i

A Guide to the National Income and Product Accounts 

of the United States 

This guide presents information on the structure, definitions, and presentation that underlie the national income 

and product accounts (NIPAs) produced by the Bureau of Economic Analysis. The NIPAs show the composition 

of production and the distribution of incomes earned in production. Thus, they represent a critical element of 

the U.S. economic accounts, which are designed to provide a consistent and comprehensive picture of the Nation’s economy. The NIPAs feature several widely followed measures of aggregate U.S. economic activity, including gross domestic product (GDP), gross domestic income (GDI), personal income, and personal saving among 

others. This guide is organized as follows: 

Background and History of the NIPAs ......................................................................................................................................................................................................................... 1


Definitions and Classifications Underlying the NIPAs ............................................................................................................................................................................ 4


Real Output and Related Measures................................................................................................................................................................................................................................ 15


Classifications of Production ................................................................................................................................................................................................................................................ 17


Presentation of the NIPAs ............................................................................................................................................................................................................................................................. 21


Statistical Conventions Used for NIPA Estimates........................................................................................................................................................................................... 24


Appendix 1: Formulas for Calculating Chain-Type Quantity and Price Indexes............................................................................................... 25


Appendix 2: Chained Measures in the NIPAs Not Calculated as Fisher Indexes................................................................................................ 26


Appendix 3: Calculation of Component Contributions to the Change in GDP and Other Major Aggregates........... 27

1 

Background and History of the NIPAs


The estimation of national income was initiated 

during the early 1930s, when the lack of comprehensive economic data frustrated the efforts of Presidents Hoover and Roosevelt to design policies to 

combat the Great Depression. In response to this need, 

the Department of Commerce commissioned Simon 

Kuznets of the National Bureau of Economic Research 

(NBER) to develop estimates of national income. Professor Kuznets headed a small group within the Bureau 

of Foreign and Domestic Commerce’s Division of Economic Research. Professor Kuznets coordinated the 

work of researchers at the NBER in New York and his 

staff at Commerce. The estimates were presented in 

a report to the Senate in 1934, National Income, 

1929–32. 

The entry of the United States into World War II led 

to increased demand for data that could be used for 

wartime planning. Early in 1942, annual estimates of 

gross national product (GNP) were introduced to 

complement the estimates of national income. In addition, estimates were developed to detail how income 

was generated, received, and spent by various sectors 

of the economy. 

The U.S. national income and product statistics 

were first presented as part of a complete and consistent accounting system in the July 1947 supplement to 

the SURVEY OF CURRENT BUSINESS. The supplement contained 48 tables covering the years 1929–46. All estimates were presented in current dollars; no 

adjustments were yet made for changes in purchasing 

power. Quarterly estimates were available for only a 

few of the aggregates (national income, GNP, and personal income, and their major components). Monthly 

estimates were presented for personal income and its 

major components. 

In 1951, annual estimates of real GNP and of implicit price deflators were introduced as supplementary 

tables. Real GNP was calculated by holding fixed the 

prices of a particular base year that is—GNP was calculated in “constant dollars.” In 1954, these inflationadjusted estimates were formally integrated into the 

standard NIPA tables. 

Another revision, published in 1958, introduced 

changes in the accounting system and added new information to the accounts. Five summary accounts 

were adopted as a concise, general presentation of output, income, outlays, foreign transactions, saving, and 

investment. Quarterly estimates of real GNP were introduced. Government sector tables provided a new 

breakdown of expenditures by type and function for 

the Federal Government and for state and local governments. The foreign transactions tables were expanded in detail and integrated with the balance of 

payments accounts. Regional estimates were introduced, as were estimates of the net stock of fixed assets 

in manufacturing. 

In the 1965 comprehensive revision, for the first 

time, the components of GNP were benchmarked to 

the detailed estimates contained in the 1958 input-output table, which provided a better understanding of 

the structural relationships within the economy. 

During the 1960s and 1970s, the estimates of capital 

stock were expanded to cover all business and government owned fixed assets and consumer durable goods. 

In 1976, in order to provide a more consistent valuation, the estimates of consumption of fixed capital 

(CFC) were shifted to a current-cost basis. Previously, 

the estimates were on a book-value basis—that is, valued at historical cost—reflecting a mixture of prices 

for the various years in which the assets were acquired. 

In 1985, BEA introduced quality-adjusted price indexes for computers and peripheral equipment that 

were developed with the assistance and advice of researchers from the IBM Corporation. The indexes, 

which were based on a statistical technique known as 

“hedonic” regression, adjusted for the rapid improvements in speed and capacity of computer equipment. 

These hedonic price indexes provide improved measures of price change for computers and peripheral 

equipment during periods when quality characteristics 

change rapidly and when prices decline as new products are introduced. 

In 1991, BEA changed its featured measure of U.S. 

production from GNP to GDP. GDP covers the goods 
2 A Guide to the NIPAs 

and services produced by labor and property located in 

the United States and is thus consistent with key economic indicators of employment, productivity, and industry output. The change also facilitated comparisons 

of economic activity in the United States with that in 

other countries. 

In 1993, the System of National Accounts 1993 (SNA 

1993) was adopted by the international community in 

order to facilitate international comparisons of national economic statistics and to serve as a guide for 

countries as they develop their economic accounting 

systems.1

 BEA actively participated in preparing SNA 

1993 and announced its plan to move toward consistency with SNA 1993. Since then, the major improvements in the NIPAs have been designed, at least in 

part, to incorporate the SNA’s concepts and definitions wherever feasible.2 

In 1996, BEA introduced several major improvements to the NIPAs. BEA began estimating the changes 

in real GDP and its components by chaining together 

year-by-year quantity changes that were calculated using the Fisher index formula, rather than estimating 

real GDP on the basis of prices of a single, arbitrary 

base year.

3

 Government expenditures for equipment 

and structures were recognized as fixed investment, 

thereby providing a more complete measure of investment through the consistent treatment of fixed assets 

whether purchased by the public or the private sector. 

The method for calculating CFC was changed to reflect 

the results of studies on the prices of used equipment 

and structures in resale markets that found that depreciation generally tends to follow a geometric pattern. 

The 1999 comprehensive revision of the NIPAs further improved the definitions underlying the accounts 

and the statistical underpinnings of the current-dollar 

estimates, quantities, and prices in the accounts. For 

example, business and government expenditures for 

software were recognized as fixed investment. Government employee retirement plans were reclassified so 

that they would be treated similarly to private pension 

plans. A new method was introduced for calculating 

the real value of unpriced bank services by incorporating measures of banking activity. The consumer price 

indexes that were used for deflating personal consumption expenditures (PCE) were revised back to 

1. Commission of the European Communities, International Monetary 

Fund, Organisation for Economic Co-operation and Development, United 

Nations, and the World Bank, System of National Accounts 1993 (SNA 

1993) Brussels/Luxembourg, New York, Paris, and Washington, DC, 1993. 

2. See Charles Ian Mead, Karin E. Moses, and Brent R. Moulton, “The 

NIPAs and the System of National Accounts,” SURVEY OF CURRENT BUSINESS 84 

(December 2004): 17–32. 

3. The chain-type measures of real output and prices eliminate the overstatement of real GDP growth for periods after the reference year and the 

understatement of real GDP growth for periods before the reference year. 

1978 to reflect the use of a geometric mean formula. 

The most recent comprehensive revision of the 

NIPAs, which was released beginning in 2003, further 

improved and updated the accounts. For example, a 

more complete and accurate measure of insurance services was adopted that includes estimates of the implicit services provided by property and casualty 

insurance companies; the new measure eliminates 

large swings in measured insurance services associated 

with catastrophic losses. An improved measure of 

banking services that includes the services received by 

borrowers was introduced; previously, such services 

were only allocated to depositors. A new treatment of 

government activity that recognizes that governments 

produce services and that goods and services purchased by governments are intermediate inputs was 

adopted. An expanded definition of national income 

that includes all net incomes earned in production was 

introduced; the new definition is more consistent with 

international guidelines. The presentation of the 

NIPAs was changed to reflect these improvements and 

to introduce a redesigned set of tables that provides 

more information in an easier to use format and that 

offers more flexibility for the addition of new tables. 

The new tables also improve the comparability of the 

NIPAs with other U.S. accounts (such as the Federal 

Reserve Board’s flow of funds accounts) and with accounts of other nations and the System of National Accounts. 

The improvements introduced over the years have 

reflected not only BEA’s own experience, research, and 

strategic planning but also the reviews and recommendations of scholars and other experts. 

In the 1950s, there were two major reviews of the 

accounts. The first was prepared by the NBER.

4

 The 

second resulted from a symposium on the accounts 

held by the Conference on Research in Income and 

Wealth.

5

 Both of these reviews dealt with emerging issues of the time, many of which related to expanding 

the complexity and scope of the accounts to more accurately portray the U.S. economy. They also dealt 

with conceptual issues, such as the treatment of capital 

gains and the coverage of nonmarket production and 

consumption, and they discussed the need for better 

integration of the income and product accounts, flow 

of funds, and other aspects of the existing accounts. 

4. U.S. Congress, Joint Economic Committee, Subcommittee on Economic Statistics, “The National Economic Accounts of the United States: 

Review, Appraisal, and Recommendations,” in The National Economic 

Accounts of the United States, report by the National Accounts Review 

Committee, National Bureau of Economic Research, 85th Congress, October 1957. 

5. “A Critique of the United States Income and Product Accounts.” Studies 

in Income and Wealth, vol. 22. Princeton, NJ: Princeton University Press, for 

the National Bureau of Economic Research, 1958. 
A Guide to the NIPAs 3 

In 1971, on the occasion of the 50th anniversary of 

the SURVEY, BEA published a special volume containing 

43 papers contributed by some of the country’s most 

prominent economists.

6

 BEA catalogued and prioritized the suggestions from these papers, and BEA’s Director at that time, George Jaszi, responded to them. 

In 1977, a report was prepared by the Advisory 

Committee on Gross National Product Data Improvement (referred to as the Creamer Report after its chair, 

Daniel Creamer).7

 The report addressed concerns 

about the relatively large revisions to the GNP estimates in the early 1970s and focused on needed improvements in the source data. 

In 1979, the Conference on Research in Income and 

Wealth addressed several aspects of the NIPAs role as a 

system of information about the behavior of the economy.

8

 Topics included the concepts and structure of 

the accounts, deflation and the treatment of quality 

change in price indexes, and source data. The last topic 

included an evaluation of major parts of the Creamer 

Report. 

In 1982, the General Accounting Office published a 

report that reviewed quarterly GNP revisions in order 

to reevaluate the relative importance of the Creamer 

Report’s recommendations and to reassess the reliability of the GNP estimates.

9

 The report focused more on 

statistical than on conceptual issues and suggested that 

priorities be placed on those recommendations that 

would most reduce GNP revisions. In addition, as the 

6. “The Economic Accounts of the United States: Retrospect and Prospect,” SURVEY 51 (July 1971), Part II, 50th anniversary issue. 

7. Office of Federal Statistical Policy and Standards, Gross National Product Data Improvement Project Report, report of the Advisory Committee on 

Gross National Product Data Improvement, Washington, DC: U.S. Department of Commerce, 1977. 

8. Murray F. Foss, ed., “The U.S. National Income and Product Accounts: 

Selected Topics,” Studies in Income and Wealth, vol. 47, Chicago: University 

of Chicago Press, for the National Bureau of Economic Research, 1983. 

9. Comptroller General, The Bureau of Economic Analysis Should Lead 

Efforts to Improve GNP Estimates (Washington, DC: General Accounting 

Office, 1982). 

title indicates, it urged BEA to take a more proactive 

role in obtaining the source data needed to improve 

the accounts. 

In 1995, BEA began a comprehensive review of its 

national, international, and regional economic accounts. Outside perspective was obtained by comments and discussions of a strategic plan that BEA 

presented in the SURVEY and at a conference of users.

10 

In 2000, BEA established an advisory committee 

that meets about twice a year to discuss issues and possible improvements to the accounts. The papers that 

are presented to the advisory committee are made 

available on BEA’s Web site <www.bea.gov>. 

In 2004, BEA participated in a Conference on Research in Income and Wealth on “A New Architecture 

for the U.S. National Accounts.”11 The purpose of the 

conference was to initiate the development of a comprehensive and fully integrated set of U.S. national accounts. Conference participants identified short-term 

and long-term initiatives to more fully integrate the 

existing sets of accounts, to uncover gaps and inconsistencies, and to expand and integrate systems of nonmarket accounts with the core system. As part of this 

exercise, participants identified initiatives to integrate 

BEA’s existing set of accounts with other U.S. economic accounts, including the productivity accounts 

prepared by the Bureau of Labor Statistics and the flow 

of funds accounts prepared by the Federal Reserve 

Board. 

10. “Mid-Decade Strategic Review of BEA’s Economic Accounts: Maintaining and Improving Their Performance,” SURVEY 75 (February 1995): 

36–66, and “Mid-Decade Strategic Review of BEA’s Economic Accounts: An 

Update,” SURVEY 75 (April 1995): 48–56. 

11. Dale W. Jorgenson, J. Steven Landefeld, and William D. Nordhaus, 

eds., “A New Architecture for the U.S. National Accounts,” Studies in Income 

and Wealth, vol. 66, Chicago: University of Chicago Press, for the National 

Bureau of Economic Research, 2006. 
4 

Definitions and Classifications Underlying the NIPAs


NIPA entries 

The national income and product accounts (NIPAs) 

are summarized in seven accounts that show the composition of production and the distribution of incomes 

earned in production.12 The seven summary accounts 

are shown in table A. For illustrative purposes, the tables show estimates for 2005 that are based on the latest published NIPA estimates. 

Each of the components in the summary accounts 

also enters one of the other summary accounts and is 

shown in one or more of the tables that make up the 

full set of 299 NIPA tables. Taken together, the summary accounts constitute a double-entry system in 

which a use (or expenditure) recorded in one account 

for one sector is also recorded as a source (or receipt) 

in an account of another sector or of the same sector.

13 

This system of integrated, double-entry accounts provides a comprehensive measure of economic activity in 

a consistently defined framework without double 

counting. Thus, the NIPAs, in combination with BEA’s 

industry, wealth, and regional accounts, can be used to 

trace the principal economic flows among the major 

sectors of the economy. 

