Brian C. Moyer

1. Measuring U.S. GDP within the Input-Output Framework Comments on “Interrelationship Between China’s Input-Output Estimation: Production-based GDP and Expenditure-based GDP” Brian C. Moyer 13th OECD-NBS Workshop on National Accounts Haikou, China November 30 – December 4, 2009

2. U.S. Industry Accounts • Benchmark I-O Accounts • Prepared every five years • 400 industries/commodities • Annual I-O Accounts • 12 months after close of year • 65 industries/commodities • GDP by Industry Statistics • 4 months after close of year • 22 industry groups

3. Three ways to measure GDP • Expenditure Approach GDP = C + I + G + (X-M) • Income Approach GDP = Compensation + Gross operating surplus + Taxes on production • Production Approach GDP = Gross output - Intermediate inputs

4. Data from various sources … • Census Bureau annual survey data • Monthly/quarterly Census survey data • Data from the tax authority • Labor Dept. employment and wage data • Administrative data • Trade association data • Data from other government agencies

5. Balanced I-O framework: Use table

6. Results show small differences [Percent changes and percentage-point contributions]

7. Building the annual accounts • Output by industry and commodity • Intermediate purchases and final uses • Value added by industry • Balancing • Quantity and price measures

8. Industry and commodity output • Industry output: most recent benchmark I-O estimates extrapolated with appropriate indicators; consistent with expenditure-based GDP indicators • Commodity output: composition of industry output retained from benchmark I-O, except in manufacturing

9. Intermediate and final uses • Initial input estimates prepared in two broad steps • Base-year inputs extrapolated with quantity change in output by industry • Inputs “reflated” with appropriate input prices • Initial final use estimates prepared using commodity-flow method; controlled to expenditure-based GDP categories

10. Value added by industry • Initial estimates based on gross domestic income by industry • Compensation and Taxes on production obtained from income-based GDP measures • Gross operating surplus extrapolated from “combined” benchmark-year values; company-to-establishment adjustments applied

11. Balancing • Based on RAS procedure—scaling of transactions • Outputi = Inputsi + Value addedi • Total commodity output = Total industry output • Total final uses = total value added = GDP • Primarily adjustments to inputs; controls for value added by industry (Gross operating surplus) relaxed, as necessary

12. Quantity and price measures • Outputs and inputs deflated separately • Primarily BLS Producer Price Indexes • Consistency with expenditure-based GDP • Value added quantity and price measures computed using Fisher-Ideal, double-deflation procedure • “Not allocated by industry” reflects differences with expenditure-based GDP

13. Further improvements to consistency • “Feedback” between production and expenditure approaches • Time-series consistency of benchmark I-O accounts • Quarterly GDP by industry

14. Improving consistency

15. Feedback • Focused on consumer spending • Annual I-O accounts: commodity flow method • Expenditure-based GDP: Retail control method based on retail sales data • Requires evaluating data quality and timing of alternative methods

16. Example: PCE for shoes