarks," to which the P&E survey-based estimates are tied, and the retabulation of the P&E survey reports. Benchmarks are universe estimates for each industry based on data from the quinquennial economic censuses and, especially for industries not covered by these censuses, from a variety of other sources that provide comprehensive, detailed information. Retabulations incorporate information not available when the previously published estimates were prepared; industry and size classifications are updated, and company reports received too late to be included in the previous tabulations are included. In addition, the quarterly survey samples are reedited.
In this revision, benchmarks for 1977 are introduced, and estimates back to 1973 and forward to 1983 are revised to reflect them. The retabulation is carried out for 1977 and later years. The revised series also reflect definitional revisions, which affect the estimates for 1947-83, and recalculation of seasonal factors, bias-adjustment factors, and price deflators.
This revision was done in the context of a number of changes resulting from an in-depth review of the P&E survey over the last several years. These changes were made to reduce respondent burden and to improve the quality of the estimates. Quarterly estimates no longer include selected nonmanufacturing industries: Real estate; professional services; membership organizations and social services; and forestry, fisheries, and agricultural services. Data are now collected only annually for these industries, which account for about 11 percent of P&E expenditures. Also, separate quarterly estimates of plant and of equipment expenditures are no longer published. Instead, annual estimates now appear once each year.
The revision raised the expenditures estimates for all years for "all industries," which is the total for the industries survey. Although the revision extends back to 1947, the largest revisions are for the benchmark year 1977 and for later years. For 1977, the estimate was raised 5.8 percent, to $184.8 billion, and for 1983, 13.2 percent, to $304.8 billion (table 7 and chart 5). In manufacturing, the 1977 estimate was lowered 2.5 percent, but the 1983 estimate was raised 4.2 percent. In nonmanufacturing, the 1977 estimate was raised 11.3 percent and the 1983 estimate was raised 19.6 percent.
In constant (1972) dollars, the revision raised the expenditures estimate for "all industries" 6.6 percent, to $126.0 billion, for 1977, and 14.6 percent, to $146.4 billion, for 1983 (table 7 and chart 5). In manufacturing, the estiamte was lowered 2.6 percent for 1977, but raised 2.5 percent for 1983. In nonmanufacturing, the estimate was raised 12.5 percent for 1977 and 23.0 percent for 1983.
The first section of this article discusses the sources of the revisions. The second compares the previously published and revised estimates and describe the revised estimates for total P&E expenditures, for plant and for equipment expenditures separately, and for planned expenditures. Primary emphasis is on the period 1977-83. Three technical notes follow. The first describes the P&E survey and the procedures used to prepare the P&E expenditures estimates. The second summarizes the methodology used to prepare the revised P&E series. The third compares the P&E series with the nonresidential fixed investment component of GNP. The revised series follow the text: Annual P&E expenditures, in current and constant dollars, in table 7; quarterly P&E expenditures, in current and constant dollars, in table 8; annual plant expenditures and equipment expenditures, separately, in current and constant dollars, in tables 9 and 10; and planned P&E expenditures as a percentage of actual expenditures, quarterly and annually, in tables 11 and 12.
Sources of the Revisions
The revisions in the current-dollar annual estimates had two sources: Statistical revisions and definitional revisions. These are shown for selected years, including 1977-83, in table 1. The recalculation of seasonal factors affected the quarterly, but not the annual, estimates; the recalculation of bias-adjustment factors affected the estimates of planned, but not actual, expenditures; and the recalculation of price deflators affected the constant-dollar, but not the current-dollar, estimates.
The statistical revisions stem from the two primary purposes of the revision: The introduction of the 1977 benchmarks and the retabulation of the sample reports for 1977-83. The statistical revision for 1977 due to the 1977 benchmarks was $8.7 billion; manufacturing was lowered $1.7 billion and nonmanufacturing was raised $10.4 billion. The statistical revisions for 1973-76 and for 1978-83 also reflect the 1977 benchmarks. For 1973-76, the estimates were revised using the previously published series and the 1977 benchmarks. For 1978-83, the estimates were prepared by extrapolating the 1977 benchmarks; therefore, the size of the statistical revisions for these years varies in proportion to P&E spending. For 1983, the statistical revision due to the 1977 benchmarks was $12.0 billion, 34 percent of the total revision.
the retabulation of the sample reports affected the estimates for 1977 and later years, although for 1977 it affected only the pattern of the quarterly estimates. For 1983, the statistical revision due to retabulation was $21.9 billion, 62 percent of the total revision.