The first account, the domestic income and product 

account, shows the consolidated—that is, unduplicated—production of all sectors of the economy as the 

sum of goods and services sold to final users on the 

right side and the income generated by that produc12. Prior to the 2003 comprehensive revision, the NIPAs were summarized in five accounts, which are shown in table A of the August 2002 SURVEY 

on pages 38–39. For a discussion of the differences between the old and new 

summary accounts, see Nichole Mayerhauser, Shelly Smith, and David F. 

Sullivan, “Preview of the 2003 Comprehensive Revision of the National 

Income and Product Accounts: New and Redesigned Tables,” SURVEY 83 

(August 2003): 8–15. 

13. For more information on the concepts underlying the accounts, see 

U.S. Bureau of Economic Analysis (BEA), “An Introduction to National 

Economic Accounting,” methodology paper, forthcoming, and SNA 1993. 

tion on the left side.14 The private enterprise income 

account (account 2) provides additional information 

on the sources and uses of income by private enterprises, which give rise to the bulk of the output in the 

U.S. economy. Accounts 3–5 show the receipts and expenditures of the other major sectors of the U.S. economy: The personal sector, which is made up of 

households and nonprofit institutions serving households; the government sector; and the foreign sector. 

Account 6 provides information on the saving and investment of the domestic sectors of the economy, and 

account 7 provides information on capital transactions 

with the rest of the world. 

Within the summary accounts, each entry has a 

counterentry, generally in another account. The parenthetical numbers that follow an entry in table A identify the counterentry by account and line number. 

With the exception of major income and product aggregates, entries are usually defined in the sequence in 

which they appear in the seven-account summary. The 

definition is not repeated where the counterentry appears, but a cross reference is made to the place of its 

first appearance. After the seven-account-summary 

discussion, definitions for the following items are presented: Final sales of domestic product, gross domestic 

purchases, final sales to domestic purchasers, net interest, fixed assets, produced assets, nonproduced assets, 

population, personal saving as a percentage of disposable personal income, gross saving as a percentage of 

gross national income, U.S. residents, foreign residents, and the rest of the world. 

14. The estimate of GDP avoids double counting (of, for example, the 

semiconductors that go into computers or the flour that goes into bread) 

because the purchase by one business of materials and services on current 

account (intermediate purchases) from another business is canceled by the 

corresponding sale by another business in the consolidation. 
A Guide to the NIPAs 5 

Major aggregates 

Gross domestic product (GDP) (1–34), the featured 

measure of U.S. output, is the market value of the 

goods and services produced by labor and property located in the United States.

15 Because the labor and 

property are located in the United States, the suppliers— that is, the workers and, for property, the owners—may be either U.S. residents or residents of the 

rest of the world. 

Gross domestic income (GDI) (1–12) measures output as the costs incurred and the incomes earned in the 

production of GDP.

16 In theory, GDP should equal 

GDI, but in practice, they differ because their components are estimated using largely independent and less 

than perfect source data. This difference is termed the 

“statistical discrepancy” (described below). 

Gross national product (GNP) is the market value of 

the goods and services produced by labor and property 

supplied by U.S. residents. Because the labor and property are supplied by U.S. residents, they may be located 

either in the United States or abroad. The difference 

between GDP and GNP is net receipts of income from 

the rest of the world. These net receipts represent income from the goods and services produced abroad 

using labor and property supplied by U.S. residents less 

payments to the rest of the world for the goods and 

services produced in the United States using labor and 

property supplied by foreign residents. The income receipts and payments are measured as compensation of 

employees, corporate profits (earnings of both incorporated and unincorporated affiliates), and interest. 

Net domestic product (NDP) is the net market value 

of the goods and services attributable to labor and 

property located in the United States and is equal to 

GDP less consumption of fixed capital (CFC). NDP 

may be viewed as an estimate of sustainable product, 

which is a rough measure of the level of consumption 

that can be maintained while leaving capital assets intact. 

Net national product (NNP) is the net market value 

of goods and services attributable to the labor and 

property supplied by U.S. residents and is equal to 

GNP less CFC. The measure of CFC used for both 

NDP and NNP relates only to fixed capital located in 

the United States. The investment in capital is measured by private fixed investment and government 

gross investment. 

National income includes all net incomes (net of 

15. In the NIPAs, the United States consists of the 50 states (before 1960, 

Alaska and Hawaii were not included), the District of Columbia, and U.S. 

military installations, embassies, and consulates abroad. 

16. Capital gains and losses are not included in NIPA measures, because 

they result from the revaluation and sale of existing assets rather than from 

current production. 

CFC) earned in production.17 National income is the 

sum of compensation of employees, proprietors’ income with inventory valuation adjustment (IVA) and 

capital consumption adjustment (CCAdj), rental income of persons with CCAdj, corporate profits with 

IVA and CCAdj, net interest and miscellaneous payments, taxes on production and imports, business current transfer payments, and the current surplus of 

government enterprises, less subsidies.18 

Gross national income (GNI) is equal to national income plus CFC. (GNI and GNP also differ by the statistical discrepancy.) 

Personal income (3–26) is the income received by 

persons from all sources—that is, from participation 

in production and from current transfer receipts from 

both government and business. “Persons” consists of 

individuals, nonprofit institutions that primarily serve 

households, private noninsured welfare funds, and private trust funds. Personal income is calculated as compensation of employees, received; proprietors’ income 

with IVA and CCAdj; rental income of persons with 

CCAdj; personal income receipts on assets; and personal current transfer receipts; less contributions for 

government social insurance. 

Disposable personal income is personal income less 

personal current taxes. It is the income available to 

persons for spending or saving. 

Account 1. Domestic income and product account 

This account presents the product and the income produced by labor and property located in the United 

States. 

GDP is measured as the sum of personal consumption expenditures, gross private domestic investment 

(including change in private inventories and before deduction of charges for CFC), net exports of goods and 

services (exports less imports), and government 

17. Prior to the 2003 comprehensive revision, national income consisted 

only of “factor incomes.” 

18. Inventory valuation adjustment (IVA) is the difference between the 

cost of inventory withdrawals valued at acquisition cost and the cost of 

inventory withdrawals valued at replacement cost. The IVA is needed 

because inventories as reported by business are often charged to cost of 

sales (that is, withdrawn) at their acquisition (historical) cost rather than at 

their replacement cost (the concept underlying the NIPAs). As prices 

change, businesses that value inventory withdrawals at acquisition cost may 

realize profits or losses. Inventory profits, a capital-gains-like element in 

business income (corporate profits and nonfarm proprietors’ income), 

result from an increase in inventory prices, and inventory losses, a capitalloss-like element, result from a decrease in inventory prices. In the NIPAs, 

inventory profits or losses are shown as adjustments to business income; 

that is, they are shown as the IVA with the sign reversed. No adjustment is 

needed to farm proprietors’ income because farm inventories are measured 

on a current-market cost basis. 

The private capital consumption adjustment (CCAdj) converts depreciation that is on a historical-cost (book value) basis—the capital consumption allowance (CCA)—to depreciation that is on a current-cost basis— 

consumption of fixed capital (CFC)—and is derived as the difference 

between private CCA and private CFC. 
6 A Guide to the NIPAs 

Table A. Summary National Income and Product Accounts, 2005 

[Billions of dollars] 

Account 1. Domestic Income and Product Account 

Line Line 

1 Compensation of employees, paid ......................................................................... 7,036.6 15 Personal consumption expenditures (3–3) ............................................................ 8,742.4 

2 Wage and salary accruals.................................................................................. 5,671.1 16 Durable goods ................................................................................................... 1,033.1 

3 Disbursements (3–12 and 5–11).................................................................... 5,671.1 17 Nondurable goods ............................................................................................. 2,539.3 

4 Wage accruals less disbursements (4–9 and 6–11) ...................................... 0.0 18 Services............................................................................................................. 5,170.0 

5 Supplements to wages and salaries (3–14) ....................................................... 1,365.5 19 Gross private domestic investment........................................................................ 2,057.4 

6 Taxes on production and imports (4–16) ................................................................ 922.4 20 Fixed investment (6–2) ...................................................................................... 2,036.2 7 Less: Subsidies (4–8)............................................................................................. 57.3 21 Nonresidential................................................................................................ 1,265.7 

8 Net operating surplus............................................................................................. 2,878.2 22 Structures .................................................................................................. 338.6 

9 Private enterprises (2–19).................................................................................. 2,893.6 23 Equipment and software............................................................................ 927.1 

10 Current surplus of government enterprises (4–26) ............................................ –15.4 24 Residential..................................................................................................... 770.4 

11 Consumption of fixed capital (6–13)....................................................................... 1,604.8 25 Change in private inventories (6–4)................................................................... 21.3 

26 Net exports of goods and services ........................................................................ –716.7 12 Gross domestic income ...................................................................................... 12,384.8 27 Exports (5–1)..................................................................................................... 1,303.1 

28 Imports (5–9) ..................................................................................................... 2,019.9 

13 Statistical discrepancy (6–19) ................................................................................ 71.0 29 Government consumption expenditures and gross investment (4–1 and 6–3)...... 2,372.8 

30 Federal............................................................................................................... 878.3 

31 National defense............................................................................................ 589.3 

32 Nondefense ................................................................................................... 289.0 

33 State and local................................................................................................... 1,494.4 

14 GROSS DOMESTIC PRODUCT............................................................................ 12,455.8 34 GROSS DOMESTIC PRODUCT ........................................................................... 12,455.8 

Account 2. Private Enterprise Income Account 

Line Line 

1 Income payments on assets................................................................................... 2,552.4 19 Net operating surplus (1–9) ................................................................................... 2,893.6 

2 Interest and miscellaneous payments (3–20 and 4–21) .................................... 2,411.4 20 Income receipts on assets..................................................................................... 2,107.1 

3 Dividend payments to the rest of the world (5–14)............................................. 81.8 21 Interest (3–20) ................................................................................................... 1,769.1 

4 Reinvested earnings on foreign direct investment in the United States (5–15) 59.2 22 Dividend receipts from the rest of the world (5–6)............................................. 320.0 

5 Business current transfer payments (net) .............................................................. 74.2 23 Reinvested earnings on U.S. direct investment abroad (5–7)............................ 18.0 

6 To persons (net) (3–24) ...................................................................................... 45.7 

7 To government (net) (4–24)................................................................................ 30.1 

8 To the rest of the world (net) (5–19) ................................................................... –1.6 

9 Proprietors’ income with inventory valuation and capital consumption adjustments (3–17) ............................................................................................ 970.7 

10 Rental income of persons with capital consumption adjustment (3–18) ................ 72.8 

11 Corporate profits with inventory valuation and capital consumption adjustments .. 1,330.7 12 Taxes on corporate income ................................................................................ 399.3 

13 To government (4–17) .................................................................................... 384.4 

14 To the rest of the world (5–19) ....................................................................... 14.9 

15 Profits after tax with inventory valuation and capital consumption adjustments. 931.4 

16 Net dividends (3–21 and 4–22) ...................................................................... 576.9 

17 Undistributed corporate profits with inventory valuation and capital consumption adjustments (6–10)............................................................... 354.5 

18 USES OF PRIVATE ENTERPRISE INCOME ........................................................ 5,000.7 24 SOURCES OF PRIVATE ENTERPRISE INCOME................................................ 5,000.7 

Account 3. Personal Income and Outlay Account 

Line Line 

1 Personal current taxes (4–15) ................................................................................ 1,203.1 10 Compensation of employees, received .................................................................. 7,030.3 

2 Personal outlays ..................................................................................................... 9,070.9 11 Wage and salary disbursements ....................................................................... 5,664.8 

3 Personal consumption expenditures (1–15) ....................................................... 8,742.4 12 Domestic (1–3 less 5–11).............................................................................. 5,661.9 

4 Personal interest payments (3–20) .................................................................... 209.4 13 Rest of the world (5–3) .................................................................................. 2.9 

5 Personal current transfer payments ................................................................... 119.2 14 Supplements to wages and salaries (1–5) ........................................................ 1,365.5 

6 To government (4–25) .................................................................................... 72.0 15 Employer contributions for employee pension and insurance funds.............. 933.2 

7 To the rest of the world (net) (5–17) ............................................................... 47.1 16 Employer contributions for government social insurance............................... 432.3 

17 Proprietors’ income with inventory valuation and capital consumption 

8 Personal saving (6–9) ............................................................................................ –34.8 adjustments (2–9).............................................................................................. 970.7 18 Rental income of persons with capital consumption adjustment (2–10)................ 72.8 

19 Personal income receipts on assets ...................................................................... 1,519.4 

Personal interest income (2–2 and 3–4 and 4–7 and 5–5 less 2–21 less 4–21 

20 less 5–13) ...................................................................................................... 945.0 

21 Personal dividend income (2–16 less 4–22)...................................................... 574.4 

22 Personal current transfer receipts .......................................................................... 1,526.6 

23 Government social benefits (4–4)...................................................................... 1,480.9 

24 From business (net) (2–6).................................................................................. 45.7 25 Less: Contributions for government social insurance (4–19)................................. 880.6 

9 PERSONAL TAXES, OUTLAYS, AND SAVING.................................................... 10,239.2 26 PERSONAL INCOME ........................................................................................... 10,239.2 
A Guide to the NIPAs 7 

Account 4. Government Receipts and Expenditures Account 

Line Line 

1 Consumption expenditures (1–29) ......................................................................... 1,975.7 14 Current tax receipts ............................................................................................... 2,520.7 

2 Current transfer payments...................................................................................... 1,517.8 15 Personal current taxes (3–1) ............................................................................. 1,203.1 

3 Government social benefits ............................................................................... 1,484.0 16 Taxes on production and imports (1–6) ............................................................. 922.4 

4 To persons (3–23) .......................................................................................... 1,480.9 17 Taxes on corporate income (2–13) .................................................................... 384.4 

5 To the rest of the world (5–18) ....................................................................... 3.1 18 Taxes from the rest of the world (5–18) ............................................................. 10.8 

6 Other current transfer payments to the rest of the world (net) (5–18) ................ 33.9 19 Contributions for government social insurance (3–25) .......................................... 880.6 7 Interest payments (3–20) ....................................................................................... 348.0 20 Income receipts on assets..................................................................................... 98.3 

8 Subsidies (1–7) ...................................................................................................... 57.3 21 Interest and miscellaneous receipts (2–2 and 3–20)......................................... 95.8 

9 Less: Wage accruals less disbursements (1–4)..................................................... 0.0 22 Dividends (3–21) ............................................................................................... 2.4 

10 Net government saving (6–12)............................................................................... –312.5 23 Current transfer receipts ........................................................................................ 102.1 

11 Federal ............................................................................................................... –309.2 24 From business (net) (2–7) ................................................................................. 30.1 

12 State and local ................................................................................................... –3.3 25 From persons (3–6) ........................................................................................... 72.0 

26 Current surplus of government enterprises (1–10)................................................ –15.4 

13 GOVERNMENT CURRENT EXPENDITURES AND NET SAVING....................... 3,586.3 27 GOVERNMENT CURRENT RECEIPTS ............................................................... 3,586.3 

Account 5. Foreign Transactions Current Account 

Line Line 

1 Exports of goods and services (1–27) ................................................................... 

2 Income receipts from the rest of the world............................................................. 

3 Wage and salary receipts (3–13) ....................................................................... 

4 Income receipts on assets ................................................................................. 5 Interest (3–20)................................................................................................ 

