Transcript Major Changes in the Presentation of the US National

Major Changes in the
Presentation of the U.S. National
Accounts
Brent Moulton, Yvon Pho, and
Robert Yuskavage
Bureau of Economic Analysis
2 Major Initiatives

Conversion to the North American Industry
Classification System (NAICS) from
Standard Industrial Classification (SIC)
codes

Movement towards greater consistency with
SNA 1993 in classification and presentation
History of SIC System

Created in 1938. Since its creation, U.S. has
based its industry coding on this system

Revisions took place every 10 to 15 years to
reflect changing U.S. economy
– Last revision occurred in 1987
Creation of NAICS

SIC system heavily criticized
– Inability to keep pace with changing domestic
and international economies, particularly in
services

1991 International Conference on the
Classification of Economic Activities

Joint effort with Mexico and Canada to
develop NAICS
Motivations for NAICS

Precise country comparisons of economic
and financial statistics among U.S., Canada,
and Mexico

Passage of North American Free Trade
Agreement (NAFTA) in 1994
NAICS vs. SIC

NAICS improves over SIC:
1. NAICS uses a production-oriented
2.
3.
4.
5.
conceptual framework
Increased comparability of statistical data
Greater flexibility and precision in capturing
new and emerging economic activities
More frequent reviews--every 5 years
More accurate treatment of auxiliary
establishments
NAICS and the International
Standard Industrial
Classification (ISIC) System

NAICS more closely aligned to ISIC than the
1987 SIC system

Both NAICS and ISIC emphasize
classification by production technology
Primary Differences between
NAICS and ISIC

NAICS separately identifies an information
sector
– Recognizes the similarities in production of various
types of information
– UN Statistical Commission is considering
incorporating this sector into next revision of ISIC

NAICS uses a single, production-based
framework in organizing industrial activities
whereas ISIC uses multiple criteria
BEA data submissions
to OECD

OECD utilizes ISIC, thereby requiring data
adjustments

Under SIC system:
– Data adjustments were made with little difficulty
– Eased by the use of an international concordance
– In some cases, conversion not perfect


Example: fishing
BEA is currently developing a concordance between
NAICS and ISIC
Implementation Schedule

Highly dependent upon implementation schedule
of source data
– Census Bureau


1997 Economic Census was first data converted to NAICS
Census annual surveys converted beginning in 1998
– Bureau of Labor Statistics (BLS)


Employment and wage data converted beginning in 2001
Producer price indices converted in 2004
– Internal Revenue Service (IRS)


Data conversion beginning in 2000
Difficult 4-year transition period
BEA Release Schedule
on a NAICS basis

December 2002:
– 1997 Benchmark Input-Output Accounts

December 2003:
– Comprehensive Revision of the NIPA’s
 Data beginning in 1998 for type of income,
employment, and hours by industry

2004:
– GDP estimates (value added) and regional
estimates (gross state product) by industry
Historical Time-Series

BEA intends to convert industry estimates from
SIC to NAICS for years prior to 1997 for GDP,
investment, capital stock
Complications

Limited availability of source data

Heavy reliance on concordances

Few direct one-to-one matches
– Matrix of 1997 conversion weights for receipts,
payroll, and employment available
– Conversion matrix likely to become inaccurate over
time due to fixed weights
– Applicability of conversion matrix to data items not
available in the matrix
Progress Made by
Other Agencies

Federal Reserve Board
– Converted indices of industrial production for manufacturing
back to 1972

Census Bureau
– Converted monthly and annual series for wholesale and retail
trade sales and inventories back to 1992

Bureau of Labor Statistics
– Converted monthly payroll, employment, and related series
for all detailed NAICS industries back to 1990

BEA will review these procedures for its conversion of
investment, capital stock, and GDP by industry
Other issues

Preparation of volume estimates

Ensuring consistency of converted industry
estimates to related series in the national
accounts, including GDP estimates

Appropriate level of industry detail in
converted series
User Feedback

Overall positive
– NAICS is a more accurate reflection of today’s
economy than SIC

Concerns
– Transition creates breaks in the data
– Future revisions to NAICS may lead to more
frequent disruptions in data flow and time series
Presentation of the NIPA’s

BEA actively participated in preparing
System of National Accounts (SNA) 1993

Since 1993 BEA has been moving towards
consistency with SNA
– Chain index
– Saving and capital formation
– Software
Changes for 2003
Comprehensive Revision

Most definitions of transactions (and
terminology) will conform with SNA.
 Some differences between the NIPA’s and
SNA 1993 will remain:
– Sectoral definitions
 Treatment of government enterprises
– Maintenance of non-SNA aggregates important
to U.S. users
7 NIPA Summary Accounts
1.
2.
3.
4.
5.
6.
7.
Domestic income and product
Private enterprise income
Personal income and outlay
Government receipts and expenditures
Foreign transactions current
Domestic capital
Foreign transactions capital
Domestic Income and
Product Account

Shows GDP by final uses on the right side
of the account, while uses of income are on
the left
 Left side based on generation of income
account
 Differences from SNA:
– Private, government GFCF are separated
– Government GFCF is aggregated with
government final consumption
Private Enterprise
Income Account

Based on the SNA entrepreneurial income
account

Differs from SNA:
– Government enterprises are not included
– Payments of other current transfers are
classified as uses
– Dividends presentation differs from the SNA
Personal Income and
Outlay Account

Personal sector
– Consolidation of the household and nonprofit
institutions serving households

Represents consolidation of SNA’s :
– Allocation of primary income
– Secondary distribution of income
– Use of disposable income accounts

Differs from SNA:
– Pension accounting
– Disposable personal income accounting
Government Receipt
and Expenditures

Consolidates the SNA:
– Allocation of primary income
– Secondary distribution of income
– Use of disposable income accounts

General government enterprises are
consolidated with general government
Remaining NIPA
Summary Accounts

Foreign transactions current account
 Domestic capital account
 Foreign transactions capital account

Presentation is largely consistent with SNA
convention
BEA’s Commitment

Harmonizing its national accounts with the
international community

Continuing in the role of being an effective
resource for explaining the national
accounts

Guiding U.S. data users in the transition to
SNA 1993 concepts
Plans for improvement

Work with Federal Reserve Board to
integrate NIPA’s with flow of funds
accounts
 Conference on Research in Income and
Wealth--Architecture of national accounts
– April, 2004, Washington DC
– See http://www.nber.org/CRIW/