Annual Input-Output Accounts of the U.S. Economy, 1997.

Kuhbach, Peter D. ; Planting, Mark A.

ON DECEMBER 18, 2000, the Bureau of Economic Analysis (BEA) released the 1997 annual input-output (I-O) accounts for the U.S. economy. These accounts, which present estimates for 94 industries, are based on the 1992 benchmark I-O accounts and are prepared using 1997 estimates of industry and commodity output and the 1997 estimates of gross domestic product (GDP) from last summer's annual revision of the national income and product accounts.(1) The 1997 I-O accounts are the second annual update of the 1992 benchmark I-O accounts.(2)

Highlights from the release of these accounts include the following:

* In terms of use, the fastest growing commodities in 1992-97 were among those that are frequently associated with high technology--computers, electronics, and data-processing services.

* The use of commodities that are often associated with outsourcing--data-processing services and other business and professional services--also grew rapidly in 1992-97.

* The I-O accounts now include a new table that provides total requirements multipliers on an industry-by-industry basis; this information is useful for analyzing industry-to-industry linkages.

The I-O accounts provide estimates of domestic production by commodity and industry, the export and import of commodities (goods and services), the use of commodities by each industry, the commodity composition of GDP (final demand), and the industry distribution of value added. The annual I-O accounts are used in a variety of analytical and statistical contexts, including studies of interindustry relationships within the economy and as the basis for developing satellite accounts on particular aspects of economic activity.

The 1997 annual I-0 tables

The full 1997 annual I-O accounts are presented in eight tables.(3) Two make tables, one that is based on I-O definitions of industry inputs (table 1) and an alternative that is based on the Standard Industrial Classification (SIC), show the commodities produced by each industry; two use tables, one on the I-O basis (table 2) and one on the SIC basis, show the commodities that are consumed by each industry.(4) (Table A provides a summary version of the use table.)

[TABULAR DATA A NOT REPRODUCIBLE IN ASCII]

Four requirements tables are derived from the make and use tables. The direct requirements table shows the amount of a commodity that is required by an industry to produce a dollar of that industry's output. The three total requirements tables show the production that is required, directly and indirectly, to meet purchases from final demand. The new table "Industry-by-Industry Total Requirements" (table 8) presents these total requirements with final-demand purchases classified by industry. This presentation is frequently used in I-O analysis when data on purchases are available only as purchases from industries rather than as purchases of commodities; it is also used to analyze industry-to-industry interdependencies or "linkages"--for example, the purchases of one industry's output by all other industries or the purchases of all other industries' output by one industry.

The presentation of the annual I-O tables is generally the same as that of the benchmark I-O tables, but the information is less detailed. The annual I-O tables present summary estimates for 94 industries, while the benchmark I-O tables present more detailed estimates for 498 industries.(5) The annual use table presents 11 categories of final uses, while the benchmark use table presents 203 categories.(6) The annual use and total direct requirements tables present estimates of total value added by industry, while the corresponding benchmark tables also decompose the total value into detailed estimates of value added for compensation of employees, indirect business tax and other nontax liability, and other value added.

The estimates of commodity output and industry output in the make and use tables and the estimates of final uses in the use table are based on annual source data. Most of the other estimates are based on updated relationships from the 1992 benchmark I-O accounts.(7)

Uses of the I-O accounts

The I-O accounts are an important tool for economic analysis because they show the interdependence among producers and consumers in the U.S. economy. The accounts show the commodity composition of GDP (final demand), and the commodities used by the business sector to produce GDP (intermediate demand). Changes in the use of commodities provide information about changes in the structure of the economy and about the effect of these changes on production and economic growth. For example, a recent study of the contribution of computer and data-processing services to economic growth used I-O tables for 1972-96.(8) Another study used the same set of tables to evaluate changes in the level of interindustry linkages and the effect of international trade on those linkages; the study shows that U.S. domestic industry interdependencies decreased over the period, partly as the result of declining manufacturing production and increased import penetration.(9)

Changes in the composition of total consumption, 1992-97

The series of I-O accounts can be used for comparisons of the structure of the U.S. economy over time. Changes in the use of commodities by the economy, both domestically and for export, are measured by changes in the composition of total consumption (table B).(10) Comparisons over time of the consumption of commodities by sector provide indications of where structural changes are occurring (table C).

