A Preview of the 1999 Comprehensive Revision of the National Income and Product Accounts.

Moulton, Brent R. ; Sullivan, David F.

New and Redesigned Tables

ON OCTOBER 28, 1999, the Bureau of Economic Analysis (BEA) will release the initial results of a comprehensive, or benchmark, revision of the national income and product accounts (NIPA'S). This revision is the nth of its kind; the last such revision was released in January 1996.

Comprehensive revisions differ from annual NIPA revisions because of the scope of the changes and because of the number of years subject to revision. Comprehensive revisions incorporate three major types of improvements: (1) Definitional and classificational changes that update the accounts to more accurately portray the evolving U.S. economy, (2) statistical changes that update the accounts to reflect the introduction of new and improved methodologies and the incorporation of newly available and revised source data, and (3) presentational changes that update the NIPA tables to reflect the definitional, classificational, and statistical changes and to make the tables more informative.

This article on the presentational changes is the second in a series of articles about the comprehensive revision. An article in the August issue described the definitional and classificational changes.(1) Subsequent articles will describe the statistical changes and other aspects of the revision, including estimates of the effects of the definitional, classificational, and statistical changes.

Highlights of the changes in presentation

* New tables on contributions to percent change in real personal consumption, private fixed investment, exports and imports, and government consumption and investment will provide additional detail and supplement the current table on contributions by these components to percent change in real gross domestic product (GDV).

* New tables will present changes in the relationship between investment and the net stock of produced assets, motor vehicle output, and new presentations of government expenditures by function.

* New summary tables will highlight the percent changes in real GDV and its major components and the component contributions to the percent changes.

* Redesigned NIPA tables will reflect the changes that will be introduced in this comprehensive revision, such as the recognition of business and government expenditures for software as investment and the new treatment of government employee retirement plans that shifts their saving to personal saving from government saving.

* New series on computers and their contribution to GDP growth will be added to several tables.

* The reference year for chain-type quantity and price indexes and for chained dollars will be updated from 1992 from 1996.

Table 1 at the end of this article provides a complete list of the revised set of NIPA tables arranged according to the new table numbers.(2) The table cross-references the new table numbers with the old ones and identifies the new tables and the tables that are published monthly in the "Selected NIPA Tables"; the discontinued tables are shown at the end of table 1. In addition, the table indicates the major changes to each NIPA, table.

[TABULAR DATA 1 NOT REPRODUCIBLE IN ASCII]

The first section of this article discusses several new tables that will be introduced in the 1999 comprehensive revision. The second section discusses changes that result from the major definitional and classificational changes. The third section discusses other major presentational changes.

New tables

New summary tables.--Two new "summary" tables, tables S.1 and S.2, will be shown as the first tables in the NIPA tables, including in the "Selected NIPA Tables" that appear each month in the SURVEY OF CURRENT BUSINESS. Table S.1 will present a summary of the percent changes in real GDP and its major components, and table S.2 will present a summary of the contributions to the percent changes in real GDP. Thus, the new tables will place some of the most cited and newsworthy information on GDP and its components at the beginning of the NIPA tables, where they can be easily located. (These tables will contain information that is first presented in the monthly GDP news releases; the information presented in these tables will also continue to be presented in tables 8.1 and 8.2.)

With two exceptions, the series names shown in the two new tables will be the same as those currently shown in table 1.1. First, the series name "producers' durable equipment" will be changed to "equipment and software" to reflect the recognition of business and government expenditures for software as investment. Second, the series "change in business inventories" will be renamed "change in private inventories" to more accurately indicate that the series covers only private business inventories and that government enterprise inventories are excluded. These two name changes will also be made in the other NIPA tables.

Contributions to percent change.--Four new NIPA tables showing contributions to percent changes in major aggregates will be introduced; the new tables will complement table 8.2, "Contributions to Percent Change in Real Gross Domestic Product," which will be expanded to show additional detail.