Three nonmanufacturing industries were affected by two definitional revisions. Unlike the statistical revisions, which affected only the period 1973-83, the definitional revisions affected all years back to 1947. First, certain railroad track maintenance expenditures that were previously defined as current expenses are now defined as capital expenditures. Railroads were required by the Interstate Commerce Commission to make this change beginning in 1983; the P&E expenditure series for 1947-83 was revised to obtain a consistent time series. Second, expenditures for leased railroad equipment and aircraft, previously assigned to the railroad and air transportation industries, are now assigned to the finance industry (in most cases, the industry of the original purchaser). This revision, which affected the estimates for 1959 and later years, makes the treatment of leased assets consistent across all industries--that is, the P&E expenditure series is now entirely on an owner basis. For 1947, the revision due to the definitional revisions was $0.5 billion. For 1973, it was $0.7 billion, 49 percent of the total revision; for 1977, $1.4 billion, 14 percent of the total revision; and for 1983, $1.7 billion, 5 percent of the total revision.
The Revised P&E Expenditures Series
On the revised basis, P&E expenditures for "all industries" increased at an average annual rate of 7.8 percent from 1947 to 1983 (table 2). The previously published series increased at a rate of 7.5 percent. During this period, manufacturing expenditures increased at a rate of 7.5 percent, and nonmanufacturing increased at a rate of 8.1 percent. In the previously published series, the comparable rates were 7.3 percent and 7.7 percent, respectively.
During 1977-83, P&E expenditures for "all industries" increased at an average annual rate of 8.7 percent, compared with 7.5 percent for the previously published series. Manufacturing expenditures increased at a faster rate, 9.5 percent, than nonmanufacturing, 8.2 percent. In the previously published series, the comparable rates were 8.3 percent and 6.9 percent, respectively. In manufacturing, nondurable goods industries increased at a faster rate, 10.5 percent, than durable goods, 8.4 percent. The largest growth rates in manufacturing were in "other nondurables" (18.3 percent), aircraft, and electrical machinery. The smallest growth rates were in blast furnaces-steel works (2.1 percent) and fabricated metals. In nonmanufacturing, the largest growth rates were in finance and insurance (18.7 percent), air transportation, and wholesale and retail trade. Railroads and personal and business services had smaller growth rates, and "other transportation" declined.
On the revised basis, real (constant-dollar) P&E expenditures for "all industries" increased at an average annual rate of 3.5 percent from 1947 to 1983, compared with 3.2 percent for the previously published series (table 2). For 1977-83, the revised series in creased at an annual rate of 2.5 percent, compared with 1.3 percent for the previously published series. During this period, real expenditures in manufacturing increased at a faster rate, 3.0 percent, than in nonmanufacturing, 2.3 percent. Durable and nondurable goods industries increased at about the same rate. In nonmanufacturing, "commercial and other" and public utilities increased, while transportation and mining declined.
The revised series of real P&E expenditures follows a cyclical pattern similar to that of the previously published series; both show two contractions during 1977-83 corresponding to the two business-cycle contractions in the U.S. economy (chart 6). Real P&E expenditures for "all industries" peaked in the first quarter of 1980 at $154.1 billion; they declined 3.0 percent over the next three quarters. Real expenditures then rose from the first through the third quarters of 1981, when they reached $157.7 billion. They then declined 11.9 percent over the next six quarters, to $138.9 billion. The 1980 contraction in real P&E expenditures was mild compared to the average for the eight postwar business-cycle contractions (the postwar average was a five-quarters decline of 11.7 percent); the 1981-83 contraction corresponded more closely to the average.