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Over 1992-97, total commodity consumption grew at an average annual rate of 6.4 percent (table D). The consumption of services commodities (6.6 percent) grew faster than that of goods commodities (6.1 percent). Among the major commodity groups, the fastest rates of change were in "services" (7.3 percent) and finance, insurance and real estate (7.1 percent). Over the last year of the period, 1996-97, the fastest growth was in finance, insurance, and real estate (9.3 percent), transportation, communication, and utilities (8.8 percent), construction (8.8 percent), and "services" (8.2 percent).

Table D.--Commodity Consumption Growth Rates by Major Commodity Group, 1992-97

 Consumption
 average annual
 rate of growth
Commodity (percent)

 1992-97 1996-97

All commodities 6.4 6.6
 Goods commodities 6.1 6.3
 Agriculture, forestry, fisheries 5.1 3.7
 Mining 3.6 0.8
 Construction 6.8 8.8
 Manufacturing 6.1 6.2
 Services commodities 6.6 6.8
 Transportation, communication,
 and utilities 6.8 8.8
 Wholesale and retail trade 6.5 2.6
 Finance, insurance, and real estate 7.1 9.3
 Services 7.3 8.1
 Special industries 4.4 4.8

The 15 commodities that accounted for at least 1 percent of total supply in 1997 and that grew faster than the overall commodity average in 1992-97 are shown in table E. These commodities included the following "high technology" commodities--computer and office equipment, electronic components and accessories, "communications, except radio and TV," and "computer and data-processing services, including own-account software" Consumption of these four commodities grew 12.0 percent, almost twice the rate of growth of all commodities, and the group's share of total consumption grew from 5 percent in 1992 to 6 percent, or $969.3 billion, in 1997.(11)

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Among these commodities were at least two services that are often associated with "outsourcing"--other business and professional services and, again, "computer and data-processing services including own-account software." Consumption of these two commodities grew at an average annual rate of 11.6 percent in 1992-97 and 14.4 percent in 1996-97. These commodities accounted for 5 percent, or $841.2 billion, of total consumption in 1997, up from 4 percent in 1992.

These commodities also include finance, which grew at an average annual rate of growth of 10.4 percent over 1992-97 and accounted for 4.1 percent of total consumption in 1997. This commodity includes banking, credit agencies other than banking, and security and commodity brokers. Most of the above-average growth in finance was accounted for by rapid growth in the use of security and commodity brokers services--particularly securities commissions, underwriting fees, and other services.

For the six aforementioned commodities, the rapid growth in consumption can be traced to growth in demand by both intermediate and final users (table F). The growth in the consumption of electronic components and accessories and "other business and professional services, except medical" was due to growth in intermediate demand. Final users were primarily responsible for the increased consumption of computer and office equipment. Growth in the consumption of the other three commodities was the result of growth in demand from both sources.

[TABULAR DATA F NOT REPRODUCIBLE IN ASCII]

Computer and office equipment.--Nearly 90 percent of computer and office equipment was consumed by the intermediate, gross private fixed investment (GPFI), and export sectors, and both the GPFI and export sectors grew at rates of at least 12 percent. In addition, personal consumption expenditures (PCE), which accounted for only 6.9 percent of total consumption, grew 16.2 percent.

Electronic components and accessories.--Nearly four-fifths of all electronic components and accessories flowed to intermediate uses, and virtually all of the remainder was exported. Intermediate use grew 13.9 percent, and exports grew 19.3 percent.

Communications, except radio and TV.--Ninety percent of "communications, except radio and TV" was consumed by the intermediate and PCE sectors, and another 5.7 percent was consumed by the government sector. Consumption by all three sectors grew between 8 and 10 percent.