The additional information provided in the new tables and in the expanded table 8.2 is necessary for interpreting the sources of change in major aggregates because chained-dollar measures are not additive. Contributions to percent change, unlike chained-dollar measures, provide accurate estimates of component contributions to real growth, particularly for components for which relative prices are changing rapidly. These contributions are additive and are prepared using a methodology that determines the amount that each detailed component contributes to the percent change in the major aggregate. The new tables will be formatted similarly to table 8.2. The percent change in the aggregate will be shown with one decimal place, and the component contributions to the percent change will be shown with two decimal places.(3)

The new tables are table 8.3, "Contributions to Percent Change in Real Personal Consumption Expenditures by Major Type of Product"; table 8.4, "Contributions to Percent Change in Real Private Fixed Investment by Type"; table 8.5, "Contributions to Percent Change in Real Exports and in Real Imports of Goods and Services by Type of Product"; and table 8.6, "Contributions to Percent Change in Real Government Consumption Expenditures and Gross Investment by Type." The detail that will be shown in the new tables generally corresponds to the detail shown in chained-dollar tables 2.3, 5.5, 4.4, and 3.8, respectively.

Table 8.2 will show additional detail for component contributions under personal consumption expenditures, private fixed investment in equipment and software, change in private inventories, and government consumption expenditures and gross investment. Table 8.2 will also show new addenda for goods, services, structures, motor vehicle output, and final sales of computers.

Changes in net stock of produced assets.--A new table, "Changes in Net Stock of Produced Assets (Fixed Assets and Inventories)" (table 5.16), will integrate the NIPA estimates of the flows of investment and consumption of fixed capital with BEA'S estimates of the net stocks of produced assets.(4) The table, which will provide annual estimates beginning with 1951, will include series for opening balance, accumulation of produced assets, "other changes in the volume of assets," revaluation, and closing balance. The "other changes in the volume of assets" will include new series on the effects of disasters, such as earthquakes and hurricanes, on the net stock of private and government fixed assets. The revaluation is the change in the value of assets that results from price changes (that is, holding gains or losses). The revaluation will be divided into neutral holding gains, which reflect changes in the "general price level," as measured by the gross domestic purchases price index, and real holding gains or losses, which reflect changes in the prices of produced assets relative to changes in the general price level.

This table will provide fundamental information on the role of investment and depreciation in determining changes in the value of the Nation's stock of structures, equipment, software, and private inventories; thus, it can be used as a tool in analyzing the accumulation of wealth. The estimates of neutral and real holding gains or losses will provide information on the effects of price changes on the value of the net stock of assets.

Adding this table represents a step in BEA's strategic plan of developing fully integrated accounts of the stocks and flows of nonfinancial and financial assets.

Motor vehicle output.--Beginning with 1967, a new table for motor vehicle output (table 8.8B) will replace the existing tables for auto output (table 8.4) and for truck output (table 8.6), and a new table for chain-type quantity indexes for motor vehicle output (table 7.18B) will replace tables 7.18 and 7.19. Beginning with 1987, a new table for real motor vehicle output (table 8.9B), will replace tables 8.5 and 8.7. The detailed estimates for auto and truck output will continue to be shown in the new motor vehicle output tables. In addition, the new motor vehicle output tables will present several new aggregates, including "private fixed investment in new autos and new light trucks." Separate estimates for "light" trucks and for "other" trucks under private fixed investment and additional detail under the change in private inventories will also be presented.

For 1946-67, the period for which estimates of truck output are not available, the estimates of auto output will be shown in tables 8.8A and 7.18A. (Estimates of motor vehicle output and of GDP less motor vehicle output are shown in tables 1.3 and 1.4.)

Capital transfers.--As part of this comprehensive revision, certain transactions now included in the NIPA's will be reclassified as capital transfers. A new table, "Capital Transfers (Net)" (table 8.29), will present net capital transfers received by total government, by the Federal Government, by State and local governments, and by the rest of the world.

The reclassification of capital transfers results in several other changes to NIPA tables. In the government sector tables, the series name "receipts" will be changed to "current receipts," "estate and gift taxes" will be deleted from tables 3.2 and 3.4, and tables 3.18A, 3.18B, and 3.19 will be revised to show the exclusion of capital transfers from the NIPA government sector accounts.(5) In addition, tables 3.1, 3.2, and 3.3 will present new addenda that show the relation between "current surplus or deficit (-), national income and product accounts" and "government net lending or net borrowing (-)." Net lending or borrowing shows the amount of resources available for lending (after current-account transactions, gross investment, capital transfers, and purchases of nonproduced assets) or the amount of resources that need to be borrowed.(6) In tables 4.1, 5.1, and 9.5, the series "Capital grants received by the United States (net)" will be deleted.

