Gross Domestic Product

We evaluate the economic effects of the COVID-19 pandemic on consumer spending using daily card transaction data. Overall, we find large effects of this pandemic on sectors such as accommodations and restaurants, which by the second week of March, show declines of around 80 percent and 70 percent, respectively. However, these declines were partly offset by the large 100 percent immediate increase in food and beverage store sales. For select goods and services in our data, we find an aggregate decline in spending of around 13.7 percent for March, and we estimate an aggregate “pandemic effect”—the effect of the pandemic on consumer spending after mitigation measures have had time to take hold—of around –27.8 percent.

Investment funds, which include mutual funds, other regulated investment companies, and real estate investment trusts, play an increasingly important role in the U.S. economy, with financial assets of about $23 trillion in 2017. Currently, in the U.S. National Income and Product Accounts (NIPAs), statistics on investment funds are included within larger aggregate statistics but not published separately. This paper presents separate statistics on investment funds from the NIPAs, using the framework of the integrated macroeconomic accounts, or sectoral accounts. As expected, investment funds account for a significant share of total interest and dividend payments. One feature of BEA’s accounting treatment of investment funds is that they are persistent net borrowers. This paper also discusses possible alternative treatments of investment funds, currently used by the Federal Reserve Board’s Financial Accounts and the national accounts of some other countries, in which net saving and net lending are closer to zero.

The internationally agreed guidelines for national economic accounts, System of National Accounts 2008 (hereafter referred to as SNA 2008) (United Nations Statistics Division 2008), explicitly recommend that illegal market activity should be included in the measured economy. This recommendation has not yet been implemented by the U.S. Bureau of Economic Analysis (BEA) because of challenges inherent in identifying suitable source data and differences in conceptual traditions. This paper explores how tracking illegal activity in the U.S. national economic accounts might impact nominal Gross Domestic Product (GDP), real GDP, productivity, and other economic statistics. Nominal GDP rises in 2017 by more than 1 percent when illegal activity is tracked in the U.S. National Income and Product Accounts (NIPAs). By category, illegal drugs add $108 billion to measured nominal GDP in 2017, illegal prostitution adds $10 billion, illegal gambling adds $4 billion, and theft from businesses adds $109 billion. Real GDP and productivity growth also change. Real illegal output grew faster than overall GDP during the 1970s and post–2008. As a result, tracking illegal activity ameliorates both the 1970s economic slowdown and the post–2008 economic slowdown considerably.