The peaks and troughs for various industries differed in timing and severity from those for "all industries". During the most recent contraction in real P&E spending, manufacturing declined 15.6 percent, and nonmanufacturing, 10.2 percent, from their peaks in the third quarter of 1981 to their respective troughs in the fourth quarter of 1982 and the second quarter of 1983 (table 3). In manufacturing, the contraction was more severe in durables, which declined 17.9 percent from peak to trough, than in nondurables, which declined 14.u percent. In durables, the largest declines were in nonferrous metals (45.1 percent), motor vehicles, blast furnaces-steel works, and fabricated metals. Stone-clay-glass, which had never recovered from the previous contraction, declined an additional 27.2 percent. In nondurables, the largest declines were in paper (26.9 percent), food-beverage, and textiles. The smallest declines in manufacturing were in rubber (10.7 percent), "other nondurables," and machinery (except electrical).
During the most recent contraction, the largest declines in nonmanufacturing were in mining (37.5 percent) and communication. Spending in transportation, which had never recovered from the previous contraction, declined an additional 24.4 percent. The smallest declines--5.1 percent to 6.1 percent--were in public utilities, wholesale and retail trade, and finance and insurance.
Expenditures for plant and for equipment
Once each year, companies are asked to separate their annual P&E expenditures into plant and equipment. However, not all companies that report total P&E expenditures provide such a breakdown. As a result, the two components are less reliable than the total, and separate estimates for plant and for equipment are presented only for the major industry groups shown in table 4.
On the revised basis, for the bench-mark year 1977, plant expenditures were $62.5 billion, 0.3 percent lower than previously published; equipment expenditures were $122.3 billion, 9.2 percent higher than previously published. For 1983, plant expenditures were $107.4 billion, 0.4 percent lower than previously published; equipment expenditures were $197.4 billion, 22.3 percent higher than previously published.
From 1947 to 1983, plant expenditures and equipment expenditures for "all inudstries" increased at about the same average annual rate--7.8 percent and 7.9 percent, respectively. For 1977-83, plant expenditures increased faster, at an average annual rate of 9.4 percent, compared with 8.3 percent for equipment expenditures.
From 1977 to 1983, manufacturing expenditures for equipment increased at a slightly faster average annual rate, 9.6 percent, than those for plant, 9.1 percent. Equipment expenditures increased faster for both durable and nondurable goods industries. In nonmanufacturing, in contrast, in contrast, expenditures for plant grew at a faster rate, 9.6 percent, than those for equipment, 7.4 percent. Plant expenditures increased faster for each major industry group in nonmanufacturing.
Plant expenditures as a proportion of total P&E expenditures for "all industries" varied little over time; they were 36.3 percent of the total in 1947, 33.8 percent in 1977, and 35.2 percent in 1983. In manufacturing, the proportion declined from 35.6 percent in 1947, to 28.4 percent in 1977, to 27.9 percent in 1983. The larger decline was in durable goods; nondurable goods showed relatively little change. In nonmanufacturing, the proportion changed little from 1947 to 1977, then increased slightly. The largest increase was in mining, from 26.1 percent in 1947, to 45.8 percent in 1977, to 55.8 percent in 1983.
The estimates for planned P&E expenditures were revised to be consistent with the revised estimates for actual P&E expenditures. The planned expenditures estimates incorporate adjustments for systematic reporting biases due to factors other than cyclical changes in economic and operating conditions.
The mean absolute percentage deviation between planned and actual spending levels for 1955-83 was 1.8 percent for one-quarter-ahead plans and 2.6 percent for two-quarters-ahead plans. For manufacturing, the deviations were 2.8 percent and 3.9 percent, respectively; for nonmanufacturing, they were 1.7 percent and 2.7 percent, respectively.
The mean absolute percentage deviations for major industry groups were larger than the deviations for "all industries" and vary from industry to industry. The deviations were smallest for "commercial and other" (2.5 percent for one-quarter-ahead and 3.5 percent for two-quarters-ahead plans), nondurable goods manufacturing, public utilities, and durable goods manufacturing. They were largest for mining (5.6 percent and 7.3 percent) and transportation (3.9 percent and 7.9 percent).