New presentation of the functions of government.--As part of this comprehensive revision, BEA plans to provide a new, simpler presentation for the estimates of government current expenditures and gross investment by function in tables 3.15, 3.16, and 3.17. The currently published tables 3.15, 3.16, and 3.17 will be discontinued. The new presentation will be discussed in a SURVEY article in the spring of 2000.

Each of the three new tables will present estimates by function for total government, for the Federal Government, and for State and local government. Table 3.15 will present estimates by function of consumption expenditures and gross investment. Table 3.16 will present estimates by function of current expenditures. Table 3.17 will present estimates by function of transfer payments to persons, Federal grants-in-aid to State and local governments, and subsidies less current surplus of government enterprises.

Changes due to other definitional and classificational changes

Business and government expenditures for software.--The recognition of business and government expenditures for software as fixed investment will affect the presentation of several NIPA tables. The series for gross private domestic investment, private fixed investment, and government gross investment will be redefined to include expenditures for software by business and government. In addition, government consumption expenditures will be redefined to exclude expenditures for software and to include consumption of fixed capital for general government software as a partial measure of the services of the stock of government software. The producers' durable equipment component of nonresidential fixed investment will be renamed "equipment and software," and the producers' durable equipment component of residential fixed investment will be renamed "equipment." The equipment component of gross government investment will be renamed "equipment and software," and the electronics component of national defense gross investment will be renamed "electronics and software."

In the presentation of private fixed investment, a new series, "software," will be added to tables 5.4, 5.5, 5.8, 5.9, 7.6, 7.8, and 8.4. The new series will be included in "information processing and related equipment," which will be renamed "information processing equipment and software." The series "office, computing, and accounting machinery" will be deleted from tables 5.8, 5.9, and 7.8.

As a result of the recognition of software as investment--specifically, the reclassification of own-account software production--the series name "compensation of general government employees, except force-account construction" will be changed to "compensation of general government employees, except own-account investment" in tables 3.7, 3.8, 310, 3.11, 7.11, 7.12, and 8.6.

Government employee retirement plans.--Government employee retirement plans will no longer be classified as social insurance funds within the government sector; instead, they will be treated similarly to private pension plans. Because of this reclassification, several NIPA series will be redefined, but the series names will not be changed. Transfer payments to persons will exclude government employee retirement benefits; the lines showing government employee retirement benefits will be deleted from tables 2.1 and 3.12. Employer and personal contributions for social insurance will exclude contributions to government employee retirement plans; the lines showing these contributions will be deleted from table 3.6. The administrative expenses of government employee retirement plans will be excluded from government consumption expenditures; instead, they will be included in personal consumption expenditures. To reflect this change, the series "services furnished without payment by financial intermediaries except life insurance carriers and private noninsured pension plans" will be renamed "services furnished without payment by financial intermediaries except life insurance carriers," and the series "expense of handling life insurance" will be renamed "expense of handling life insurance and pension plans" in tables 2.4, 2.5, 2.6, 2.7, and 7.5. Government interest and dividends received will exclude the interest and dividends received by government employee retirement plans. The series in table 3.14, "Social Insurance Funds Current Receipts and Expenditures," will exclude government employee retirement plans; the references to "dividends received" will be removed, because the only social insurance funds that currently receive dividends are State and local government employee retirement plans.

As a result of the reclassification, other labor income will include employer contributions to government employee retirement plans, and lines will be added to table 6.11 that present the employer contributions to Federal civilian, to Federal military, and to State and local government plans. Estimates of the benefits paid by, and personal contributions to, these plans will be shown in the addenda of table 6.11. Table 6.11A will show estimates for 1929-47. In table 8.19, additional components, "publicly administered government employee retirement plans" and "other," will be shown under "dividends received by persons." In table 8.20, additional components, "publicly administered government employee retirement plans" and "other," will be shown under "monetary interest received by persons." In tables 3.18a,, 3.18B, and 3.19, additional lines will show the exclusion of the transactions of government employee retirement plans from the NIPA government sector accounts.

