The national income and product accounts: preliminary, revised estimates, 1977.
The first part of this article provides a brief overview of the revisions in the NIPA aggregates and major components, and the second part describes the new data sources and estimating procedures incorporated into the revised estimates.
Revisions in the NIPA
Aggregates and Major
The presently published and preliminary revised estimates, and the amount of the revision, are shown in table A for the five NIPA summary accounts.
The revised estimate of GNP is $58 billion, or 3 percent, higher than the presently published estimate. Personal consumption expenditures (PCE) accounts for most of the upward revision; nonresidential producers' durable equipment (PDE) and residential investment also have large upward revisions. Nonresidential structures, net exports of goods and services, and State and local government purchases are revised up moderately. The change in business inventories is revised down moderately, and Federal Government purchases is revised down slightly.
The revised estimate of national income is $55 billion, or 3-1/2 percent, higher than the presently published estimate. Proprietors' income, wages and salaries, and net interest have large upward revisions; rental income of persons has a large downward revision. As a result, charges against GNP, which is GNP measured as the sum of incomes and nonfactor charges, is revised up $55-1/2 billion. Reflecting the larger upward revision in GNP than in charges against GNP, the statistical discrepancy--the difference between them--is revised up slightly, from $1-1/2 billion to $4 billion.
Most of the revisions in national income components also affect personal income, which is revised up $55-1/2 billion, or 3-1/2 percent. Disposable personal income--personal income less personal tax and nontax payments--is revised up $56 billion, and personal outlays up $42 billion. As a result, personal saving is revised up $14 billion, and the personal saving rate--personal saving as a percentage of disposable personal income--is revised up from 5.9 percent to 6.7 percent.
New Data Sources and
The I-O tables and the preliminary revised NIPA estimates reflect the introduction of improved adjustments for misreporting on tax returns. The improved adjustments incorporate newly available information about the extent of underreporting of income and about the failure to file income and employment tax return (nonfiling). Tax return information is used directly in estimating several income components (including compensation of employees and proprietors' income) and indirectly--via the Census Bureau's use of tax returns to make estimates for small firms--for two product components (PCE and gross private domestic investment). The sources and procedures used to prepare the adjustments will be described in an article in the June SURVEY.
For the components affected, the total revisions and the revisions in the misreporting adjustments are shown in the accompanying tabulation. The remainder of this article describes the sources and procedures underlying other major revisions in the NIPA components. GNP
Personal consumption expenditures.--The revisions in goods mostly are from the incorporation of the detailed commodity-flow procedure used to develop the interindustry flows for the I-O tables. The presently published lished estimates are, for the most part, extrapolated from the 1972 I-O levels using survey data on retail sales.
The new commodity-flow calculations incorporate data on sales from the 1977 economic censuses and trade margins from the 1977 Annual Retail Trade Survey and the 1977 Annual Trade Survey (which covers wholesale trade). In addition, the commodity-flow estimates for 1977 include adjustments for undercoverage in the sales data of the economic censuses in mining, manufacturing, and wholesale trade due to the exclusion of businesses with no paid employees.
Most of the upward revision in goods purchases is in jewelry and watches, food, clothing, and toys Truck purchases are revised up substantially, and used car purchases are revised down substantially. The upward revision in PCE trucks, from new information on the consumer-business allocation, is offset in GNP by a downward revision in PDE trucks. Purchases of kitchen and other household appliances and of radios and televisions also are revised down.
A variety of new data sources and estimating procedures are incorporated in the revised services estimates. The largest upward revision is in religious and welfare activities, which is measured as the current account expenditures (including depreciation) of religious, social welfare, and similar organizations. The revision is from the incorporation of data from the 1977 Census of Service Industries, which covered these organizations for the first time.
The expense of handling life insurance, a category that includes the operating expenses of noninsured pension plans, also is revised up substantially. This revision incorporates tabulations for 1977 of newly required reports to the Internal Revenue Service by employee benefit plans. Improved information used to allocate airline revenue between consumers and business leads to an upward revision in PCE purchases of air transportation. Space rent of owner-occupied nonfarm dwellings is revised up due to incorporation of data on the number of housing units and average rental values from the 1980 Census of Housing.