6 Dividends (2–22)............................................................................................ 

7 Reinvested earnings on U.S. direct investment abroad (2–23) ...................... 

1,303.1 

513.3 

2.9 

510.4 

172.4 

320.0 

18.0 

9 Imports of goods and services (1–28) ................................................................... 

10 Income payments to the rest of the world.............................................................. 

11 Wage and salary payments (1–3)...................................................................... 

12 Income payments on assets .............................................................................. 13 Interest (3–20) ............................................................................................... 

14 Dividends (2–3) ............................................................................................. 

15 Reinvested earnings on foreign direct investment in the United States (2–4) 

16 Current taxes and transfer payments to the rest of the world (net)........................ 

17 From persons (net) (3–7)................................................................................... 

18 From government (net) (4–5 and 4–6 less 4–18) .............................................. 19 From business (net) (2–8 and 2–14) ................................................................. 

20 Balance on current account, national income and product accounts (7–1)........... 

2,019.9 

481.5 

9.2 

472.2 

331.2 

81.8 

59.2 

86.6 

47.1 

26.1 

13.3 

–771.4 

8 CURRENT RECEIPTS FROM THE REST OF THE WORLD................................ 1,816.5 

21 CURRENT PAYMENTS TO THE REST OF THE WORLD AND BALANCE ON 

CURRENT ACCOUNT ...................................................................................... 1,816.5 

Account 6. Domestic Capital Account 

Line Line 

1 Gross domestic investment.................................................................................... 2,454.5 8 Net saving.............................................................................................................. 7.2 

2 Private fixed investment (1–20).......................................................................... 2,036.2 9 Personal saving (3–8)........................................................................................ –34.8 

3 Government fixed investment (1–29) ................................................................. 397.1 10 Undistributed corporate profits with inventory valuation and capital 

4 Change in private inventories (1–25) ................................................................. 21.3 consumption adjustments (2–17) .................................................................. 354.5 

5 Capital account transactions (net) (7–2) ................................................................ 4.4 11 Wage accruals less disbursements (private) (1–4) ........................................... 0.0 

6 Net lending or net borrowing (–), national income and product accounts (7–3)..... –775.8 12 Net government saving (4–10) .......................................................................... –312.5 

13 Plus: Consumption of fixed capital (1–11) ............................................................. 1,604.8 

14 Private ............................................................................................................... 1,352.6 

15 Government....................................................................................................... 252.2 

16 General government...................................................................................... 207.2 

17 Government enterprises................................................................................ 45.1 

18 Equals: Gross saving............................................................................................. 1,612.0 

7 GROSS DOMESTIC INVESTMENT, CAPITAL ACCOUNT TRANSACTIONS, 19 Statistical discrepancy (1–13) ............................................................................... 71.0 

AND NET LENDING.......................................................................................... 1,683.1 20 GROSS SAVING AND STATISTICAL DISCREPANCY........................................ 1,683.1 

Account 7. Foreign Transactions Capital Account 

Line Line 

1 BALANCE ON CURRENT ACCOUNT, NATIONAL INCOME AND PRODUCT 

ACCOUNTS (5–20) ........................................................................................... –771.4 

2 Capital account transactions (net) (6–5)................................................................ 3 Net lending or net borrowing (–), national income and product accounts (6–6) .... 

4 CAPITAL ACCOUNT TRANSACTIONS (NET) AND NET LENDING, NATIONAL 

INCOME AND PRODUCT ACCOUNTS ........................................................... 

4.4 –775.8 

–771.4 

NOTE. Numbers in parentheses indicate accounts and items of counterentry in the accounts. For example, line 5 of account 1 is shown as “Supplements to wages and salaries (3–14)”; the counterentry is shown in account 3, line 14. 
8 A Guide to the NIPAs 

consumption expenditures and gross investment. GDP 

excludes intermediate purchases of goods and services 

by business. 

Personal consumption expenditures (PCE) (1–15) 

measures goods and services purchased by U.S. residents. PCE consists mainly of purchases of new goods 

and of services by individuals from private business. In 

addition, PCE includes purchases of new goods and of 

services by nonprofit institutions (including compensation of employees), net purchases of used goods by 

individuals and nonprofit institutions, and purchases 

abroad of goods and services by U.S. residents. PCE 

also includes purchases of certain goods and services 

provided by general government and government enterprises, such as tuition payments for higher education, charges for medical care, and charges for water 

and other sanitary services. Finally, PCE includes imputed purchases that keep PCE invariant to changes in 

the way that certain activities are carried out—for example, whether housing is rented or owned, whether 

financial services are explicitly charged, or whether 

employees are paid in cash or in kind. 

The following conventions are used to classify each 

PCE commodity: Durable goods (1–16) are tangible 

commodities that can be stored or inventoried and 

that have an average life of at least 3 years; nondurable 

goods (1–17) are all other tangible commodities that 

can be stored or inventoried; and services (1–18) are 

commodities that cannot be stored and that are consumed at the place and time of purchase. 

Gross private domestic investment (1–19) consists of 

fixed investment (1–20) and the change in private inventories (1–25). Fixed investment consists of both nonresidential (1–21) fixed investment and residential (1–24) 

fixed investment. It is measured without a deduction 

for CFC and includes replacements and additions to 

the capital stock. It covers all investment in fixed assets 

by private businesses and by nonprofit institutions in 

the U.S., regardless of whether the fixed asset is owned 

by U.S. residents. (Purchases of the same types of 

equipment, software, and structures by government 

agencies are included in government gross investment.) It excludes investment by U.S. residents in 

other countries. Nonresidential fixed investment consists of both structures (1–22) and equipment and software (1–23). 

Nonresidential structures consists of new construction (including own-account production), improvements to existing structures, expenditures on new 

nonresidential mobile structures, brokers’ commissions on sales of structures, and net purchases of used 

structures by private business and by nonprofit institutions from government agencies.

19 New nonresidential 

construction includes hotels and motels and mining 

exploration, shafts, and wells. Nonresidential structures also includes equipment considered to be an integral part of a structure, such as plumbing, heating, and 

electrical systems. 

Equipment and software consists of purchases by 

private business and by nonprofit institutions of new 

machinery, equipment, furniture, vehicles, and computer software used repeatedly, or continuously, in the 

processes of production for more than 1 year. Also included are dealers’ margins on sales of used equipment 

to business and to nonprofit institutions; net purchases 

of used equipment from government agencies, from 

persons, and from the rest of the world; and own-account production of computer software. For equipment that is purchased for both business and personal 

use (for example, motor vehicles), the personal-use 

portion is included in PCE. 

Residential fixed investment consists of all private 

residential structures and of residential equipment that 

is owned by landlords and rented to tenants. Residential structures consists of new construction of permanent-site single family and multifamily units, 

improvements (additions, alterations, and major 

structural replacements) to housing units, expenditures on manufactured homes, brokers’ commissions 

on the sale of residential property, and net purchases of 

used structures from government agencies. Residential 

structures includes some types of equipment that are 

built into the structure, such as heating and air conditioning equipment. 

Change in private inventories (1–25) is the change in 

the physical volume of inventories owned by private 

business, valued in average prices of the period. It differs from the change in the book value of inventories 

reported by most business; the difference is the inventory valuation adjustment (described above). 

Net exports of goods and services (1–26) is exports 

(1–27) less imports (1–28) of goods and services. Income receipts and payments and current taxes and 

transfer payments to the rest of the world (net) are excluded. 

Government consumption expenditures and gross investment (1–29), the measure of government sector final demand, consists of two major components: 

Current consumption expenditures by general government and gross investment by both general government and government enterprises. Consumption 

19. Own-account production refers to an asset produced by a business or 

government for its own use. 
A Guide to the NIPAs 9 

expenditures consists of the goods and services that are 

produced by general government, less sales to other 

sectors and own-account investment. As producers of 

nonmarket services, governments generally provide 

services to the general public without charge, for example, law enforcement services, national defense services, and elementary and secondary education. The 

value of government production, that is, government’s 

gross output, is measured by the cost of 

inputs: Compensation of employees, CFC (a partial 

measure of the services of government capital), and intermediate goods and services purchased.20 Therefore, 

government consumption expenditures is measured as 

the sum of these costs of production less sales by government of goods and services to other sectors (which 

are classified as PCE, if purchased by individuals, or as 

intermediate inputs, if purchased by businesses) and 

the value of software and construction that are produced by government for its own use (that is, own-account investment, which is classified as part of gross 

government investment). Gross investment consists of 

purchases of new structures and of equipment and 

software by both general government and government 

enterprises, net purchases of used structures and 

equipment, and own-account production of structures 

and of software. Government consumption expenditures and gross investment does not include current 

transactions of government enterprises, current transfer payments, interest payments, subsidies, or transactions in financial assets and in nonproduced assets 

such as land. 

Compensation of employees, paid (1–1) shows the income accruing to employees as remuneration for their 

work for domestic production; it includes compensation paid to the rest of the world and excludes compensation received from the rest of the world. It is the 

sum of wage and salary accruals and of supplements to 

wages and salaries. 

Wage and salary accruals (1–2) consists of the monetary remuneration of employees, including the compensation of corporate officers; commissions, tips, and 

bonuses; voluntary employee contributions to certain 

deferred compensation plans, such as 401(k) plans; 

employee gains from exercising nonqualified stock options; receipts-in-kind; and miscellaneous compensa20. Intermediate goods also include net purchases of used goods and 

changes in inventories. Change in inventories is not included in government investment because source data to prepare estimates for most inventory categories are not available. At present, the estimates for a few 

inventory categories for which data are available, such as inventories held 

by the Commodity Credit Corporation and the Strategic Petroleum 

Reserve, are included in government consumption expenditures. 

tion of employees.

21 Wage and salary accruals consists 

of disbursements (1–3) and wage accruals less disbursements (1–4). Disbursements is wages and salaries as 

just defined except that retroactive wage payments are 

recorded when paid rather than when earned. Accruals 

less disbursements is the difference between wages 

earned, or accrued, and wages paid, or disbursed. In 

the NIPAs, wages accruals is the measure used for gross 

domestic income, and wage disbursements is the measure used for personal income. 

Supplements to wages and salaries (1–5) consists of 

employer contributions for employee pension and insurance funds (3–15) and of employer contributions 

for government social insurance (3–16). 

Taxes on production and imports (1–6) consists of 

Federal excise taxes and custom duties and of state and 

local sales taxes, property taxes (including residential 

real estate taxes), motor vehicle licenses, severance 

taxes, special assessments, and other taxes. 

Subsidies (1–7) is the monetary grants paid by government agencies to private business and to government enterprises at another level of government.22 

Net operating surplus (1–8) is a profits-like measure 

that shows business income after subtracting the costs 

of compensation of employees, taxes on production 

and imports (less subsidies), and CFC from gross 

product (or value added), but before subtracting financing costs (such as net interest) and business current transfer payments. Net operating surplus consists 

of net operating surplus of private enterprises (1–9) and 

current surplus of government enterprises (1–10). (Net 

operating surplus of private enterprises is discussed 

under account 2 below.) The current surplus of government enterprises is their current operating revenue 

and subsidies received from other levels of government 

less their current expenses. In the calculation of their 

current surplus, no deduction is made for net interest 

paid. 

Consumption of fixed capital (CFC) (1–11) is the 

charge for the using up of private and government 

fixed capital located in the United States. It is defined 

as the decline in the value of the stock of fixed assets 

due to wear and tear, obsolescence, accidental damage, 

and aging. For most types of assets, estimates of CFC 

are based on geometric depreciation patterns; empirical studies on the prices of used equipment and 

21. Miscellaneous compensation of employees includes judicial fees paid 

to jurors and to witnesses, compensation of prison inmates, and marriage 

fees paid to justices of the peace. 

22. For years prior to 1959, subsidies is presented net of the current surplus of government enterprises (1–10), because detailed data to separate the 

series for this period are not available. 
10 A Guide to the NIPAs 

structures in resale markets have concluded that a geometric pattern of depreciation is appropriate for most 

types of assets.

23 For general government and for nonprofit institutions that primarily serve individuals, 

CFC is recorded in government consumption expenditures and in PCE, respectively, as a partial measure of 

the value of the current services of the fixed assets 

owned and used by these entities. Private capital consumption allowances consists of tax return-based depreciation charges for corporations and nonfarm 

proprietorships and of historical cost depreciation 

(calculated by BEA using a geometric pattern of price 

declines) for farm proprietorships, rental income of 

persons, and nonprofit institutions. Private capital 

consumption adjustment is the difference between private capital consumption allowances and private CFC. 

Statistical discrepancy (1–13) is GDP less GDI or 

GNP less GNI. It is recorded in the NIPAs as an “income” component that reconciles the income side with 

the product side of the accounts. As noted above, it 

arises because the two sides are estimated using independent and imperfect data.

24 

Account 2. Private enterprise income account 

This account presents sources of private enterprise income (2–24) on the right side of the account and uses of 

private enterprise income (2–18) on the left side.