Private noninsured pension plans.--The treatment of noninsured pension plans as it relates to the measurement of corporate profits and to the recording of property income--rents, dividends, and interest--will be modified. Because of this change, the following NIPA series will be redefined, but the series names will not be changed: Corporate profits, net interest, rental income of persons, personal dividend income, and personal interest income.

In table 8.20, the series names that refer to "life insurance carriers and private noninsured pension plans" will be renamed "life insurance carriers." In tables 819 and 8.20, the new lines "other" dividends received by persons and "other" monetary interest received by persons, respectively, will reflect the revised treatment of noninsured pension plans. Table 8.28 will be redesigned to reflect the revised treatments of government employee retirement plans and of private noninsured pension plans.

Other changes in presentation

Updated reference year.--For this comprehensive revision, will feature output and price measures that use 1996 as the reference year; currently, 1992 is used as the reference year.(7) The estimates for most tables showing "real," or chained-dollar, estimates will begin with 1987.

Updating the reference year will not, by itself, affect the percent changes in the price or quantity indexes (or the chained-dollar estimates), because these changes are measured with chain-type indexes.(8) Revisions to the growth rates of NIPA aggregates will reflect the definitional and statistical changes and not the change in reference year.

Personal consumption expenditures (PCE).--Several changes will be made to the presentation of PCE. The new series "gasoline, fuel oil, and other energy goods" that will be derived from the existing series "gasoline and oil" and "fuel oil and coal" will be shown in several tables. Two new items, "energy goods and services" and "personal consumption expenditures less food and energy," will be shown in addenda to tables 2.2, 2.3, and 8.3; the quantity and price indexes for both of these items will be shown in table 7.4. Within ECU. services, "recreation"--which is currently under "other" services in tables 2.6, 2.7, and 7.5--will be shown separately from "other" services in these tables and will be added to tables 2.2, 2.3, 7.4, 8.2, and 8.3; "other" services will be redefined to exclude recreation in these tables.

Two new series--"video and audio goods, including musical instruments" and "computers, peripherals, and software"--will be added to tables 2.4, 2.5, 2.6, 2.7, and 7.5. As a result, the aggregate series--"video and audio products, computing equipment, and musical instruments"--will be renamed "video and audio goods, including musical instruments, and computer goods."

Changes to tables 1.16 and 7.15.--In tables 1.16 and 7.15, "gross domestic product of corporate business" will be renamed "gross product of corporate business," and "gross domestic product of nonfinancial corporate business" will be renamed "gross product of nonfinancial corporate business." The names, but not the content, will be changed for consistency with the terminology used for other BEA estimates, such as gross product by industry.(9) The chained-dollar measure of the gross product of nonfinancial corporate business will be calculated using a new method, which, for most periods, uses price indexes developed for BEA'S gross-product-by-industry series; the new method will be described in the October SURVEY.

In addition, table 7.15 will be reorganized to emphasize the distinctions among compensation (or unit labor cost), unit nonlabor cost (for example, consumption of fixed capital, indirect business tax liability, and net interest), and corporate profits (or unit profits from current production). (This redesign will result in a format similar to that currently used in table 12 of the GPU news release.)

Computer addenda.--New series that present information on computers, which have become an increasingly important component of GDP growth in recent years, have been added to several tables. As noted earlier, the contribution of final sales of computers to GDP growth will be shown in table 8.2. In addition, tables 7.2 and 8.1 will show quantity and price indexes and corresponding percent changes for final sales of computers, GDP less final sales of computers, and gross domestic purchases less final sales of computers.