For plans reported 1 year ahead in the fourth-quarter survey, the mean absolute percentage deviation between planned and actual spending for 1955-83 was 3.0 percent for "all industries." For manufacturing, the deviation was 4.5 percent, and for nonmanfacturing, 2.6 percent. Among major industry groups, the deviations were smallest for public utilities (3.4 percent), nondurable goods manufacturing, and "commercial and other." They were largest for transportation (7.7 percent), mining, and durable goods manufacturing.
1. The P&E Survey
This note describes the P&E survey--the data reported, the collection schedule, and the sample--and the procedures used to prepare the P&E expenditures estimates.
Description of the P&E survey
BEA's quarterly P&E survey collects data on expenditures by business for new plant and equipment for installation or use in the United States. The survey covers expenditures both for new facilities and for expansion or replacement of existing facilities that are chargeable to fixed asset accounts and for which depreciation or amortization accountsa re ordinarily maintained. The distinction between structures--that is, plant--and equipment is not always clear-cut. However, a useful guideline is that the former are not movable, but the latter are. Detailed definitions of plant and equipment expenditures, showing specifically what is included and what is excluded, as well as other instructions to respondents are given on the buck of the report forms. A sample form is provided at the end of this article.
Companies generally report expenditures for the quarter in which payment is made to the supplier; construction work performed by a company's own employees--force-account construction work--is generally reported for the quarter in which costs are incurred.
Companies are instructed to report expenditures for structures and equipment acquired for lease to others. Thus, the reporting is on an owner, rather than on a user, basis. Expenditures are included in the industry of the company retaining title, even if the capital good is for use by, or even capitalized by, a company in another industry.
Companies are instructed to report, whenever possible, on a fully consolidated basis--that is, for all their domestic operations, including those of their majority-owned subsidiaries. BEA classifies each company in a two-digit Standard Industrial Classification industry on the basis of its primary activity, which is the activity with the largest volume of sales or business receipts. All of its capital expenditures--for its primary activity as well as for its other activities--are assigned to that industry. Company classifications are reviewed during comprehensive revisions using responses to survey questions and outside information; changes are reflected in the retabulated samples. In addition, classifications of companies involved in major mergers are reexamined between revisions.
P&E expenditures--both actual and planned--have been collected quarterly since the survey began in 1947. Each quarterly survey collects the following date: Actual expenditures for the previous quarter and planned expenditures one quarter ahead, two quarters ahead, and three quarters ahead. The third- and fourth-quarter surveys collect planned expenditures for the coming calendar year (year-ahead plans). (Plans for the second half of the year are derived in the fourth-quarter survey by subtracting the sum of the first-quarter and second-quarter plans from the year-ahead plans.) At various times during each year, annual data are collected on the following: P&E expenditures, separate plant and equipment expenditures, sales, assets, price changes, type of business activity, and P&E expenditures for assets for lease to others.
BEA currently requests quarterly data from a nonprobability sample of about 12,000 companies; about 9,000 additional companies are sampled in the industries survey only annually. In 1977, for "all industries," the proportion of P&E expenditures represented by companies responding to the survey--that is, the sample "coverage"--was 54 percent; the corresponding proportion for manufacturing was 68 percent and for nonmanufacturing, 45 percent. Survey coverage is highest in the most concentrated industries, characterized by a relatively small number of large firms making a large share of the industry's capital expenditures. Table 5 shows that sample coverage in 1977 was above 80 percent in blast furnaces-steel works, nonferrous metals, motor vehicles, aircraft, petroleum, electric utilities, and communication, but below 25 percent in mining, wholesale and retail trade, finance and insurance, personal and business services (including construction), and in the nonmanufacturing industries surveyed only annually.
For each quarter, universe estimates for actual and planned P&E expenditures are made for each industry by extrapolating the P&E universe estimates forward from the previous quarter on the basis of movements in the quarterly sample. (The starting points for the series of quarterly universe estimates are the benchmarks. The methodology for determining the benchmarks is described in technical note 2.) The four steps in the procedure for making the quarterly estimates are as follows.
First, after each, quarter's report forms have been reviewed for accuracy and consistency, the sample data are summarized by "tab group." For most industries, the tab groups are asset-size classes; for the other industries, the tab group is the entire industry. For each tab group, expenditures for companies reporting in both the current and the preceding quarter are totaled and used to calculate a ratio indicating the relative change from the preceding quarter.