Computer and data-processing services, including own-account software.--Nearly 95 percent of "computer and data-processing services, including own-account software" was used by the intermediate, GPFI, and government sectors; the intermediate and GPFI sectors had a combined growth rate of more than 16 percent. In addition, PCE (primarily for prepackaged software), which accounted for only 2.8 percent of total consumption, grew 28.2 percent.

Other business and professional services, except medical.--Over four-fifths of "other business and professional services, except medical" was consumed in intermediate uses, and consumption by this sector grew 10.8 percent.

Finance.--The intermediate and PCE sectors accounted for more than 90 percent of total consumption, and these two sectors averaged over 10percent growth.

Methodology for the 1997 annual I-0 accounts

The methodology used to prepare the 1997 annual I-O accounts is similar to that used for the 1996 annual I-O accounts. These accounts are based on the 1992 benchmark I-O accounts and on the most recently revised and updated estimates from the NIPA's. The annual estimates are based on less comprehensive and less detailed source data; for the annual estimates for which data were unavailable, the relationships from the 1992 benchmark accounts were extrapolated to 1997.

The annual I-O estimates are prepared in five steps: (1) The output total for each industry and commodity is calculated; (2) the commodity composition of intermediate inputs for each industry is estimated; (3) the domestic supply of each commodity is estimated; (4) the commodity compositions of the GDP expenditure components for PCE, gross private fixed investment, and government consumption and investment expenditures are derived; and (5) the table is balanced.(12)

An appendix and tables 1, 2 and 8 follow.

Data Availability

The estimates for 94 industries at the input-output (I-O) two-digit level, including alternative estimates of the make and use tables on an approximate 1987 Standard Industrial Classification (SIC) basis and a discussion of the matrix algebra underlying the derivation of the tables, are available on BEA's Web site. (Estimates for 498 industries at the I-O six-digit level are also available; these estimates are less reliable, but they are made available for research that requires a high level of detail.) Go to <www.bea.doc.gov>, click on "Industry and wealth data," and look under "Input-Output data" The two-digit I-O estimates are also available for $20 on diskette--product number NDN-0271. To order, call the BEA Order Desk at 1-800-704-0415 (outside the United States, call 202-606-9666).

Acknowledgments

Mark A. Planting supervised the preparation of the 1997 annual input-output (I-O) estimates. Sumiye Okubo, Associate Director for Industry Accounts, and Ann M. Lawson, Chief of the Industry Economics Division, provided overall guidance. Felicia V. Candela, Peter D. Kuhbach, Tameka R. Lee, Greg R. Linder, Sherlene K. S. Lum, Demian J. McGarry, Kimberly A. Mourey, Brian C. Moyer, William H. Nicolls IV, Robert S. Robinowitz, and Regina K. Villasmil prepared the estimates. Karen J. Horowitz provided valuable assistance. Jiemin Guo of the Bureau of Transportation Statistics, U.S. Department of Transportation, also contributed to the preparation of the estimates.

(1.) For an overview of the 1-O accounts, see Ann M. Lawson, "Benchmark Input-Output Accounts for the U.S. Economy, 1992: Make, Use, and Supplementary Tables" SURVEY Or CURRENT BUSINESS 77 (November 1997): 36-82; and "Benchmark Input-Output Accounts for the U.S. Economy, 1992: Requirements Tables" SURVEY 77 (December 1997): 22-47. For information on last summer's annual revision, see Eugene P. Seskin and David F. Sullivan, "Annual Revision of the National Income and Product Accounts," SURVEY 80 (August 2000): 6-139.

(2.) Sumiye Okubo, Ann M. Lawson, and Mark A. Planting, "Annual Input-Output Accounts of the U.S. Economy, 1996," SURVEY 80 (January 2000): 37-86.

(3.) Tables 1, 2, and 8 are at the end of this article. All eight tables are available electronically; see the box "Data Availability" on page 15.

(4.) The alternative tables conform more closely to the current SIC establishment-based data collection system by showing the primary and secondary products in the industries that produce them. As a result, the industry definitions, which are used to determine the columns of the use table and the rows of the make table, may differ from those used in the traditional l-O tables.