25 Private enterprises consist of private businesses and the 

accounts of homeowners for owner-occupied housing 

(which is treated as if it were a business). In addition, 

the net interest paid by nonprofit institutions serving 

households is included as a use of income in this account.

26 

Net operating surplus, private enterprises (2–19), can 

be derived by a series of deductions from business-sector gross value added, as described above. Alterna23. Several asset types use depreciation patterns that are not geometric. 

For example, computers and peripheral equipment and private autos use 

actual empirical depreciation profiles, and missiles and nuclear fuel rods 

use a straight-line pattern. For more information on depreciation patterns, 

see U.S. Department of Commerce, Bureau of Economic Analysis, Fixed 

Assets and Consumer Durable Goods in the United States, 1925–97, 

(Washington, DC: U.S. Government Printing Office, September 2003) and 

<www.bea.gov/bea/dn/Fixed_assets_1925_97.pdf>. 

24. For additional details on the statistical discrepancy, see Robert P. 

Parker and Eugene P. Seskin, “Annual Revision of the National Income and 

Product Accounts,” SURVEY 77 (August 1997): 19. 

25. Government enterprises are not included in account 2, because complete estimates on sources and uses of government enterprise income, notably the income payments and income receipts on assets, are not currently 

available. The sources and uses of government enterprise income are 

included, but not separately identified, in the government receipts and 

expenditures account. 

26. Summary account 2 presents the components of private enterprise 

income on a national basis, that is, for labor and property supplied by U.S. 

residents. Consequently, for the net operating surplus to be shown in 

account 2 on a domestic basis consistent with summary account 1, several 

income flows to and from the rest of the world must also be shown in 

account 2. 

tively, it can be calculated as the sum of the domestic 

components of proprietors’ income with inventory 

valuation adjustment (IVA) and capital consumption 

adjustment (CCAdj), rental income of persons with 

CCAdj, corporate profits with IVA and CCAdj, net interest and miscellaneous payments, and business current transfer payments (net).27 

Income receipts on assets (2–20) consists of interest, 

dividend receipts from the rest of the world, and reinvested earnings on U.S. direct investment abroad. Interest (2–21) is the interest received by domestic private 

enterprises and includes both monetary and imputed 

interest receipts. Interest received by private noninsured pension plans is recorded as being directly received by persons in personal income. Dividend 

receipts from the rest of the world (2–22) consists of receipts by U.S. residents of dividends from foreign corporations plus earnings distributed by unincorporated 

foreign affiliates to their U.S. parents. Reinvested earnings on U.S. direct investment abroad (2–23) consists of 

receipts by U.S. residents of their share of the reinvested earnings of their incorporated foreign affiliates 

and reinvested earnings of their unincorporated foreign affiliates. 

The uses of private enterprise income (2–18) consists 

of income payments on assets, business current transfer payments (net), proprietors’ income with IVA and 

CCAdj, rental income of persons with CCAdj, and corporate profits with IVA and CCAdj. 

Income payments on assets (2–1) consists of interest 

and miscellaneous payments, dividend payments to 

the rest of the world, and reinvested earnings on foreign direct investment in the United States. Interest and 

miscellaneous payments (2–2) consists of interest paid 

by domestic private enterprises and of rents and royalties paid by private enterprises to government.

28 Interest payments includes both monetary and imputed 

interest payments. Dividend payments to the rest of the 

world (2–3) consists of payments by U.S. corporations 

of dividends to foreign residents, plus earnings distributed by unincorporated U.S. affiliates to their foreign 

parents. Reinvested earnings on foreign direct investment 

in the United States (2–4) consists of payments to foreign residents of their share of the reinvested earnings 

of their incorporated U.S. affiliates and reinvested 

earnings of their unincorporated U.S. affiliates. These 

earnings are treated as income payments on assets because the decision to retain some of the earnings 

27. Net interest and miscellaneous payments, a component of national 

income, consists of interest and miscellaneous payments (2–2) less interest 

receipts (2–21). For a definition of net interest, see the section “other definitions” (page 14). 

28. Interest payments on mortgage and home improvement loans and on 

home equity loans are included in interest paid by private enterprises 

because home ownership is treated as a business in the NIPAs. 
A Guide to the NIPAs 11 

within a U.S. enterprise represents a deliberate investment decision on the part of the foreign investor.

29 

Business current transfer payments (net) (2–5) consists of payments to persons (net) (2–6), to government 

(net) (2–7), and to the rest of the world (net) (2–8) by 

private business for which no current services are performed. Payments for net insurance settlements—actual insured losses (or claims payable) less a normal 

level of losses—are also treated as business current 

transfer payments. Business current transfer payments 

to government (net), consists of Federal deposit insurance premiums and other current transfer payments 

(largely fines and regulatory and inspection fees), less 

net insurance settlements from the National Flood Insurance Program, state and local fines and other current transfer payments (largely donations and tobacco 

settlements), and net insurance settlements paid to 

state and local governments as policyholders. Business 

current transfer payments to the rest of the world (net) 

consists of net insurance settlements paid to the rest of 

the world as policyholders. 

Proprietors’ income with inventory valuation and 

capital consumption adjustments (2–9) is the currentproduction income (including income in kind) of sole 

proprietorships and partnerships and of tax-exempt 

cooperatives. The imputed net rental income of owner 

occupants of farm and nonfarm dwellings is included 

in rental income of persons. Proprietors’ income excludes dividends and monetary interest received by 

nonfinancial business and rental income received by 

persons not primarily engaged in the real estate business; these incomes are included in dividends, net interest, and rental income of persons. 

Rental income of persons with capital consumption 

adjustment (2–10) is the net current production income of persons (except those primarily engaged in 

the real estate business) from the rental of real property, the imputed net rental income of owner occupants of farm and nonfarm dwellings, and the royalties 

received by persons from patents, copyrights, and 

rights to natural resources. 

Corporate profits with inventory valuation and capital consumption adjustment (2–11) is the net current 

production income of organizations treated as corporations in the NIPAs. These organizations consist of all 

entities required to file Federal corporate tax returns, 

including mutual financial institutions and cooperatives subject to Federal income tax, private noninsured 

pension funds, nonprofit institutions that primarily 

serve business, Federal Reserve banks, and federally 

29. This treatment is consistent with the guidelines of SNA 1993, paragraph 7.121. 

sponsored credit agencies.

30 With several differences, 

this income is measured as receipts less expenses as defined in Federal tax law. Among these differences are 

the following: Receipts exclude capital gains and dividends received, expenses exclude depletion and capital 

losses and losses resulting from bad debts, inventory 

withdrawals are valued at replacement cost, and depreciation is on a consistent accounting basis and is valued at replacement cost using depreciation profiles 

based on empirical evidence on used asset prices that 

generally suggest a geometric pattern of price declines. 

Corporate profits is included on a national income basis, which is defined as the income of U.S. residents; 

therefore the profits component includes income 

earned abroad by U.S. corporations and excludes income earned in the United States by the rest of the 

world. 

Taxes on corporate income (2–12) consists of taxes 

on corporate income paid to government and taxes on 

corporate income paid to the rest of the world. Taxes 

on corporate income paid to government (2–13) is the 

sum of Federal, state, and local government income 

taxes on all income subject to taxes; this income includes capital gains and other income excluded from 

profits before tax. The taxes are measured on an accrual basis, net of applicable tax credits. Taxes on corporate income paid to the rest of the world (2–14) 

consists of nonresident taxes—that is, taxes paid by 

domestic corporations to foreign governments. 

Profits after tax with inventory valuation adjustment 

and capital consumption adjustment (2–15) is corporate profits with IVA and CCAdj less taxes on corporate income. It consists of net dividends and 

undistributed corporate profits with IVA and CCAdj. 

Net dividends (2–16) is payments in cash or other assets, excluding the corporations’ own stock, that are 

made by corporations located in the United States and 

abroad to stockholders who are U.S. residents. The 

payments are measured net of dividends received by 

U.S. corporations. Dividends paid to state and local 

governments are included. Undistributed profits with 

inventory valuation and capital consumption adjustments (2–17) is corporate profits after tax with IVA and 

CCAdj less net dividends. 

Account 3. Personal income and outlay account 

Personal income is the sum of compensation of employees, received; proprietors’ income with IVA and 

CCAdj; rental income of persons with CCAdj; personal 

30. The corporate profits that are associated with private noninsured pension plans are recorded as zero, and the property income is recorded as 

being received directly by persons in the corresponding components of personal income. 
12 A Guide to the NIPAs 

income receipts on assets; and personal current transfer receipts; less contributions for government social 

insurance. Personal income receipts on assets (interest, 

dividends, and rent) of private noninsured pension 

plans and of government employee retirement plans 

are recorded as being received directly by persons in 

the corresponding components of personal income. 

Compensation of employees, received (3–10) consists 

of wage and salary disbursements and supplements to 

wages and salaries. 

Wage and salary disbursements (3–11) consists of domestic disbursements (see 1–3) and rest-of-the-world 

disbursements (3–13). 

Supplements to wages and salaries (see 1–5) consists 

of employer contributions for employee pension and 

insurance funds and of employer contributions for 

government social insurance. Employer contributions 

for employee pension and insurance funds (3–15) consists of employer payments (including payments in 

kind) to private pension and profit-sharing plans, publicly administered government employee retirement 

plans, private group health and life insurance plans, 

privately administered workers’ compensation plans, 

and supplemental unemployment benefit plans. Employer contributions for government social insurance 

(3–16) consists of employer payments under the following Federal Government and state and local government programs: Old age, survivors, and disability 

insurance (social security); hospital insurance; unemployment insurance; railroad retirement; pension benefit guaranty; veterans life insurance; publicly 

administered workers’ compensation; military medical 

insurance; and temporary disability insurance.31 

Proprietors’ income with inventory valuation and 

capital consumption adjustments (see 2–9). 

Rental income of persons with capital consumption 

adjustment (see 2–10). 

Personal income receipts on assets (3–19) consists of 

personal interest income and personal dividend income. Personal interest income (3–20) is the interest income (monetary and imputed) of persons, including 

individuals and nonprofit institutions serving households, from all sources. It equals private enterprise interest payments (see 2–2) plus personal interest 

payments (3–4), plus government interest payments 

(4–7), plus interest receipts from the rest of the world 

(5–5), less private enterprise interest receipts (see 2–21), 

less government interest receipts (see 4–21), less interest 

payments to the rest of the world (5–13). Personal interest payments (3–4) consists of all interest paid by individuals except mortgage interest, which is reflected in 

31. Publicly administered government employee retirement plans are 

classified as employee pension and insurance funds, not as government 

social insurance programs. 

rental income of persons. 

Personal dividend income (3–21) is the dividend income of persons from all sources. It equals net dividends paid by corporations (see 2–16) less government 

receipts of dividends (4–22), which consists of dividends received by state and local governments. 

Personal current transfer receipts (3–22) consists of 

income payments to persons for which no current services are performed and of net insurance settlements. 

It is shown as the sum of government social benefits 

and current transfer receipts from business (net) (see 

2–6). Government social benefits (3–23) includes benefits from government social insurance funds and social 

assistance benefits from certain other programs. 

Contributions for government social insurance (3–25) 

includes employer contributions for government social 

insurance (see 3–16) and payments by employees, self 

employed, and other individuals who participate in the 

following government programs: Old age, survivors, 

and disability insurance (social security); hospital insurance; supplementary medical insurance, including 

the Medicare Prescription Drug benefit; unemployment insurance; railroad retirement; veterans life insurance; and temporary disability insurance. 

Personal current taxes (3–1) is tax payments (net of 

refunds) by U.S. residents that are not chargeable to 

business expense. Personal taxes includes taxes on income, including realized net capital gains, and on personal property. Personal contributions for government 

social insurance is not included. Taxes paid by U.S. residents to foreign governments and taxes paid by foreigners to the U.S. Government are both included in 

current taxes and transfer payments to the rest of the 

world from government (net). 

Personal outlays (3–2) is the sum of personal consumption expenditures (see 1–15), personal interest 

payments (see 3–4), and personal current transfer payments. Personal current transfer payments (3–5) consists of transfer payments to government (3–6) and to 

the rest of the world (3–7). Payments to government includes donations, fees, and fines paid to Federal, state, 

and local governments. Payments to the rest of the 

world is personal remittances in cash and in kind to 

the rest of the world less such remittances from the rest 

of the world. 

Personal saving (3–8) is personal income less the 

sum of personal outlays and personal current taxes. It 

is the current saving of individuals (including proprietors and partnerships), nonprofit institutions that 

primarily serve households, life insurance carriers, private noninsured welfare funds, private noninsured 

pension plans, publicly administered government employee retirement plans, and private trust funds. Personal saving may also be viewed as the net acquisition 
A Guide to the NIPAs 13 

of financial assets (such as cash and deposits, securities, and the change in life insurance and pension fund 

reserves), plus the net investment in produced assets 

(such as residential housing, less depreciation), less the 

net increase in financial liabilities (such as mortgage 

debt, consumer credit, and security credit), less net 

capital transfers received. 

Account 4. Government receipts and expenditures 

account 

Government current receipts (4–27) is the sum of current tax receipts, contributions for government social 

insurance, income receipts on assets, current transfer 

receipts, and current surplus of government enterprises. Current tax receipts (4–14) consists of personal 

current taxes (see 3–1), taxes on production and imports (see 1–6), taxes on corporate income (see 2–13), 

and taxes from the rest of the world (4–18), which are 

mostly income taxes received by the Federal Government from foreigners.

32 

Contributions for government social insurance (see 

3–25). 

Income receipts on assets (4–20) consists of interest 

and miscellaneous receipts and dividends. Interest and 

miscellaneous receipts (4–21) includes monetary and 

imputed interest received by government on loans and 

investments from persons, from business, and from 

the rest of the world; miscellaneous receipts include 

Federal Outer Continental Shelf royalties and state and 

local rents and royalties. (Interest received by government employee retirement plans is recorded as being 

received directly by persons in personal income.) 

Dividends received by government (see 3–21). 

Current transfer receipts (4–23) consists of receipts 

from business (net) (4–24) (see 2–7) and receipts from 

persons (4–25) (see 3–6). 

Current surplus of government enterprises (see 1–10).


