# Presentation: 916122

## Annual Industry Accounts Overview

- George Smith & Nicole Mayerhauser
- Current Industry Analysis Division
- Bureau of Economic Analysis

*Industry Accounts Users’ Conference, October 26, 2007*

## Annual Industry Accounts

- “Integrated” Annual I-O and GDP by Industry
- 12 months after year (2006 in Dec 2007)
- 2005 and 2004 revised
- 65 industries
- “Advance” GDP by Industry
- 4 months after year (2006 in April 2007)
- 22 industry groups

## Outline

- Uses and products
- Methods and strengths
- Challenges and progress
- What’s ahead
**Q & A**

## Integrated - Uses

- Link industry-sector-macro performance
- 		Relative size; relative growth; 	contribution to growth
- Analyze specific industries
- 		KLEMS and productivity analysis
- Input to other BEA programs
- 		TTSA; GDP by State; Regional I-O Model

## Integrated - Products

- Annual time series, 1998-forward
- Make and use tables
- Supplementary tables
- Direct & total requirements
- Bridge (PCE, Private investment)
- Import matrices
- Quantity and price decomposition
- Historical NAICS estimates, 1947-97

## Integrated – Strengths

- Improved consistency
- I-O framework perspective
- Current-dollar: cross-section & time series
- Quantity and price: time series
- Mix of inputs used by industries overall
- (Step 1)

## Mix of inputs overall (Step 1)

## Integrated – Challenges & progress

- Mix of inputs, by industry (Step 2)
- BEA/Census “core expense” initiative
- Input categories (e.g., purchased professional and technical services)
- Services Annual Survey, beg. 2005
- Annual Survey of Manufacturers, beg. 2006

## Mix of inputs, ASM & SAS (Step 2)

## Integrated – Challenges & progress

- Mix of inputs, every industry (step 3)
- Survey coverage of services industries
- Private services-producing	68% of GDP
- Wholesale & retail trade	13%
- Covered by SAS			30%
- Not covered by SAS		25%
- Budget-contingent
- 2008 SAS coverage 		55%

## Mix of inputs, long run (Step 3)

## Integrated – Challenges & progress

- Quantity and price decomposition
- PPI services coverage expansion
- Retail trade margin output
- Wholesale trade margin output
- Budget-contingent
- Professional health care services
- Computer-related services

## Integrated – Challenges & progress

- Source data inconsistencies
- Census output, BLS wages, etc.
- Separate business registers
- Different industry assignments of units
- Data sharing restrictions
- Micro-data research of payroll differences

## Integrated – Publication level

- Analytical needs
- Value added
- Publication and estimation levels
- Work underway

## Integrated – What’s ahead

- Comprehensive revision
- Revised 2002 benchmark I-O (2002 NAICS)
- Comprehensive NIPA revision due 2009
- Census survey data on industry inputs
- Improved deflation of retail trade output
- Publish more industries if possible
- Imported service inputs by type

## Integrated – More information

- Featured estimates and articles:
- www.bea.gov/industry/index.htm#annual
- Underlying estimates:
- www.bea.gov/industry/more.htm
- Information guide:
- www.bea.gov/industry/iedguide.htm#GPO

## Advance GDP by Industry

- Earliest look at most recent year
- 22 NAICS industry groups
- Current dollars
- Chained (2000)dollars
- Chained-type quantity indexes
- Chained-type price indexes

## 8 months earlier than integrated accounts

Less detailed but good indicator of
Direction of change 
Rate of change (acceleration/deceleration)
Industry growth relative to overall GDP

- Less detailed but good indicator of
- Direction of change
- Rate of change (acceleration/deceleration)
- Industry growth relative to overall GDP

**Advance - Uses**

## Advance - Uses

- Integration within BEA
- NIPA current quarterly GDP/National Income
- Advance GDP by Industry
- Advance GDP by State

## Advance - Current dollar method

- Value Added
- Advanced estimates
- Extrapolated by industry
- Controlled to NIPA GDP

- Output  –  Intermediate Inputs

- Compensation
- Taxes – Subsidies
- Gross Operating Surplus

## Advance - Real estimates

- Single deflation
- Value added deflated with output prices
- Output prices
- NIPA price indexes
- BLS price indexes
- Nominal and volume output measures from government and private sources

## Advance - Limitations

- Single deflation
- Assumption
- output and input prices grow at same rate
- Misstates real VA growth
- when output prices and input prices do not move in the same direction or at the same rate of change

## Advance - Modified single deflation

- Output vs input prices
- Adjustments to real value added made when known prices differences exist

## Advance - What’s ahead

- Double deflation
- Separate deflation for output and for intermediate inputs
- Real **Value Added** =
- 	real **Output** **–** real **Intermediate Inputs**
- Requires few assumptions about the relationship between output and intermediate inputs.

## Advance - What’s ahead

- Opportunity to compare 2 years:
- Single-deflation advanced estimates
- Double-deflated prototype estimates
- Integrated annual estimates
- Assess size of revisions
- Single-deflation vs double-deflation

## Advance - More information

- Press Release
- http://www.bea.gov/newsreleases/industry/gdpindustry/gdpindnewsrelease.htm
- Survey of Current Business
- http://www.bea.gov/scb/index.htm