(5.) Detailed 1997 I-O estimates for 498 industries have been prepared for use in research (see the box "Data Availability").

(6.) The benchmark l-O tables include 136 categories for personal consumption expenditures, 26 categories for structures, and 30 categories for private fixed investment and software.

(7.) "Final uses" in the I-O accounts are the same as the "product-side" components of GDP in the NIPA's.

(8.) Laurence R. Klein postulates that I-O measures of deliveries of computer and data-processing services to other intermediate sectors and to final-demand sectors indicate the diffusion of information technology; Laurence R. Klein, "Sustainability and Global Reach of IT" (paper presented at the WEFA Annual Symposium on International Issues, New York, October 2000).

(9.) Jiemen Guo and Mark A. Planting, "Using Input-Output Analysis to Measure U.S. Economic Structural Change Over 25 Years" (paper presented at the 13th International Conference on Input-Output Techniques, Macerata, Italy, August 21-26, 2000).

(10.) Total consumption is defined as total domestic commodity output plus imports less change in private inventories, and it is equal to the sum of total intermediate use and the four final-use sectors--personal consumption expenditures, gross private fixed investment, exports, and government purchases.

(11.) In real terms, the growth rates of these commodities is much faster because of the declining prices of computers, electronic components, telecommunications services, and software.

12. For a more complete description of the methodology see Okubo, Lawson, and Planting, 42--46.

Appendix.--Classification of Industries in the Annual Input-Output Accounts

[An asterisk preceding a Standard Industrial Classification (SIC) code indicates that the SIC industry is included in more than one I-O industry.]

I-O Related 1987
number I-O title SIC codes

 AGRICULTURE, FORESTRY, AND FISHERIES

 01 Livestock and livestock products *01, *02
 02 Other agricultural products *01, *02
 03 Forestry and fishery products 081, 083,
 091, 097
 04 Agricultural, forestry, and fishery 0254, *0279,
 services 071, 072,
 075, 076,
 078, 085,
 092
 MINING

 05+06 Metallic ores mining 101-6, *108,
 109
 07 Coal mining 121-3, *124
 08 Crude petroleum and natural gas 131, 132,
 *138
 09+10 Nonmetallic minerals mining 141-7, *148,
 149
 CONSTRUCTION

 11 New construction, including own-account *108, *124,
 construction *138,
 *148, *15,
 *16, *17,
 6552
 12 Maintenance and repair construction, *138, *15,
 including own-account construction *16, *17

 MANUFACTURING

 13 Ordnance and accessories 348, 3761,
 3795
 14 Food and kindred products 20
 15 Tobacco products 21
 16 Broad and narrow fabrics, yarn and 221 4, *226,
 thread mills 228
 17 Miscellaneous textile goods and floor
 coverings 227, 229
 18 Apparel 225 231-8
 19 Miscellaneous fabricated textile products 239
 20+21 Lumber and wood products 24
 22+23 Furniture and fixtures 25
 24 Paper and allied products, except 261, 262,
 containers 263, 267
 25 Paperboard containers and boxes 265
 26A Newspapers and periodicals 271, 272
 26B Other printing and publishing 273-9
 27A Industrial and other chemicals 281, 286,
 289
 27B Agricultural fertilizers and chemicals 287
 28 Plastics and synthetic materials 282
 29A Drugs 283
 29B Cleaning and toilet preparations 284
 30 Paints and allied products 285
 31 Petroleum refining and related products 29
 32 Rubber and miscellaneous plastics products 30
 33+34 Footwear, leather, and leather products 31
 35 Glass and glass products 321-3
 36 Stone and clay products 324-9
 37 Primary iron and steel manufacturing 331, 332,
 339, 3462
 38 Primary nonferrous metals manufacturing 333-6, 3463
 39 Metal containers 341
 40 Heating, plumbing, and fabricated
 structural metal products 343, 344
 41 Screw machine products and stamping 345, 3465-9
 42 Other fabricated metal products 342, 347,
 349
 43 Engines and turbines 351
 44+45 Farm, construction, and mining machinery 352, 3531-3
 46 Materials handling machinery and equipment 3534-7
 47 Metalworking machinery and equipment 354
 48 Special industry machinery and equipment 355
 49 General industrial machinery and equipment 356
 50 Miscellaneous machinery, except electrical 359
 51 Computer and office equipment 357
 52 Service industry machinery 358
 53 Electrical industrial equipment and
 apparatus 361, 362
 54 Household appliances 363
 55 Electric lighting and wiring equipment 364
 56 Audio, video, and communication equipment 365, 366
 57 Electronic components and accessories 367
 58 Miscellaneous electrical machinery and
 supplies 369
 59A Motor vehicles (passenger cars and trucks) 3711
 59B Truck and bus bodies, trailers, and motor
 vehicles parts 3713-5
 60 Aircraft and parts 372, 3764,
 3769
 61 Other transportation equipment 3716, 373-5,
 3792, 3799
 62 Scientific and controlling instruments 381, 382,
 384, 387
 63 Ophthalmic and photographic equipment 385, 386
 64 Miscellaneous manufacturing 39

