Summary of Improvements in the Upcoming Comprehensive Revision
On October 28, BEA plans to release the initial results of a comprehensive, or benchmark, revision of the national income and product accounts, along with the release of the advance estimates for the third quarter of 1999. The revision will incorporate improvements that reflect changes to definitions and classifications, to source data and estimating methodologies, and to tables that present the accounts, as summarized below.
Definitional and classificational improvements
- Business and government purchases of software, as well as own-account production of software, will be recognized as investment. This improvement will raise the level and rate of growth of GDP.
- The treatment of government employee retirement plans will change to make it more similar to the treatment of private pension plans. This improvement will result in a shift of the savings associated with government employee retirement plans from the government to the personal sector; national saving will not be affected.
- The accounting convention used to measure the corporate profits of private noninsured pension plans will be changed, eliminating a large negative value that is included in the profits estimate of insurance carriers. This improvement, which will also result in an offsetting decrease in net interest, will not affect national income, personal saving, or business saving.
- Improvements will be made to the measures of national saving, the government current surplus or deficit, and personal saving by classifying certain transactions into a new NIPA category, "capital transfers." These transactions, which mainly represent transfers of existing assets and do not affect the level of disposable income in the current period, will include federal government investment grants to state and local governments, and estate and gift taxes.
New and redesigned tables
- New summary tables will highlight the percent changes in real GDP and its major components and the component contributions to the percent changes; new series on computers and their contribution to GDP growth will be added to several tables.
- New tables on contributions to percent change in real personal consumption expenditures, private fixed investment, exports and imports, and government consumption and investment will supplement the current table on contributions by these components to the percent change in real gross domestic product (GDP) by providing additional detail.
- Other new or redesigned tables include (1) a table that integrates the estimates of investment flows and the stocks of produced assets, (2) a table that combines motor vehicle output, and (3) a new presentation of government expenditures by function.
Statistical and methodological changes
- Estimates of major expenditure components of GDP will be improved by the incorporation of BEA's benchmark 1992 input-output (I-O) accounts and preliminary information from the Census Bureau's 1997 Economic Censuses. The I-O estimates are based on more detailed and comprehensive information from the 1992 Economic Censuses.
- Adjustments that convert business tax-return data to the concepts underlying GDP will be improved, including the adjustments for foreign-source income of U.S. corporations, amortization of intangible assets, and interest income of captive finance companies.
- Newly available price indexes from the Bureau of Labor Statistics (BLS) that reflect recent improvements in the consumer price indexes (CPI's) will be incorporated into the estimates of real personal consumption expenditures (PCE) beginning with 1978. The improved CPI's, which increase less than the previously calculated indexes, will result in upward revisions to the rate of growth of real PCE and GDP for 1978-95; the improved CPI's are currently used in the NIPA's for deflation of PCE categories beginning with 1995.
- Improved estimates of the real value of unpriced bank services will be incorporated, using an output index published by BLS that is a weighted average of various measures of bank transactions and volume of services, such as checks cleared and ATM transactions. Currently, the estimates are based on hours worked by bank employees. Introduction of the new measure will result in an upward revision to the rate of growth of real bank services, affecting PCE and several other components of GDP.
- The reference year for calculating quantity and price indexes and for chained-dollar estimates will be shifted from 1992 to 1996.
An article in the October issue of the Survey of Current Business will discuss the methodological and statistical changes; articles in the August and September issues discussed the definitional and classificational changes and the new and redesigned tables, respectively.