Second, each tab group's sample is edited. Companies reporting relative changes in investment spending that are noticeably different from other companies in that group are identified, and some are classified as "outliers."
Third, a tab-group universe estimate is derived in which the outliers are treated separately using their reported values; the remainder of the universe estimate is based on the relative change in investment spending by the other companies. (The universe estimates for planned expenditures are made as just described except that the tab-group summaries are based on sample data for the current quarter and the three successive quarters.)
Fourth, several adjustments are made to the universe estimates. The planned expenditures estimates are adjusted for systematic reporting biases, and the actual and bias-adjusted planned expenditures estimates are adjusted for seasonal variation. Then, the resulting set of actual and planned current-dollar estimates is adjusted to remove the effects of inflation; the result is a set of actual and planned constant-dollar estimates. Descriptions of these adjustments follow.
Bias adjustments.--Comparison of planned expenditures with actual expenditures for the same quarter reveals systematic reporting biases in the planned expenditures. Because there are well-established patterns in these biases, for most purposes it is desirable to adjust the plans data for them. Bias-adjusted plans estimates are prepared by dividing universe estimates for planned expenditures by bias-adjustment factors. These factors are calculated by industry for each planning horizon. For a given quarter, the bias-adjustment factor is the median of the ratios of planned to actual expenditures for that quarter in the preceding 8 years.
Seasonal factors.--Seasonal factors for adjusting the P&E expenditures by industry are computed using the Census Bureau's X-11 program. The seasonal factors for actual P&E expenditures are also used to seasonally adjust the bias-adjusted planned expenditures.
Price deflators.--The actual and planned quarterly expenditures estimates are adjusted by BEA to remove the effects of inflation using implicit price deflators derived from unpublished detailed estimates in the national income and product accounts (NIPA's) of current- and constant-dollar nonresidential fixed investment (NRFI). Because NRFI differs from the P&E series (see technical note 3), the NIPA estimates must be adjusted before price deflators for P&E expenditures can be calculated. First, capital-flow matrixes are used to transform the NIPA current- and constant-dollar estimates of structures and producers' durable equipment by type into current- and constant-dollar purchases by establishment-based industry; adjustments are made to conform the NIPA estimates to P&E survey industry definitions. Second, the adjusted establishment-based estimates are transformed to a company basis. Implicit price deflators are then derived by dividing the current-dollar estimates by the constant-dollar estimates.
Constant-dollar P&E estimates are calculated by applying the implicit price deflators to the quarterly current-dollar estimates. Final constant-dollar estimates are derived by constraining the industry deflators so that the growth rate for the total P&E deflator for "all industries" equals that of the nonresidential fixed investment deflator (on a P&E survey basis).
To adjust planned P&E expenditures, the price deflator for each industry is projected using its growth rate over the latest four quarters. Once the deflators are projected, they are applied to each industry's seasonally adjusted, planned current-dollar expenditures.
2. Revision Methodology
The methodology used to prepare the revised P&E series is summarized in five sections: 1977 benchmarks, definitional revisions, quarterly expenditures series, planned expenditures, and expenditures for plant and for equipment.
Previous benchmarks were compiled for 1948, 1958, 1963, 1967, and 1972; the current revision introduces benchmarks for 1977. The current benchmark year was selected primarily because of the availability of 1977 Enterprise Statistics data prepared by the Bureau of the Census. (Benchmarks for 1982 will be prepared after 1982 Enterprise Statistics data become available.)
The sources and methods used to prepare the 1977 benchmarks varied among industries. The 1977 edition of Enterprise Statistics was the principal source of the benchmarks for the manufacturing industries, and for the mining, trade, personal and business services, and construction industries. Specifically, the benchmarks for the manufacturing industries, for mining, and for construction were based on published and unpublished tabulations of data from Enterprise Statistics, the Census of Manufactures, the Census of Mineral Industries, and the Census of Construction Industries. For wholesale trade, retail trade, and personal and business services, benchmarks were constructed from a combination of enterprise and establishment statistics prepared by the Bureau of the Census. Specifically, the benchmarks were derived from capital expenditures and employment data for establishments from the Census of Wholesale Trade, the Census of Retail Trade, and the Census of service Industries, using employment matrixes from Etnerprise Statistics to transform the establishment data to a company basis.