Consumption expenditures (see 1–29).


Current transfer payments (4–2) is government so­


cial benefits and other current transfer payments to the 

rest of the world. Government social benefits (4–3) consists of government social benefits payments to persons 

(4–4) (see 3–23) and government social benefits payments to the rest of the world (4–5), which are U.S. 

Government transfers, mainly social security benefits, 

to former residents of the United States. Other current 

transfer payments to the rest of the world (net) (4–6) 

consists of U.S. Government military and nonmilitary 

grants in cash and nonmilitary grants-in-kind to foreign governments. 

Interest payments (4–7) is interest paid by govern32. Taxes from the rest of world also includes some taxes on production 

and some current transfers, but the source data do not permit the reliable 

separation of the taxes on income. 

ment to persons, to business, and to the rest of the 

world (that is, to foreign businesses, governments, and 

persons). Interest paid consists of monetary interest 

paid on public debt and other financial obligations. 

Subsidies (see 1–7).


Wage accruals less disbursements (see 1–4).


Net government saving (4–10) is the sum of govern­


ment current receipts (lines 14, 19, 20, 23, and 26 of 

account 4) less the sum of government current expenditures (lines 1, 2, 7, 8, less line 9 of account 4). It may 

also be viewed as the net acquisition of financial assets 

by government and government enterprises, plus the 

net investment in fixed assets (such as roads and highways, less depreciation), plus the net government purchases of nonproduced assets, less the net increase in 

financial liabilities, less net capital transfers. 

Account 5. Foreign transactions current account 

Imports of goods and services (see 1–28). 

Income payments to the rest of the world (5–10) consists of wage and salary payments (see 1–3) and income payments on assets (5–12), which is the sum of 

interest (see 3–20), dividends (see 2–3), and reinvested 

earnings on foreign direct investment in the United 

States (see 2–4). 

Current taxes and transfer payments to the rest of the 

world (net) is the sum of transfer payments from persons (net) (see 3–7), from government (net) (see 4–5 

and 4–6 less 4–18), and from business (net) (see 2–8 

and 2–14). 

Balance on current account, national income and 

product accounts (5–20) is U.S. exports of goods and 

services and income receipts from the rest of the world 

less U.S. imports of goods and services, income payments to the rest of the world, and current taxes and 

transfer payments to the rest of the world (net). It may 

also be viewed as the acquisition of foreign assets by 

U.S. residents less the acquisition of U.S. assets by foreign residents. It includes the statistical discrepancy in 

the balance of payments accounts. 

Exports of goods and services (see 1–27). 

Income receipts from the rest of the world (5–2) consists of wage and salary receipts (see 3–13) and income 

receipts on assets (5–4), which is the sum of interest (see 

3–20), dividends (see 2–22), and reinvested earnings 

on U.S. direct investment abroad (see 2–23). 

Account 6. Domestic capital account 

This account presents gross saving and the statistical 

discrepancy on the right side and “gross domestic investment, capital transfers, and net lending” on the 

left. 

Gross saving (6–18) is net saving plus the consumption of fixed capital (see 1–11). Net saving (6–8) is 
14 A Guide to the NIPAs 

calculated as the sum of personal saving (see 3–8), undistributed corporate profits with inventory valuation 

and capital consumption adjustments (see 2–17), private wage accruals less disbursements (see 1–4), and 

net government saving (see 4–10). It supplements the 

NIPA gross saving measure and provides a useful measure of the saving that is available for adding to the Nation’s net stock of fixed assets. 

Statistical discrepancy (see 1–13). 

Gross domestic investment (6–1) measures the total 

investment in the United States in fixed assets (that is, 

the structures, equipment, and software that are used 

in production) and in inventories (change in private 

inventories). It is the sum of private fixed investment 

(see 1–20), government fixed investment (see 1–29), 

and change in private inventories (1–25). 

Capital accounts transactions (net) (6–5) consist of 

capital transfers (mainly debt forgiveness and migrants’ transfers) and the transfers of nonproduced 

nonfinancial assets to (or from) the rest of the world. 

Net lending or net borrowing (–), national income 

and product accounts (6–6) is equal to the balance on 

current account less capital accounts transactions 

(net). It may be viewed as an indirect measure of the 

net acquisition of foreign assets by U.S. residents less 

the net acquisition of U.S. assets by foreign residents. 

Account 7. Foreign transactions capital account 

The right side of this account shows capital accounts 

transactions (net) (see 6–5) and net lending or net 

borrowing (–), national income and product accounts 

(see 6–6). The left side shows the balance on current 

account, national income and product accounts (see 

5–20). 

Other definitions 

Final sales of domestic product is GDP less change in 

private inventories; equivalently, it is the sum of PCE, 

private fixed investment, government consumption expenditures and gross investment, and net exports of 

goods and services. 

Gross domestic purchases is the market value of 

goods and services purchased by U.S. residents, regardless of where those goods and services were produced. 

It is GDP less net exports of goods and services; equivalently, it is the sum of PCE, gross private domestic investment, and government consumption expenditures 

and gross investment. 

Final sales to domestic purchasers is gross domestic 

purchases less change in private inventories. 

Net interest is the interest paid by private enterprises 

less the interest received by private enterprises, plus the 

interest paid by the rest of the world less the interest received by the rest of the world. Interest payments on 

mortgage and home improvement loans and on home 

equity loans are included in interest paid by private enterprises because home ownership is treated as a private enterprise. Interest received by private noninsured 

pension plans is recorded as being directly received by 

persons in personal income. Interest paid by nonprofits serving households is included in interest paid by 

private enterprises, while interest received by nonprofits serving households is included in the interest received by persons. In addition to monetary interest, 

net interest includes imputed interest. Imputed interest 

is made up of 1) imputed income paid to policy holders by property and casualty insurance companies and 

life insurance companies, measured as the investment 

income earned on policyholders’ reserves; 2) implicit 

services provided by financial intermediaries other 

than commercial banks, measured as the property income received by them less the interest paid by them to 

business, households and institutions, governments, 

and the rest of the world; and 3) implicit services provided by commercial banks in the form of both depositor and borrower services.

33 

Fixed assets are produced assets that are themselves 

used repeatedly, or continuously, in processes of production for more than 1 year. Fixed assets consist of 

equipment, software, and structures (including, by 

convention, owner-occupied housing); consumer durable goods are not included. Fixed investment is the 

net acquisition of fixed assets. 

Produced assets are nonfinancial assets that have 

come into existence as outputs from a production process; they include fixed assets and private inventories. 

Nonproduced assets are nonfinancial assets that are 

used for production but have not themselves been produced; they include naturally occurring assets, such as 

land and mineral deposits. 

Population is the total population of the United 

States, including the Armed Forces overseas and the institutionalized population. The monthly estimate is the 

average of Census Bureau survey estimates for the first 

of the month and the first of the following month; the 

33. Commercial banks provide implicit services to both depositors and 

borrowers. Depositor services are measured as the difference between the 

interest received by depositors and the interest they would have received 

had they been paid a risk-free rate of interest (reference rate). Depositors 

receive a lower interest rate for their deposits in exchange for the unpriced 

services provided by banks. Borrower services are measured as the difference between the interest paid by borrowers and the interest they would 

have paid had they borrowed at the reference rate. Borrowers pay a higher 

interest rate for loans in exchange for the unpriced services provided to 

them by banks. The unpriced depositor services are recorded as imputed 

interest paid by financial intermediaries and received by depositors. The 

unpriced borrower services are recorded as negative imputed interest 

received by the financial intermediaries and negative interest paid by borrowers. Thus, imputed interest paid by private enterprises includes the 

interest paid by financial intermediaries for depositor services and the negative interest paid by businesses and owner-occupied housing in their role 

as borrowers. 
A Guide to the NIPAs 15 

quarterly and annual estimates are the averages of the 

relevant monthly estimates. 

Personal saving as a percentage of disposable personal 

income (DPI), frequently referred to as “the personal 

saving rate,” is calculated on a monthly, quarterly, and 

annual basis as the ratio of personal saving to DPI. 

Gross saving as a percentage of gross national income 

(GNI), sometimes referred to as “the national saving 

rate,” is calculated on a quarterly and annual basis as 

the ratio of gross saving—the sum of net saving and 

consumption of fixed capital—to GNI. 

U.S. residents are individuals, governments, business enterprises, trusts, associations, nonprofit organizations, and similar institutions that have the center of 

their economic interest in the United States and that 

reside or expect to reside in the United States for 1 year 

or more. (For example, business enterprises residing in 

the United States include U.S. affiliates of foreign companies.) In addition, U.S. residents include all U.S. citizens who reside outside the United States for less than 

1 year and U.S. citizens residing abroad for 1 year or 

more who meet one of the following criteria: Owners 

or employees of U.S. business enterprises who reside 

abroad to further the enterprises’ business and who intend to return within a reasonable period; U.S. Government civilian and military employees and members 

of their immediate families; and students who attend 

foreign educational institutions. 

Foreign residents are those residing and pursuing 

economic interests outside the United States. They also 

include international institutions located in the United 

States, foreign nationals employed by their home governments in the United States, and foreign affiliates of 

U.S. companies. 

The rest of the world consists of foreign residents 

who are transactors with U.S. residents. 

Real Output and Related Measures 

In addition to estimating the current-dollar market 

value of GDP, BEA estimates “real,” or inflation-adjusted, GDP and its components. 

Quantity and price indexes 

BEA’s chain-type quantity and price indexes, in combination with the current-dollar estimates, provide users 

with the basic data series from which all other analytical tables and presentations of the NIPAs are derived. 

Changes in current-dollar GDP measure the 

changes in the market value of the goods, services, and 

structures produced in the economy in a particular period. These changes can be decomposed into quantity 

and price components that, in turn, can be expressed 

as index numbers with the reference year—at present, 

the year 2000—equal to 100. These are referred to as 

“chain-type” indexes. Percent changes in real GDP and 

its components are equal to the percent changes of the 

quantity indexes; percent changes in prices are equal to 

the percent changes of the price indexes.

34 

The annual changes in quantities and prices in the 

NIPAs are calculated using a Fisher formula that incorporates weights from 2 adjacent years. For example, 

the 2003–04 change in real GDP uses prices for 2003 

and 2004 as weights, and the 2003–04 change in prices 

uses quantities for 2003 and 2004 as weights.

35 These 

annual changes are “chained” (multiplied) together to 

form time series of quantity and price indexes. Quarterly changes in quantities and prices are calculated using a Fisher formula that incorporates weights from 

two adjacent quarters; quarterly indexes are adjusted 

for consistency to the annual indexes before percent 

changes are calculated. (For more details, see appendix 

1, “Formulas for Calculating Chain-Type Quantity and 

Price Indexes.”) 

The Fisher formula produces percent changes in 

quantities and prices that are not affected by the choice 

of reference year. In addition, the use of the Fisher formula has several other advantages over fixed-weighted 

measures: (1) It eliminates substitution bias in real 

GDP growth that tends to cause an understatement of 

growth for periods before the reference year and an 

overstatement of growth for periods after the reference 

year; (2) it eliminates the distortion of growth in components and in industries that result from the fixedweighted indexes; and (3) it eliminates the anomalies 

that arise from using recent-period price weights to 

measure periods in the past when a far different set of 

prices prevailed.36 

34. Indexes are not presented for change in private inventories, for net 

exports, and for most of the “net” series in tables 2.4.3, 2.4.4, 2.5.3, 2.5.4, 

3.9.3, 3.9.4, 5.2.3, 5.4.3, 5.4.4, 5.8.3, and 5.8.4 because indexes for these 

series are not meaningful. 

35. Because the source data available for most components of GDP are 

measured in dollars rather than in units, the quantities of most of the 

detailed components used to calculate percent changes are obtained by 

deflation. For deflation, quantities are approximated by real values 

(expressed, at present, with 2000 as the reference year) that are calculated 

by dividing the current-dollar value of the component by its price index, 

where the price index uses 2000 as the reference year. Two other methods, 

quantity extrapolation and direct valuation, are also used to calculate real 

values for a number of the most detailed GDP components. For quantity 

extrapolation, the real values are obtained by extrapolating the current-dollar estimates for the reference year in both directions by quantity indicators; 

for example, the real values for “mining exploration, shafts, and wells structures” are extrapolated using oilwell footage drilled. For direct valuation, 

the real values are obtained by multiplying reference-year prices by quantity 

data for each period; for example, the real values of “natural gas inventories” are calculated using quantities and prices of natural gas stocks. For 

more information, see “Updated Summary Methodologies,” in the November 2005 SURVEY. 

36. For further discussion, see J. Steven Landefeld, Brent. R Moulton, and 

Cindy M. Vojtech, “Chained-Dollar Indexes: Issues, Tips on Their Use, and 

Upcoming Changes,” SURVEY 83 (November 2003): 6–16; J. Steven Landefeld 

and Robert P. Parker, “BEA’s Chain Indexes, Time Series, and Measures of 

Long Term Economic Growth,” SURVEY 77 (May 1997): 58–68; and Jack E. 

Triplett, “Economic Theory and BEA’s Alternative Quantity and Price 

Indexes,” SURVEY 72 (April 1992): 49–52. 
16 A Guide to the NIPAs 

Chained-dollar measures 

BEA also prepares measures of real GDP and its components in a dollar-denominated form, designated 

“chained (2000) dollar estimates.” For GDP and most 

other series, these estimates are computed by multiplying the current-dollar value in 2000 by a corresponding quantity index number and then dividing by 100. 

For example, if a current-dollar GDP component 

equaled $100 in 2000 and if real output for this component increased 15 percent by 2004, then the chained 

(2000) dollar value of this component in 2004 would 

be $115 (= $100 x 115/100). (For a list of the chaineddollar series that are not calculated in this way, see appendix 2, “Chained Measures in the NIPAs Not Calculated as Fisher Indexes.”) 

The chained (2000) dollar, or “real,” estimates provide measures to calculate the percent changes for 

GDP and its components that are consistent with those 

calculated from the chain-type quantity indexes; any 

differences will be small and due to rounding. For 

most components of GDP, the chained-dollar estimates also provide rough approximations of their relative importance and of their contributions to real GDP 

growth for years close to 2000.37 However, for some 

components—such as computers and other high-tech 

equipment with rapid growth in real sales and falling 

prices—chained-dollar levels (as distinct from chainweighted indexes and percent changes) overstate the 

relative importance of such components to GDP 

growth.