Expanded tables. Beginning with 1986, the table "Relation of Foreign Transactions in the National Income and Product Accounts (NIPA'S) to the Corresponding Items in the Balance of Payments Accounts (BPA's)" (table 4.5) will be replaced by a more detailed reconciliation table that presents separate reconciliations for goods, services, incomes, and unilateral transfers (table 4.5). The improved table, which will reflect the presentational changes introduced in this year's annual revision of the BPA'S, will enable users to better understand the detailed relationships between the NIPA's and BPA'S.(10) The estimates for 1946-86 will be presented in table 4.5 in the same format as that used in the currently published table 4.5. In tables 1.9, 1.10, 1.11, 4.1, 4.2, 4.5A, 4.5B, 7.3, 7.9, and 9.5, "receipts of factor income" will be changed to "income receipts," and "payments of factor income" will be changed to "income payments" to improve consistency with the BPA's.

The table "Imputations in the National Income and Product Accounts" (table 8.21) will be expanded. This table shows the amounts included in gross national product (GNP) and other major NIPA aggregates as imputations for transactions that do not occur in the market economy. Imputations are recorded in the NIPA'S either to account for production that is not otherwise recorded or to keep GNP invariant to how certain activities are carried out. Because of imputations, for example, P is invariant to whether households rent or own their homes or whether or not depositors pay an explicit charge for the services provided by banks.

In the expanded table 8.21, the imputations will include the value of the services of general government investment (measured as the consumption of fixed capital), which was incorporated into the NIPA'S as part of a definitional change that was made in the 1996 comprehensive revision of the NIPA'S but was not included in this table; the imputations will also reflect the reclassification of government employee retirement plans. For the major NIPA aggregates, all the components that are affected by imputations will be shown. In addition, the effects of the specific imputations will be expanded to show imputations gross rather than net, and the section "Specific imputations" will be expanded to include a new presentation of interest-related imputations.

Discontinued tables. Eight NIPA tables will be discontinued, but most of the information they contain will still be available. The table "Quantity Indexes and Percent Change from Preceding Period in Selected Series, Fixed 1992 Weights" (table 8.9.7) will no longer be published in the SURVEY; the series, which will be updated to reflect 1996 weights, will continue to be made available. The decision to discontinue the publication of fixed-weighted quantity measures reflects the widespread adoption of the chain-type measures. As noted in the section "Motor vehicle output," tables 7.19, 8.5, 8.6, and 8.7 will be discontinued, and the estimates currently shown in these tables will be included in the new motor vehicle output tables. As noted in the section "New presentation of the functions of government," tables 3.15, 3a6, and 3.17 will be discontinued and replaced by new tables on government current expenditures and gross investment by function.

Series names

The names of several pa series will be changed as a result of the comprehensive revision. Most of these changes have been already discussed. The list on the opposite page presents the new and old names for these series.

Table 1 follows.

Availability of Redesigned Table

The redesigned NIPA tables will be available in hard copy, on diskette, and on BEA'S Web site at <www.bea.doc.gov> on October 1. To get the hard copy or diskette, write to National Income and Wealth Division (BE-54), Bureau of Economic Analysis, U.S. Department of commerce, Washington, DC 20230, or call 202-606-9700.

GDP News Release Tables

The changes to the NIPA series and series names described in this article will also be incorporated into the tables in BEA'S monthly GDP news release. In tables 1, 2, 3, 4, 6, and 7, "producers' durable equipment" will be renamed "equipment and software," and "change in business inventories" will be renamed "change in private inventories." In table 3, under personal consumption expenditures, lines will be added for "gasoline, fuel oil, and other energy goods" under nondurable goods and for "recreation" under services. In tables 3 and 8, "receipts of factor income from the rest of the world" will be renamed "income payments from the rest of the world," and "payments of factor income from the rest of the world" will be renamed "income payments from the rest of the world."

The following series will be added to the addenda to tables 6 and 7: Gross domestic purchases, final sales to domestic purchasers, and gross national product. The price index for GDP less final sales of computers will be added to the addenda to appendix table A.