 TRANSPORTATION, COMMUNICATION, AND
 UTILITIES

 65A Railroads and related services; passenger
 ground transportation 40, 41, 474
 65B Motor freight transportation and
 warehousing 42
 65C Water transportation 44
 65D Air transportation 45
 65E Pipelines, freight forwarders, and 46, 472,
 related services 473, 478
 66 Communications, except radio and TV 481, 482,
 484, 489
 67 Radio and TV broadcasting 483
 68A Electric services (utilities) 491, 4931
 68B Gas production and distribution 492, 4932,
 (utilities) 4939
 68C Water and sanitary services 494-7

 WHOLESALE AND RETAIL TRADE

 69A Wholesale trade 50, 51
 69B Retail trade 52-7, 59

 FINANCE, INSURANCE, AND REAL ESTATE

 70A Finance 60-2, 67
 (excluding
 6732)
 70B Insurance 63, 64
 71A Owner-occupied dwellings
 71B Real estate and royalties 65
 (excluding
 6552)
 SERVICES

 72A Hotels and lodging places 70
 72B Personal and repair services (except auto) 72, 762-4
 73A Computer and data processing services,
 including own-account software 737
 73B Legal, engineering, accounting, and 81, 871,
 related services 872, 89
 73C Other business and professional services,
 except medical 732-6, 738,
 769, 8731,
 8732, 8734,
 874
 73D Advertising 731
 74 Eating and drinking places 58
 75 Automotive repair and services 75
 76 Amusements 78, 79
 77A Health services 074, 80
 77B Educational and social services, and
 membership organizations 6732, 82-4,
 86, 8733

 SPECIAL INDUSTRIES

 78 Federal Government enterprises (1)
 79 State and local government enterprises (1)
 80 Noncomparable imports (2)
 81 Scrap, used and secondhand goods (3)
 82 General government industry (4)
 83 Rest of the world adjustment to final uses (5)
 84 Household industry (6)
 85 Inventory valuation adjustment (7)

(1.) The SIC assigns codes to activities regardless of whether the establishment is owned by private firms or government agency. In the I-O accounts, SIC codes are used only to classify private activities.

(2.) Noncomparable imports include imported services that are not commercially produced in the United States, and goods and services that are produced abroad and used abroad by U.S. residents for example, U.S. Federal Government defense spending abroad.

(3.) Scrap is a secondary product of many industries and used goods are sales and purchases typically between final uses. Industry output is zero because there is no primary producing industry. The sales are shown as negative values in the use table.

(4.) Industry output is defined as the compensation of employees and consumption of fixed capital of genera government agencies. The compensation of employees engaged in construction work is included in construction. The compensation or employees engaged in the production of own-account software is included in computer and data processing services.

(5.) The commodity entries include adjustments among PCE and government expenditures to eliminate counting the expenditures by foreign residents in both exports and PCE or government expenditures.

(6.) Industry output is defined as the compensation of domestic household workers.

(7.) The inventory valuation adjustment removes inventory profits and losses from business income.

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