38 

In addition, chained-dollar values for the detailed 

GDP components will not necessarily sum to the 

chained-dollar estimate of GDP (or any intermediate 

aggregate) because the relative prices used as weights 

for any period other than the reference year differ from 

those used for the reference year. BEA provides a measure of the extent of such differences by showing a “residual” line on chained-dollar tables that indicates the 

difference between GDP (or other major aggregate) 

and the sum of the most detailed components in the 

table. 

For periods close to the reference year, when there 

37. The availability of chained-dollar estimates before 1990 has been limited to key aggregates. However, detailed quantity indexes, which are accurate for all periods, are presented in tables with table numbers having 

format #.#.3, most of which begin with 1929. These quantity indexes can be 

used in place of chained-dollar estimates in analyses that require data on 

real GDP or its components over time, as well as to calculate percent 

changes. For GDP and its major components, annual growth rates beginning with 1930 and quarterly growth rates beginning with the second quarter of 1947 are presented in table 1.1.1. 

38. The problems associated with chained-dollar levels for components 

with rapidly changing prices is the result of using a fixed reference year in 

conjunction with a chain index whose weights change every period to 

reflect changes in relative prices. It is mathematically impossible to “force” 

chained-dollar levels to reflect both the current-period weights and periodto-period percent changes that are consistent with a chain index. 

usually has not been much change in the relative prices 

that are used as the weights for calculating the chaintype index, the residuals tend to be small, and the 

chained (2000) dollar estimates can be used to approximate the contributions to growth and to aggregate the 

detailed estimates. 

Contributions 

For periods further from the reference year, the residual tends to become larger, and the chained-dollar estimates are less useful for analyses of contributions to 

growth.

39 For this reason, BEA also shows contributions of major components to the percent change in 

real GDP (and to the percent change in other major 

aggregates) that use exact formulas for attributing 

growth. (For details, see appendix 3, “Calculation of 

Component Contributions to the Change in GDP and 

Other Major Aggregates.”) 

The contributions tables have table numbers with 

the format #.#.2, and the presentation is limited to the 

contributions to the percent change in GDP (or in another major aggregate) from the preceding year or 

quarter. For some analytical purposes, it may be desirable to calculate contributions to growth for more than 

a single quarter or year or to calculate contributions to 

growth for aggregates not shown in these tables. An article in the SURVEY provides information on how to 

prepare chained-dollar series with different reference 

years that permit the calculation of close approximations of contributions to real growth for any period.

40 

The article shows how to calculate a chained-dollar series for any period by using the percent changes in the 

chain-type indexes to compute chained-dollar series 

indexed to the current dollars of whatever reference 

year is appropriate for the analysis. In the article, different reference years are used depending upon the 

time period analyzed; for example, for decades and 

business cycles, the midpoints of the periods are 

used.

41 

Current-dollar shares 

Two tables show the percentage shares of GDP and 

GDI that are accounted for by major components. 

These shares, which are calculated on a current-dollar 

39. This is why most of the chained-dollar series for detailed components 

are shown beginning with 1990, although chained (2000) dollar estimates 

for selected series for earlier periods are shown in tables 1.1.6, 1.2.6, 1.3.6, 

1.4.6, 1.7.6, and 1.8.6. 

40. See Landefeld and Parker, “BEA’s Chain Indexes,” 63–66. 

41. NIPA tables 1.1.6A, 1.1.6B, 1.1.6C, and 1.1.6D present annual estimates of real GDP and its major components in chained (1937) dollars, 

chained (1952) dollars, chained (1972) dollars, and chained (1982) dollars, 

respectively. However, users should be aware that contributions calculated 

from these tables are approximations and may produce misleading results 

for periods far from those reference years or when relative prices are changing rapidly, such as during the energy crisis of 1973–75. 
A Guide to the NIPAs 17 

basis, provide data users with an accurate measure of 

the size and importance of the components of GDP 

and GDI. Table 1.1.10, which shows the shares of GDP, 

is published annually and quarterly, and table 1.11, 

which shows the shares of GDI, is published annually. 

Price indexes 

BEA’s featured aggregate price measure is the price index for gross domestic purchases, which measures the 

prices paid for goods and services purchased by U.S. 

residents. This index is derived from the prices of PCE, 

gross private domestic investment, and government 

consumption expenditures and gross investment. In 

contrast, the GDP price index measures the prices paid 

for goods and services produced by the U.S. economy 

and is derived from the prices of PCE, gross private domestic investment, net exports, and government consumption expenditures and gross investment. Thus, 

the two indexes differ with respect to coverage of the 

prices of exported and imported goods and services. 

Price changes in goods and services produced abroad 

and sold in the United States are reflected in the gross 

domestic purchases measure but not in the GDP measure; price changes in goods and services produced by 

the U.S. economy and sold abroad are reflected in the 

GDP price measure but not in the gross domestic purchases price measure. For example, a change in the 

price of imported petroleum that is fully passed on to 

U.S. consumers would be fully reflected in the price index for gross domestic purchases but not in the GDP 

price index, because imports are subtracted in deriving 

GDP. 

Implicit price deflators 

BEA also prepares another price index, the implicit 

price deflator (IPD), which is calculated as the ratio of 

the current-dollar value to the corresponding chaineddollar value, multiplied by 100 (see appendix 1, “Formulas for Calculating Chain-Type Quantity and Price 

Indexes”). The values of the IPD are very close to the 

values of the corresponding chain-type price index for 

all periods. IPDs for GDP and its major components 

are presented as index numbers in NIPA table 1.1.9. 

Command-basis GNP and terms of trade 

BEA also prepares another measure of “real” output—command-basis GNP (tables 1.8.3 and 1.8.6). 

Command-basis GNP is a measure of the goods and 

services produced by the U.S. economy in terms of 

their purchasing power. GNP and command-basis 

GNP differ in how their real values are prepared: In estimating real GNP, the current-dollar values of the detailed components of exports of goods and services are 

deflated by export prices, the current-dollar values of 

the detailed components of imports of goods and services are deflated by import prices, and the currentdollar value of most factor income is deflated by the 

IPD for final sales to domestic purchasers. In estimating command-basis GNP, the current-dollar value of 

the sum of exports of goods and services and of income receipts is deflated by the IPD for the sum of imports of goods and services and of income payments. 

The terms of trade is a measure of the relationship 

between the prices that are received by U.S. producers 

for exports of goods and services and the prices that 

are paid by U.S. purchasers for imports of goods and 

services. When the terms of trade improve (that is, 

when export prices rise relative to import prices), the 

purchasing power, or command value of U.S. GNP in 

international markets, increases by more than the production of goods and services valued in U.S. prices. 

Conversely, when the terms of trade deteriorate (that 

is, when export prices fall relative to import prices), 

the purchasing power, or command value of U.S. GNP 

in international markets, increases by less than the 

production of goods and services valued in U.S. prices. 

The terms of trade is measured by the following ratio, with the decimal point shifted two places to the 

right: In the numerator, the IPD for the sum of exports 

of goods and services and of income receipts; in the denominator, the IPD for the sum of imports of goods 

and services and of income payments. Changes in the 

terms of trade reflect the interaction of several factors, 

including movements in exchange rates, changes in the 

composition of traded goods and services, and changes 

in producers’ profit margins. For example, if the U.S. 

dollar depreciates against a foreign currency, a foreign 

manufacturer may choose to absorb this cost by reducing the profit margin on the product it sells to the 

United States, or it may choose to raise the price of the 

product and risk a loss in market share. 

Classifications of Production 

In the NIPAs, production is classified by type of product, by sector, by legal form of organization, and by industry. 

Type of product 

Type of product classifications—goods (durable and 

nondurable), services, and structures—are presented 

for GDP and the components of final sales of domestic 

product. 

Goods are tangible products that can be stored or 

inventoried, services are products that cannot be 

stored and are consumed at the place and time of their 

purchase, and structures are products that are usually 
18 A Guide to the NIPAs 

constructed at the location where they will be used and 

that typically have long economic lives. In cases in 

which a product has characteristics of more than one 

of these classifications (for example, restaurant meals), 

or in which source data do not provide detail on type 

of product (for example, foreign travel), the product is 

classified on the basis of the dominant characteristic. 

Accordingly, the following products are included in 

goods: Restaurant meals; expenditures abroad by U.S. 

residents except for travel (for example, expenditures 

of U.S. military and embassy personnel abroad); replacement parts whose installation cost is minimal; 

dealers’ margins on used equipment; and movable 

household appliances, such as refrigerators, even when 

they are included in the purchase price of a new home. 

The following products are included in services: 

Food that is included in airline transportation and 

hospital charges; natural gas and electricity (except in 

exports and imports); goods and services that are included in current operating expense of nonprofit institutions (for example, office supplies); foreign travel by 

U.S. residents; expenditures in the United States by foreigners; repair services, which include the cost of parts 

(except replacement parts whose installation cost is 

minimal); defense research and development; and exports and imports of certain goods, primarily military 

equipment purchased and sold by the Federal Government. 

Government consumption expenditures for the 

Federal Government and state and local governments 

are recognized as services produced by general government. The value of these services, most of which are 

not sold in the market, are measured by the cost of inputs: Compensation, consumption of fixed capital 

(CFC), and intermediate goods and services purchased 

less own-account investment and sales to other sectors. 

(Purchases by general government of goods and services are classified as intermediate purchases.) 

The following products are included in structures: 

Manufactured homes; certain types of installed equipment, such as elevators, heating, and air conditioning 

systems; brokers’ commissions on sale of structures; 

architectural and engineering fees included in the 

value of structures; land development costs; and mining exploration, shafts, and wells. 

In PCE, in exports, in imports, and in government 

intermediate goods and services purchased, durable 

goods have an average life of at least 3 years. In fixed 

investment, equipment and software consists of goods 

that have an average life of at least 1 year. In change in 

private inventories, goods held by manufacturing and 

trade establishments are classified as durable goods or 

nondurable goods in accordance with the classification 

of the industry of the establishment holding the inventories. Inventories held by construction establishments 

are classified as durable goods. Inventories held by establishments other than those in manufacturing, trade, 

and construction are classified as nondurable goods. 

Sector 

In the NIPAs, a breakdown of GDP is also shown in 

terms of the three sectors of the economy—business, 

households and institutions, and general government; 

the term “value added” refers to the product of sectors. 

Business: Production by all entities that produce 

goods and services for sale at a price intended at least 

to approximate the costs of production, corporate and 

noncorporate private entities organized for profit, and 

certain other entities that are treated as business in the 

NIPAs. These entities include mutual financial institutions, private noninsured pension funds, cooperatives, 

nonprofit organizations (that is, entities classified as 

nonprofit by the Internal Revenue Service (IRS) in determining income tax liability) that primarily serve 

business, Federal Reserve banks, federally sponsored 

credit agencies, and government enterprises.

42 Gross 

value added of the business sector is measured as GDP 

less the gross value added of households and institutions and of general government.

43 

Households and institutions: The households and institutions sector comprises households and nonprofit 

institutions serving households (NPISHs). The gross 

value added of households is measured by the services 

of owner-occupied housing and the compensation 

paid to domestic workers. The gross value added of 

NPISHs is measured by the compensation paid to the 

employees of these institutions, the rental value of 

fixed assets owned and used by these institutions, and 

the rental income of persons for tenant-occupied 

housing owned by these institutions. 

General government: The government sector comprises all Federal Government and state and local government agencies except government enterprises. The 

gross value added of general government is measured 

as the sum of the compensation of the employees of 

these agencies and of their CFC. 

Legal form of organization 

For the domestic business sector, income and its components are shown for corporate business and noncorporate business. Noncorporate business, in turn, 

comprises sole proprietorships and partnerships, 

other private business, and government enterprises 

42. For more detail on government enterprises, see the section “Legal 

form of organization.” 

43. Gross value added of financial and of nonfinancial corporations are 

also shown in the NIPA tables. They are calculated based on the costs 

incurred and the incomes earned from production. 
A Guide to the NIPAs 19 

(employee compensation and current surplus of enterprises). 

Corporate business: This legal form comprises all entities required to file Federal corporate tax returns (IRS 

Form 1120 series). These entities include mutual financial institutions and cooperatives subject to Federal 

income tax, nonprofit institutions that primarily serve 

business, Federal Reserve banks, and federally sponsored credit agencies. 

Sole proprietorships: This legal form comprises all 

entities that would be required to file IRS Schedule C 

(Profits or Loss from Business) or Schedule F (Farm 

Income and Expenses) if the proprietor met the filing 

requirements. 

Partnerships: This legal form comprises all entities 

required to file Federal partnership income tax returns, 

IRS Form 1065 (U.S. Partnership Return of Income). 

Other private business: This legal form comprises all 

entities that would be required to report rental and 

royalty income on the individual income tax return in 

IRS Schedule E (Supplemental Income and Loss) if the 

individual met the filing requirements, tax-exempt cooperatives, and buildings and equipment and software 

owned and used by NPISHs. 

Government enterprises: This legal form consists of 

government agencies that cover a substantial proportion of their operating costs by selling goods and services to the public and that maintain their own 

separate accounts. A “mixed” treatment of government 

enterprises is used in the NIPAs: Some types of transactions are recorded as if they were part of the business 

sector, and others are recorded as if they were part of 

the general government sector. The following transactions of government enterprises are treated like those 

of businesses and included in the NIPA business sector: 

(1) Their sales to final users are recorded as sales by 

businesses, (2) their purchases of materials and business services are considered intermediate, and (3) their 

compensation payments and CFC are deducted in calculating their income. Within the business sector, government enterprises are classified as noncorporate 

businesses. 

Other transactions of government enterprises are 

treated like those of other government agencies: (1) 

Their interest payments are combined with those of 

general government rather than those of business, (2) 

their investment in equipment and software and in 

structures is combined with general government investment rather than with business investment in gross 

private domestic investment, and (3) their profit-like 

income, the current surplus of government enterprises 

(see definition on page 9), accrues to general government. 

Industry 

Industrial distributions are presented for national income and its components, capital consumption allowances, employment and hours, and the change in 

private inventories and the stock of private inventories.