 New series name Old series name

Change in private inventories Change in business inventories

Compensation of general Compensation of general
 government employees, except government employees, except
 own-account investment force-account construction
 (government) (government)

Current receipts (government) Receipts (government)

Electronics and software Electronics (government)
 (government)

Energy goods and services (PCE) Energy (PCE)

Equipment (residential) Producers' durable equipment
 (residential)

Equipment and software Equipment (government)
 (government)

Equipment and software Producers' durable equipment
 (private nonresidential) (private nonresidential)

Expense of handling life Expense of handling life
 insurance and pension insurance (PCE)
 plans (PCE)

Information processing equipment Information processing and
 and software (equipment related equipment (producers'
 and software) durable equipment)

Income payments from the rest Payments of factor income from
 of the world (foreign the rest of the world
 transactions) (foreign transactions)

Income receipts from the Receipts of factor income
 rest of the world (foreign from the rest of the
 transactions) world (foreign transactions)

Manufactured homes Mobile homes (residential
 (residential structures) structures)

Private fixed investment Private purchases of
 in equipment and software producers' durable equipment

Private fixed investment Private purchases of structures
 in structures

Transportation equipment Transportation and related
 (equipment and software) equipment (producers'
 durable equipment)

Video and audio goods, Video and audio products,
 including musical computing equipment, and
 instruments, and computer musical instruments (PCE)
 goods (PCE)

PCE Personal consumption expenditures

(1.) Brent R. Moulton, Robert P. Parker, and Eugene P. Seskin, "A Preview of the 1999 Comprehensive Revision of the National Income and Product Accounts: Definitional and Classificational Changes," SURVEY OF CURRENT BUSINESS 79 (August 1999): 7-20.

(2.) The "NIPA tables" discussed in this article refer to the following tables: Tables showing quarterly seasonally adjusted series that are published monthly in the SURVEY in "Selected NIPA Tables"; tables covering all the NIPA series that are published in the SURVEY as part of the annual revision of the NIPA'S; and tables covering all the NIPA series for past periods that are published in National Income and Product Accounts of the United States. Changes to tables presenting NIPA-related estimates, such as the estimates of fixed reproducible tangible wealth, will be announced later.

(3.) The method of calculating contributions to percent change will be revised slightly in the comprehensive revision; the new methodology will be described in the October issue of the SURVEY.

(4.) A new treatment will exclude the effects of the abandonment of nuclear power plants from the consumption of fixed capital. The new treatment will be discussed in the October SURVEY.

The estimates of the net stock of produced assets are presented in Fixed Reproducible Tangible Wealth in the United States, 1925-94 (forthcoming).

(5.) Because some data users are specifically interested in the series on estate and gift taxes, quarterly estimates will be continue to be made available.

(6.) Government net lending or borrowing is conceptually similar to the "Net financial investment" measure in the flow-of-funds accounts prepared by the Board of Governors of the Federal Reserve System. The two sets of estimates will differ primarily because government net lending or borrowing will be estimated from information concerning transactions, whereas the net financial investment estimates are derived from information concerning financial assets. There are also small conceptual differences, such as the classification of the Federal Government's railroad retirement and veterans life insurance programs. The flow-of-funds estimates are shown in Board of Governors of the Federal Reserve System, "Federal Reserve Statistical Release Z.1, Flow of Funds Accounts of the United States, Flows and Outstandings, First Quarter 1999" (June 11, 1999).

(7.) The reference year will be 1996 because that is the latest year for which the current-dollar estimates will not be subject to revision until the next comprehensive revision. Quantity and price indexes at the most detailed level will be expressed with 1996 equal to 100 and will provide the inputs used for calculating higher level chain-type measures.

The reference years used in tables 1.2A, 1.2B, and 1.2c (1937, 1952, and 1972, respectively) will not be changed. Table 1.2D, which will present real estimates for 1972-92 using 1982 as the reference year, will be added.

(8.) See J. Steve Landefeid and Robert P. Parker, "Preview of the Comprehensive Revision of the National Income and Product Accounts: BEA'S New Featured Measures of Output and Prices," SURVEY 75 (July 1995): 31-38.

(9.) For information on gross product by industry, see Sherlene K.S. Lum and Brian C. Moyer, "Gross Product by Industry, 1985-97," SURVEY 78 (November 1998): 20-40.

(10.) See Christopher L. Bach, "U.S. International Transactions, Revised Estimates for 1982-98," SURVEY 79 (July 1999): 63-64.3