For transportation, a combination of data from the Interstate Commerce Commission (ICC), the Securities and Exchange Commission (SEC), other regulatory agencies, and the P&E sample was used in conjunction with data from the Statistics of Income compiled by the Internal Revenue Service (IRS). (The ICC data were supplemented with data from other agencies to include companies engaged in intrastate transportation, which are not regulated by the ICC.) The ratio of universe gross depreciable assets reported by the IRS to the gross depreciable assets reported in the combined data was multiplied by the expenditures reported in these data to obtain benchmarks.
For public utilities, communication, real estate, and the for-profit portions of professional services, benchmarks were based on a combination of data from the P&E sample and data from the IRS Statistics of Income. The ratio of universe gross depreciable assets reported by the IRS to the gross depreciable assets reported by companies in the P&E sample was multiplied by the expenditures reported in the P&E sample to obtain benchmarks.
For finance, the basic procedure just described was followed, supplemented with balance sheet and income data compiled by the Board of Governors of the Federal Deposit Insurance Corporation, and the Federal Home Loan Bank Board. This basic procedure was also used for insurance, except that total assets were used instead of gross depreciable assets.
For membership organizations and social services and for the not-for-profit portions of professional services, IRS data were not available. Benchmarks for those industries were based on data from the Census Bureau's County Business Patterns on employment and number of establishments (instead of IRS gross depreciable assets) in conjunction with P&E sample data. The benchmarks for most of these industries also incorporated data from other government agencies and various professional associations.
For those industries stratified by tab group, benchmarks were allocated by tab group based on the size distribution of total assets. Asset data were obtained from the IRS Statistics of Income, from tabulations published and unpublished Enterprise Statistics data, and from responses by the P&E sample.
In addition to the benchmarks, the revised estimates incorporate the two definitional revisions. For railroads, the estimates of newly capitalized track maintenance for 1979-82--years for which railroads were required to restate their financial reports on the new basis--were constructed by multiplying previously expensed track maintenance by the proportion of that expense that was capitalized in the restated reports to the ICC. For earlier periods, the 1979 proportion was applied to track maintenance expenditures. For the definitional revision involving aircraft and railroad equipment for lease, the expenditures were reassigned, for 1959 and later years, from air and railroad transportation to the finance industry.
Quarterly expenditures series
The preparation of the revised quarterly expenditures series was carried out by tab group in three steps: estimating 1977 quarterly expenditures, interpolating the quarterly series between the 1972 and 1977 benchmarks, and extrapolating the quarterly series forward from the 1977 benchmarks.
Estimates of expenditures for each quarter of 1977 were based on the 1977 benchmarks and the quarterly pattern of the retabulated P&E sample. The quarterly samples of company reponses were retabulated to incorporate the following improvements: (1) Reports received too late to be included in the previously published estimates were included; (2) each company in the sample was reclassified by industry and size on the basis of data reported in 1980; and (3) the quarterly samples were reedited. A preliminary revised estimate for the fourth quarter of 1976 was constructed by multiplying the previously tabulated estimate for that quarter by the ratio of the 1977 benchmark to the previously tabulated 1977 estimate. Preliminary revised estimates for the quarters of 1977 were obtained by linking them to the preliminary estimate for the fourth quarter of 1976 using a chain of link relatives derived from the retabulated samples. These revised quarterly estimates for 1977 were then forced to the 1977 benchmark using the ratio of the 1977 benchmark to the sum of the preliminary revised estimates for the four quarters.
The expenditures estimates for the quarters between the previous benchmark year (1972) and the current benchmark year (1977) were revised using an interpolation procedure. The percentage difference between the previously published estimate for the first quarter of 1977 and the final revised estimate for that quarter was distributed geometrically to the quarters from the first quarter of 1973 through the fourth quarter of 1976.