44 For the estimates of income and employment by 

industry beginning with 1998, the classification underlying the distributions of private activities is based on 

the North American Industrial Classification System 

(NAICS).45 For the estimates of inventories beginning 

with the first quarter of 1997, the estimates are also 

based on NAICS. For estimates before these dates, the 

industry classifications are based on the Standard Industrial Classification (SIC).46 

The industry distributions in most of the tables in 

“Income and Employment” (table section 6; see Presentation of the NIPAs below) are shown as follows: 

Estimates for 1929–48 based on the 1942 SIC are 

shown in tables designated as part A; estimates for 

1948–87 based on the 1972 SIC are shown as part B; 

estimates for 1987–2000 based on the 1987 SIC are 

shown as part C; and estimates for 1998 forward are 

based on the 1997 NAICS are shown as part D. The industry distributions based on the 1997 NAICS reflect 

the corresponding shift of most of the NIPA source 

data to a NAICS basis. The estimates for earlier years 

have not been adjusted to the 1997 NAICS basis because of a lack of adequate source data. Instead, the estimates for 1948 are shown on the basis of both the 

1942 and 1972 SIC, the estimates for 1987 are shown 

on the basis of both the 1972 and the 1987 SIC, and the 

estimates for 1998–2000 are shown on the basis of both 

the 1987 SIC and the 1997 NAICS. 

44. An industrial distribution of fixed investment based on data collected 

from establishments is prepared as part of the procedure used to estimate 

fixed assets. For further information, see Fixed Assets and Consumer Durable Goods in the United States, 1925–97 (Washington, DC: U.S. Government 

Printing Office, September 2003). Industrial distributions of gross output, 

intermediate inputs, and gross product are also prepared; for further information, see Brian C. Moyer, Mark A. Planting, Paul V. Kern, and Abigail M. 

Kish, “Improved Annual Industry Accounts for 1998–2003: Integrated 

Annual Input-Output Accounts and Gross-Domestic-Product-by-Industry 

Accounts,” SURVEY 84 (June 2004): 21–57; Robert E. Yuskavage and Yvon H. 

Pho, “Gross Domestic Product by Industry for 1987–2000: New Estimates 

on the North American Industry Classification System,” SURVEY 84 (November 2004): 33–53; and George M. Smith, Matthew J. Gruenberg, Tameka 

R.L. Harris, and Erich H. Strassner, “Annual Industry Accounts: Revised 

Estimates for 2001–2003,” SURVEY 85 (January 2005): 9–43. 

45. See Executive Office of the President, Office of Management and Budget, North American Industry Classification System, United States, 1997 

(Washington, DC: Bernan Press, 1998). 

46. See Office of Management and Budget, Statistical Policy Division, 

Standard Industrial Classification Manual, 1987 (Washington, DC: U.S. 

Government Printing Office (GPO), 1988); Office of Management and 

Budget, Statistical Policy Division, Standard Industrial Classification Manual, 1972 (Washington, DC: GPO, 1972); and Bureau of the Budget, Standard Industrial Classification Manual, 1942 (Washington, DC: GPO, 1942). 
20 A Guide to the NIPAs 

Industrial distributions of government activities are 

not provided; instead, they are combined into a single 

category. For most series, separate estimates are shown 

for the activities of the Federal Government, of state 

and local governments, and of government enterprises. 

Expenditures by the Federal Government and by state 

and local governments are also shown by type and by 

function. 

The industrial distributions for private activities are 

based on data collected from “establishments” or from 

“companies” (also called enterprises, or firms). Establishments are economic units, generally at a single 

physical location, where business is conducted or 

where services or industrial operations are performed 

(for example a factory, mill, store, hotel, movie theater, 

mine, farm, airline terminal, sales office, warehouse, or 

central administrative office). Companies consist of 

one or more establishments owned by the same legal 

entity or group of affiliated entities. Establishments are 

classified into an industry on the basis of their principal product or service, and companies are classified 

into an industry on the basis of the principal industry 

of all their establishments. Because large multiestablishment companies typically own establishments that 

are classified in different industries, the industrial distribution of the same economic activity on an establishment basis can differ significantly from that on a 

company basis. For example, employment of 

steel-manufacturing companies differs from employment of steel-manufacturing establishments because 

the employment of these companies includes the employment of establishments that are not classified in 

steel manufacturing and because it excludes the employment of establishments that manufacture steel but 

are not owned by steel-manufacturing companies. 

Industrial distributions on a consistent establishment or company basis are not available for all NIPA 

components. As a result, the industrial distribution of 

national income reflects a mix of establishment and 

company data. For the following series, the industrial 

distributions are based on establishment data: Compensation of employees, employment, hours, inventories, rental income of persons, farm proprietors’ income, farm net interest, and farm noncorporate capital 

consumption allowances. For nonfarm proprietors, industrial distributions of proprietors’ income, net interest, and capital consumption allowances are based on 

company data; these data are regarded as being substantially the same as if they were based on establishment data because nearly all unincorporated companies own only one establishment (and the few 

multiestablishment companies usually own establishments in the same industry). For corporations, industrial distributions of profits, nonfarm net interest, and 

capital consumption allowances are based on company 

data. 

In addition, individual industry series are not fully 

comparable over time. Historical comparability is affected primarily by two factors. First, the composition 

of industries may change because of changes in the 

NAICS or SIC basis that is used for the estimates. This 

factor affects estimates based on establishment data 

and on company data. 

Second, historical comparability is affected because 

the industrial classification of the same establishment 

or company may change over time. This factor affects 

company-based estimates much more than establishment-based estimates. The classification of a company 

may change as a result of the following: Shifts in the 

level of consolidation of entities for which company reports are filed; mergers and acquisitions; and other 

shifts in principal activities, especially for large, diversified firms. 

In addition to the industrial distributions of private 

activities, some NIPA tables show the following special 

industry groupings: 

Financial industries consists of the following NAICS 

industries: Finance and insurance, and management of 

companies and enterprises. Finance and insurance 

consists of Federal Reserve banks; credit intermediation and related activities; securities, commodity contracts, and investments; insurance carriers and related 

activities; and funds trusts, and other financial vehicles. Management of companies and enterprises consists of bank and other holding companies. 

Nonfinancial industries consists of all other private 

industries. 

Goods-producing industries consists of the following 

NAICS divisions: Natural resources (agriculture, forestry, fishing, and hunting) and mining; construction; 

and manufacturing. 

Services-producing industries consists of the following NAICS divisions: Wholesale trade, retail trade, 

transportation and warehousing, and utilities; and 

other services-producing industries (information; finance and insurance; real estate and rental and leasing; 

professional, scientific, and technical services; management of companies and enterprises; administrative and 

waste management services; educational services; 

health care and social assistance; arts, entertainment, 

and recreation; accommodation and food services; and 

other services, except government). 
21 

Presentation of the NIPAs


This section describes the release schedule for the 

NIPA estimates, the publication of the NIPA tables, 

and additional presentations of NIPA and NIPA related 

estimates.47 

Release schedule 

For GDP and most other NIPA series, quarterly estimates are released on the following schedule: “Advance” estimates are released near the end of the first 

month after the end of the quarter; as more detailed 

and more comprehensive data become available, “preliminary” and “final” estimates are released near the 

end of the second and third months, respectively.

 For gross national product, gross domestic income, 

national income, corporate profits, and net interest, 

“advance” estimates are not prepared, because of a lag 

in the availability of source data. Except for the fourth 

quarter estimates, the initial estimates for these series 

are released with the preliminary GDP estimates, and 

the revised estimates are released with the final GDP 

estimates. For the fourth quarter, these estimates are 

released only with the final GDP estimates. 

In addition, when the preliminary estimates of GDP 

for the current quarter are released, BEA releases revised estimates of private wages and salaries and affected income-side aggregates for the previous 

quarter.

48 This permits the incorporation of the most 

recently available wage and salary data from the quarterly census of employment and wages. 

Monthly estimates of personal income and outlays 

are released near the end of the month following the 

47. For additional details on the availability of BEA’s products and services, see BEA’s Web site at <www.bea.gov>. 

48. Affected aggregates include gross domestic income, the statistical discrepancy, gross national income, national income, personal income, disposable personal income, personal saving, gross (national) saving, 

compensation, and gross product of corporate business. Other components 

that are closely linked to wages and salaries, such as personal current taxes 

and employer contributions for government social insurance are also 

revised. However, GDP and its components are not affected. 

reference month; estimates for the preceding 2 to 4 

months are subject to revision at that time.

 Annual revisions of the NIPAs are usually carried 

out each summer and cover the months and quarters 

of the most recent calendar year and of the 2 preceding 

years. These revisions are timed to incorporate newly 

available major annual source data.49 

Comprehensive revisions are carried out at about 5­

year intervals. They incorporate definitional, statistical, and presentational improvements. 

Publication of the NIPA tables 

Tables that present the NIPA estimates appear each 

month under “National Data” in the section “BEA 

Current and Historical Data” in the SURVEY OF CURRENT 

BUSINESS and on BEA’s Web site.

50 The full set of NIPA 

tables consists of 299 tables that present annual, quarterly, and monthly estimates.

 With the release of the 12th comprehensive revision 

of the NIPAs, the presentation of the NIPA tables was 

organized to group tables with similar formats in one 

section of the NIPA tables. To assist users in identifying 

the type of estimate in a table, a numbering system for 

NIPA tables was developed for groups of tables that 

display different types of estimates using similar formats. The table-numbering system highlights the type 

of estimate (such as current dollars, quantity indexes, 

and percent changes) in the table. The new system is 

outlined below. 

Table numbers are in the format “X.Y.Z.” where “X” 

indicates the NIPA table section, “Y” indicates the table 

number in the section, and “Z” indicates the type of 

estimate presented. 

49. For a discussion of the most recent annual revision of the NIPAs, see 

Eugene P. Seskin and Shelly Smith, “Annual Revision of the National 

Income and Product Accounts,” SURVEY 86 (August 2006): 7–31. 

50. The NIPA estimates appear first in news releases, which are available 

to the general public in a variety of forms. 
22 A Guide to the NIPAs 

The table sections are numbered as follows: 

1.	 Domestic Product and Income 

2. 	 Personal Income and Outlays 

3. 	Government Current Receipts and Expenditures 

4. 	Foreign Transactions 

5. 	 Saving and Investment 

6. 	 Income and Employment by Industry 

7.	 Supplemental Tables 

8. 	Seasonally Unadjusted Estimates 

The table numbers within each section are numbered 

sequentially. The types of estimates are numbered as 

follows: 

1. 	 Percent change from preceding period in real 

estimates (most at annual rates) 

2. 	 Contributions to percent change in real estimates 

3. 	 Real estimates, quantity indexes 

4.	 Price indexes 

5. 	Current dollars 

6. 	 Real estimates, chained dollars 

7. 	 Percent change from preceding period in prices 

8. 	 Contributions to percent change in prices 

9. 	 Implicit price deflators 

10. Percentage shares of GDP 

For example, GDP is presented in table group 1.1; 

the current-dollar estimates are presented in table 

1.1.5, and the chained-dollar estimates are presented in 

table 1.1.6. 

The tables that present current-dollar estimates, but 

not other types of estimates, use only the first two 

terms of the numbering system. For example, table 3.1, 

“Government Current Receipts and Expenditures,” 

that presents only current-dollar estimates is not numbered 3.1.5.

 For some tables, a letter suffix following the table 

number indicates that there are different versions of 

the table for different time periods; for example, table 

4.3A shows the relation of foreign transactions in the 

NIPAs to the corresponding items in the international 

transactions accounts for the period 1946–85, and table 4.3B shows the same relation (with additional detail) beginning with 1986. 

Most of the full set of NIPA tables are published in 

the issues of the SURVEY that describe the annual and 

comprehensive revisions (for example, see the August 

2006 SURVEY); the remaining tables are published in 

subsequent months. In addition, a set of “Selected 

NIPA Tables” is published monthly in the SURVEY; this 

set presents the estimates for the most recent 5 quarters and the most recent 2 years. The selected set comprises 100 tables from the first seven NIPA table 

sections (seasonally unadjusted estimates in the last 

section are compiled only once a year and thus are not 

included in the selected set of tables). Because the 

numbering system used for the full set of tables is retained in the selected set, gaps occur in the numbering 

of the selected tables. 

A note preceding the NIPA tables indicates information on the vintage of the estimates. In general, the 

NIPA tables in the SURVEY present estimates for the 

most recent 2–4 years. Historical annual and quarterly 

estimates for summary NIPA series are presented annually in the SURVEY and cover the following: Currentand chained-dollar GDP for most of the components 

in NIPA tables 1.1.5 and 1.1.6 and for final sales of domestic product and gross national product; NIPA 

chained-type quantity indexes in NIPA table 1.1.3 and 

chain-type price indexes and implicit price deflators in 

NIPA tables 1.1.4 and 1.1.9; and most of the major 

components of national income and personal income 

in NIPA tables 1.12 and 2.1. For example, these estimates were published as “GDP and Other Major NIPA 

Series, 1929–2006:II” in the August 2006 SURVEY. In addition, historical annual and quarterly estimates for 

the major NIPA aggregates are published monthly in 

table C.1 in the “BEA Current and Historical Data” 

section of the SURVEY. 

An “Index to the NIPA Tables,” which identifies the 

NIPA table (or tables) for each NIPA series and each 

topic covered by the NIPAs and which includes cross 

references for commonly used business and economic 

terms to the appropriate NIPA item was published in 

the May 2005 SURVEY, beginning on page 48. The index 

is also available on BEA’s Web site in the Interactive 

NIPA table section.

 Additional presentations of NIPA and NIPA-related 

estimates 

The SURVEY also presents the following NIPA and NIPA 

related estimates that do not fit neatly into the system 

or publication schedule for the standard NIPA presentation. 

“Current-Dollar and Real Value Added by Industry” 

presents current- and chained-dollar estimates of value 

added by industry, which is the contribution of each 

industry including government to GDP. Estimates for 

value added by industry for 2002–2004 were published 

in the December 2005 SURVEY; advance estimates for 

2005 were published in the May 2006 SURVEY. (Estimates for earlier years are available on BEA’s Web site.) 