Fixed investment.--Most of the upward revision in nonresidential structures is in petroleum and natural gas well drilling and exploration expenditures. This revision incorporates data from the 1977 Census of Mineral Industries.
The revision in PDE is largely due to the incorporation of the detailed commodity-flow procedure used for the 1977 I-O table. The presently published 1977 PDE estimate is based on an abbreviated commodity-flow procedure using preliminary 1977 Census of Manufactures shipments data and margin rates from the 1972 I-O tables. The revised estimate is based on the final 1977 manufacturers' shipments data, margins from the 1977 I-O table, and the undercoverage adjustments, all of which are discussed under PCE. The largest upward revision is in communication equipment; the largest downward revision is in trucks (also discussed earlier under PCE).
The upward revision in residential investment largely is in single-family housing and in additions and alterations. For single-family housing, BEA increased the average value of new houses for 1977 by 5 percent due to an understatement identified by the Census Bureau in their value-put-in-place series upon which the presently published NIPA estimate is based. (The Census Bureau expects to introduce a similar revision in their series.) for nonfarm additions and alterations, the revised estimate incorporates data from the Consumer Expenditures Survey (CES) of the Bureau of Labor Statistics BEA has interpolated new estimates using the published 1973 and the preliminary unpublished 1980 CES estimates. Previously, this NIPA component was based on the Census Bureau's quarterly Survey of Residential Alterations and Repairs.
Change in business inventories.--Most of the revision in change in business inventories is due to the incorporation of new data on book value of inventories from the 1977 Census of Wholesale Trade.
Net exports of goods and services.--The upward revision in net exports is largely due to a change in the geographic coverage of merchandise exports and imports. The change conforms these estimates to the geographic coverage used elsewhere in the NIPA's--the 50 States and the District of Columbia. Merchandise exports and imports in the presently published NIPA estimates are consistent with the definition used in the balance-of-payments accounts, for which the geographic coverage extends to Puerto Rico and territories of the United States.
Government purchases of goods and services.--The upward revision in government purchases is largely due to State and local highway construction. The presently published series is based on the Census Bureau's series on the value of new construction put in place. BEA has adjusted these data based on an analysis of comparable expenditure data from the Census Bureau's Governmental Finances and from the Federal Highway Administration's Highway Statistics. Charges against GNP
Compensation of employees.--The revision in compensation of employees is moderate and largely in other labor income. Most of the revision is in employer contributions for group health insurance, based on revised data from the Health Care Financing Administration.
Rental income of persons.--Most of the downward revision in rental income of persons is in the net income of owner- and tenant-occupied nonfarm dwellings. For these parts, net income is derived as gross rental receipts less expenses. Gross rental receipts is revised up slightly (see earlier discussion of PCE). However, expenses are revised up much more, because the list of expenses has been expanded. (The new list includes all types of expenditures that are considered ordinary and necessary as deductions under income tax regulations.) These revisions lead to a downward revision in rental income of $7 billion, including $5 billion to the owner-occupied part. Also contributing to the downward revision are upward revisions in mortgage interest and real estate taxes--two expense items reflected in the presently published expense estimate. These revisions are due to the incorporation of data from the Survey of Residential Finance (a survey associated with the 1980 Census of Population and Housing.)
Net interest.--Most of the upward revision in net interest is due to a larger estimate of imputed interest paid by private noninsured pension plans, based on Internal Revenue Service tabulations of employee benefit plans described earlier. This revision is partly offset by an upward revision in monetary interest received by these plans, which is deducted in calculating net interest. An upward revision in mortgage interest paid, discussed earlier under rental income of persons, also contributes to the upward revision. Other NIPA components
Other NIPa components are revised slightly or not at all. Revisions in the remaining accounts (accounts 2-5) are largely due to revisions in the national income and product account.
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|Author:||Donahoe, Gerald F.|
|Publication:||Survey of Current Business|
|Date:||May 1, 1984|
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