The expenditures estimates for most industries were not revised prior to 1973. However, as noted earlier, the estimates for air transportation and finance were revised back to 1959, and the estimates for railroad transportation were revised back to 1947. In these cases, the revised quarterly estimates for each tab group for years prior to 1973 were obtained by distributing revised annual estimates using the previously tabulated quarterly series.
Expenditures estimates for successive quarters starting in the first quarter of 1978 were revised by extrapolating forward from the final revised estimates for the fourth quarter of 1977 using a chain of link relatives derived from the retabulated samples. Expenditures data from sources other than the P&E survey were used as checks, especially when the sample was weak.
The revised estimates for planned expenditures were prepared in two steps. For plans reported in 1972-76, ratios of previously reported planned to actual expenditures for each tab group for each planning horizon were multiplied by the revised actual expenditures to obtain revised planned expenditures.
For plans reported in 1977 and later years, the universe estimates for plans by tab group were revised in the same way as those for actual expenditures for that period. The revised planned expenditures for each period were then adjusted for systematic reporting biases using the procedure described in technical note 1.
Expenditures for plant and for equipment
The methodology for preparing separate benchmarks for plant and for equipment expenditures was similar to that used in preparing benchmarks for total P&E expenditures. In most cases, the same sources that provided benchmark information on total P&E expenditures provided information on the breakdown between plant and equipment. There were a few exceptions--for example, for public utilities, the breakdowns were based primarily on reports from the Federal Power Commission and the American Gas Association, and for petroleum pipelines, they were based on the Census Bureau's Value of New Construction Put in Place.
The interpolation back to 1972 and extrapolation forward from 1977 were prepared using the separate data for plant and for equipment from the P&E sample in the same way as described earlier for total P&E expenditures. Because the response rate for reporting plant and equipment expenditures separately is lower than that for reporting total P&E expenditures, the estimates for plant and for equipment were forced to equal the total P&E estimates for each tab group.
3. Comparison of the P&E Series with the Nonresidential Fixed Investment Component of GNP
The nonresidential fixed investment (NRFI) series, which is a component of GNP, differs from the P&E expenditures series in type of detail, data sources, coverage, and timing. First, the NRFI series provides estimates of investment by type of structure and by type of producers' durable equipment. The P&E series provides estimates of investment by industry.
Second, the NRFI series is estimated primarily from Census Bureau surveys of the value of new construction put in place and manufacturers' shipments of equipment, with adjustments for merchandise exports and imports and for government purchases. The P&E series is estimated primarily from BEA's surveys of plant and equipment expenditures.
Third, the coverage of expenditures in the two series differs. Investment in the farm sector is included in NRFI, but not in the P&E series. Certain industries--real estate; professional services; membership organizations and social services; and forestry, fisheries, and agricultural services--are surveyed only annually in the P&E series, and, therefore, are not included in the quarterly "all industries" total; they are included in NRFI each quarter. In addition, certain outlays not capitalized by business (and thus not included in the P&E series) are included in the NRFI estimates--for example, outlays for new motor vehicles held for less than 1 year, for some oil and gas well drilling costs, and for some other outlays associated with mining. NRFI also includes, but the P&E series excludes, reimbursable expenditures for new motor vehicles by employees for business use, and net purchases of, and broker/dealer margins on, used plant and equipment. The P&E expenditures series includes, but NRFI excludes, expenditures for certain types of residential structures, such as dormitories (which are included as residential investment in the NIPA's).
Fourth, the timing of the two series differs. The NRFI series reflects the value of new construction put in place and shipments of equipment; the P&E series reflects expenditures. On balance, expenditures tend to lag.
Table 6 shows NRFI and P&E expenditures (adjusted to the definitions and coverage of NRFI) for P&E benchmark years and for years since the current benchmark year. (Chart 7 shows the two series for 1960-83.) For 1977-83, adjusted P&E expenditures increased 60.4 percent, compared with 72.0 percent for NRIF. As a percentage of adjusted P&E expenditures, the absolute difference averaged 2.1 percent for 1977-83, down from 6.6 percent for the interbenchmark period 1972-77.
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|Author:||Seskin, Eugene P.; Sullivan, David F.|
|Publication:||Survey of Current Business|
|Date:||Feb 1, 1985|
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