“Reconciliation Table” in appendix A of the “BEA 
A Guide to the NIPAs 23 

Current and Historical Data” section presents a table 

that reconciles NIPA estimates with related series and 

that provides analytically useful extensions of the NIPA 

estimates. This table shows the reconciliation of relevant NIPA series with related series in the international 

transactions accounts.

 “Real Inventories, Sales, and Inventory Sales Ratios 

for Manufacturing and Trade,” usually published in the 

January, April, July, and October issues of the SURVEY, 

shows quarterly and monthly estimates for these series. 

Also shown are quarterly and monthly inventories for 

manufacturing by stage of fabrication. Historical estimates for these series, quarterly for 1997:I–2003:IV, 

were published in the April 2004 SURVEY, and revised 

and new estimates for 2001:IV–2005:II were published 

in the October 2005 SURVEY. Estimates for 1959 forward 

are available electronically on BEA’s Web site. 

“Fixed Assets and Consumer Durable Goods,” usually published in the September issue of the SURVEY, 

shows annual estimates of net stocks for private fixed 

assets, government owned fixed assets, and durable 

goods owned by consumers. Revised and new estimates for 2003–2005 were published in the September 

2006 SURVEY. Estimates for net stocks and depreciation 

for 1925 forward and for fixed investment for 1901 forward are available electronically on BEA’s Web site. For 

information on how these estimates are prepared, see 

Fixed Assets and Consumer Durable Goods in the United 

States, 1925–97, September 2003, at <www.bea.gov/ 

bea/dn/Fixed_Assets_1925_97.pdf>. 

“Selected Monthly Estimates” for personal income 

by type of income and for the disposition of personal 

income, including PCE, are published in table B.1 in 

the “BEA Current and Historical Data” section of the 

SURVEY. These estimates are also published annually in 

NIPA tables 2.6–2.8.6, and the estimates for the most 

recent months appear in the personal income and outlays news release. 

“Source Data and Assumptions” shows the source 

data and the BEA assumptions for missing key source 

data that are used to prepare the advance estimates of 

GDP. This information is available at the time of the 

news release and is included in the “GDP and the 

Economy” articles in the SURVEY that present the advance estimates.

51

 “Reliability of the GDP Estimates” covers several 

articles that assess the reliability of the current quarterly estimates, which consist of the advance, preliminary, and final estimates, by comparing them with the 

“latest” estimates, which reflect the results of both annual and comprehensive revisions. The most recent 

study, which was conducted in 2005 for the period 

1983–2002, found that the current quarterly estimates 

correctly indicated the direction of change 98 percent 

of the time, correctly indicated the acceleration or deceleration of aggregate economic activity about threefourths of the time, and successfully identified whether 

GDP growth was high relative to trend about twothirds of the time and whether it was low relative to 

trend about three-fifths of the time. For business cycles 

occurring during the period 1969–2002, the quarterly 

estimates of real GDP indicated the cyclical peaks in all 

five of the recessions and indicated the cyclical troughs 

in three of the five recessions; the two missed troughs 

were within one quarter of the latest estimates of the 

troughs.52 

“Underlying Detail Tables” includes 62 tables that 

show additional information or detail underlying the 

NIPA estimates. These tables provide more detailed or 

higher frequency estimates of NIPA series that appear 

in the NIPA tables published elsewhere on BEA’s Web 

site and in the SURVEY. BEA does not include these detailed estimates in the published tables because their 

quality is significantly less than that of the higher level 

aggregates in which they are included. Compared to 

these aggregates, the more detailed estimates are more 

likely to be either based on judgmental trends, on 

trends in the higher level aggregate, or on less reliable 

source data. Most of the underlying tables are updated 

one working day after the monthly GDP releases. 

51. Additional information about source data and assumptions is also 

available on BEA’s and STAT-USA’s Web sites. 

52. See Dennis J. Fixler and Bruce T. Grimm, “Reliability of the NIPA 

Estimates of U.S. Economic Activity,” SURVEY 85 (February 2005): 8–19 and 

Bruce T. Grimm and Teresa L. Weadock, “Gross Domestic Product: Revisions and Source Data,” SURVEY 86 (FEBRUARY 2006): 11–15. 
--------------

24

Statistical Conventions Used for NIPA Estimates


Most of the NIPA estimates are presented in current 

dollars. Changes in current-dollar estimates measure 

the changes in the market values of goods or services 

that are produced or sold in the economy. For many 

purposes, it is necessary to decompose these changes 

into price and quantity components. Prices are expressed as index numbers with the reference year at 

present, the year 2000 equal to 100. Quantities, or 

“real” measures, are expressed as index numbers with 

the reference year (2000) equal to 100; for selected series, they are also expressed in chained (2000) dollars. 

(For further details, see the section “Real Output and 

Related Measures.”) 

Seasonal adjustment 

Quarterly and monthly NIPA estimates are seasonally 

adjusted at the detailed series level when the series 

demonstrate statistically significant seasonal patterns. 

For most of the series that are seasonally adjusted by 

the source agency, BEA adopts the corresponding seasonal adjustment factors. Seasonal adjustment removes from the time series the average effect of 

variations that normally occur at about the same time 

and in about the same magnitude each year—for example, weather and holidays. After seasonal adjustment, cyclical and other short term changes in the 

economy stand out more clearly. 

Annual rates 

Quarterly and monthly NIPA estimates in current and 

chained dollars are presented at annual rates, which 

show the value that would be registered if the rate of 

activity measured for a quarter or a month were maintained for a full year. Annual rates are used so that periods of different lengths—for example, quarters and 

years—may be easily compared. These annual rates are 

determined simply by multiplying the estimated rate 

of activity by 4 (for quarterly data) or by 12 (for 

monthly data). 

Percent changes in the estimates are also expressed 

at annual rates. Calculating these changes requires a 

variant of the compound interest formula, 

m n § GDPt· r= – 1 × 100 , ©GDP0 1

where

 r is the percent change at an annual rate; 

GDPt is the level of activity in the later period; 

GDP0 is the level of activity in the earlier period;

 m	 is the periodicity of the data (for example, 

1 for annual data, 4 for quarterly, or 12 for 

monthly); and

 n 	 is the number of periods between the earlier and later periods (that is, t–0). 
25

Appendix 1


Formulas for Calculating Chain-Type Quantity and Price Indexes


This appendix shows the basic calculations used to 

prepare annual and quarterly chain-type quantity and 

price indexes. 

Annual indexes 

The formula used to calculate the annual change in 

real GDP and other components of output and expenditures is a Fisher index ( Qt

F ) that uses weights for 2 

adjacent years (years t–1 and t). 

The formula for real GDP in year t relative to its 

value in year t–1 is 

Qt

F Σpt 1 – qt Σp1qt = -------------------------- × ------------------- Σpt 1 – qt 1 Σpt

q – t 1 –

where the p’s and q’s represent prices and quantities of 

detailed components in the 2 years. 

Because the first term in the Fisher formula is a 

Laspeyres quantity index ( Qt

L ), or 

L Σpt 1q – t Qt = -------------------------- Σpt 1 – qt 1 –

and the second term is a Paasche quantity index ( Qt

P ), 

or 

P Σpt

qt Qt = ------------------- Σpt

qt 1 –

the Fisher formula can also be expressed for year t as 

the geometric mean of these indexes as follows: 

Q t

F

= Qt

L

× Qt

P . 

The percent change in real GDP (or in a GDP component) from year t–1 to year t is calculated as 

100 (QF

t –1.0) . 

Similarly, price indexes are calculated using the 

Fisher formula 

Σptqt 1 Σptq – t --------------------------× ------------------- Σpt 1qt 1 Σpt 1qt

Pt

F

= – – –

which is the geometric mean of a Laspeyres price index 

( Pt

L ) and a Paasche price index ( Pt

P ), or 

Pt

F

= Pt

L

× Pt

P . 

The chain-type quantity index value for period t is 

It

F = ItF

-1× Qt

F , and the chain-type price index is calculated analogously. Chain-type real output and price indexes are presented with the reference year (b) equal to 

100; that is, Ib= 100.

The current-dollar change from year t–1 to year t

expressed as a ratio is equal to the product of the Fisher 

price and quantity indexes: 

Σptqt Σpt

qt 1 Σptq – t -------------------------- = -------------------------- × ------------------- ×

Σpt 1 – qt 1 – Σpt 1 – – – qt 1 Σpt 1qt

Σpt 1 – qt Σptqt F F -------------------------- × -------------------= Pt × Qt . Σpt 1 – qt 1 Σpt

q – t 1 –

Quarterly indexes 

The same formulas are used to calculate the quarterly 

indexes except that quarterly data are substituted for 

annual data. 

All quarterly chain-type indexes for completed years 

that have been included in an annual or comprehensive revision are adjusted so that the quarterly indexes 

average to the corresponding annual index. When an 

additional year is completed between annual revisions, 

the annual index is computed as the average of the 

quarterly indexes, so no adjustment is required to 

make the quarterly and annual indexes consistent. For 

example, until the 2006 annual revision was released, 

the chain-type indexes for the year 2005 were computed as the average of the four quarterly indexes for 

2005. 

Chained-dollar estimates 

The chained-dollar value CDt

F is calculated by multiplying the index value by the reference year currentdollar value ( ∑ pb qb )and dividing by 100.1

 For period t, 

CDF

t = Σpbqb × I

F

t ⁄ 100. 

Implicit price deflators 

The implicit price deflator IPDt

F for period t is calculated as the ratio of the current-dollar value to the corresponding chained-dollar value, multiplied by 100, as 

follows: 

F Σpt

qt IPDt = ------------

F × 100 .


CDt

1. For exceptions to this procedure, see appendix 2. 
26

Appendix 2


Chained Measures in the NIPAs Not Calculated as Fisher Indexes


The Fisher formula described in Appendix 1, “Formulas for Calculating Chain-Type Quantity and Price 

Indexes,” is generally preferred for calculating the 

chain-type quantity and price indexes presented in the 

NIPAs. In the preferred method, chained dollars are 

obtained by multiplying the Fisher quantity index by 

the reference-year current-dollar value and dividing by 

100. However, when the components of an aggregate 

include large negative values, the Fisher formula may 

require taking the square root of a negative number. 

For these aggregates, another method for calculating 

chained dollars must be used. The inability to calculate 

a particular Fisher quantity index (for example, change 

in private inventories) because of negative values usually does not extend to the calculation of higher level 

aggregates (for example, quantity indexes for gross private domestic investment and for GDP can be computed). The calculation of contributions to percent 

change is not affected by negative values, so they can 

be calculated for all components. 

The following paragraphs describe the cases for 

which the Fisher formula cannot be used.

 For change in private inventories (in tables 1.1.6, 

1.2.6, 1.4.6, 1.5.6, 5.2.6, 5.6.6A, 5.6.6B, 7.2.6B, and 

7.3.6), chained-dollar series are calculated as the difference between end of period and beginning of period 

chain-weighted stocks of inventories. 

The following chained-dollar series are calculated as 

the current-dollar value of the series divided by an appropriate implicit price deflator: Gross national income and gross domestic income (in table 1.7.6); 

command-basis exports of goods and services and income receipts from the rest of the world (in table 

1.8.6); and disposable personal income (in tables 2.1 

and 2.6). 

For the following series, real values are calculated as 

the sum of, or the difference between, chained-dollar 

series measuring flows: Net exports of goods and services (in tables 1.1.6, 1.5.6, and 4.2.6); command-basis 

gross national product (in table 1.8.6); net value added 

of nonfinancial corporate business (in table 1.14); foreign travel and other, net (in table 2.5.6); net foreign 

travel and net foreign remittances (in table 2.4.6); Federal nondefense intermediate purchases of durable 

goods, of nondurable goods, and of Commodity 

Credit Corporation inventory change (in table 3.10.6); 

Federal defense intermediate purchases of other durable goods (in table 3.11.6); net investment by major 

type (in table 5.2.6); residential and nonresidential private net purchases of used structures (in table 5.4.6A 

and 5.4.6B); Federal defense and nondefense net purchases of used structures (in table 5.8.6A and 5.8.6B); 

and net exports of motor vehicles (in table 7.2.6B). 

For the following series, quantity indexes are calculated by dividing the chained-dollar series by its reference year (that is, 2000) value and multiplying by 100: 

Command-basis GNP and command-basis exports of 

goods and services and receipts from the rest of the 

world (in table 1.8.3); and income receipts from the 

rest of the world (in table 4.2.3). 
27

Appendix 3 

Calculation of Component Contributions


to the Change in GDP and Other Major Aggregates


The contributions to percent change in a real aggregate, such as real GDP, provide a measure of the composition of growth in the aggregate that is not affected 

by the nonadditivity of its components. This property 

makes contributions to percent change a valuable tool 

for economic analysis. The contribution to percent 

change (C% Δi,t ) in an aggregate in period t that is attributable to the quantity change in component i is defined by the formula 

§§ F· · ©©

pi t ⁄ P t1 + pi t , – 11 ×(qi t – qi t , – 1) , , 

Co

oΔi t = 100 × ------------------------------------------------------------------------------------------ , , 

Σj©

§

©

§pj t ⁄ PF

1

· + pj t , – 11· × , t , – 1 qj t

where 

Pt

F is the Fisher price index for the aggregate in period t relative to period t–1; 

p i,t is the price of the component i in period t; and

q i,t is the quantity of the component i in period t. 

The summation with subscript j in the denominator 

includes all the deflation level components of the aggregate. Contributions of subaggregates (such as PCE 

goods) to the percent change of the aggregate (say, PCE 

or GDP) are calculated by summing the contributions 

of all the deflation level components contained in the 

subaggregate. 

For annual estimates, no adjustments are required 

for contributions to sum exactly to the percent change 

in the aggregate. For quarterly estimates, adjustments 

are required to offset the effects of adjustments made 

to published aggregates and their quarterly percent 

change: namely, conforming quarterly estimates to average to the corresponding annual estimates, and expressing percent change at annual rate. The same 

formula is used for both annual and quarterly estimates of contributions to percent change in all periods. The only variation in the method of calculation is 

that when the annual contributions for the most recent 

year are first calculated, they are based on a weighted 

average of the quarterly contributions until the next 

annual revision.