Major Changes in the Major Changes in the Presentation of the U.S. National Presentation of the U.S. National
AccountsAccounts
Brent Moulton, Yvon Pho, and
Robert Yuskavage
Bureau of Economic Analysis
2 Major Initiatives2 Major Initiatives
Conversion to the North American Industry Classification System (NAICS) from Standard Industrial Classification (SIC) codes
Movement towards greater consistency with SNA 1993 in classification and presentation
History of SIC SystemHistory of SIC System
Created in 1938. Since its creation, U.S. has based its industry coding on this system
Revisions took place every 10 to 15 years to reflect changing U.S. economy– Last revision occurred in 1987
Creation of NAICSCreation of NAICSSIC system heavily criticized
– Inability to keep pace with changing domestic and international economies, particularly in services
1991 International Conference on the Classification of Economic Activities
Joint effort with Mexico and Canada to develop NAICS
Motivations for NAICSMotivations for NAICS
Precise country comparisons of economic and financial statistics among U.S., Canada, and Mexico
Passage of North American Free Trade Agreement (NAFTA) in 1994
NAICS vs. SICNAICS vs. SIC
NAICS improves over SIC:1. NAICS uses a production-oriented
conceptual framework
2. Increased comparability of statistical data
3. Greater flexibility and precision in capturing new and emerging economic activities
4. More frequent reviews--every 5 years
5. More accurate treatment of auxiliary establishments
NAICS and the International NAICS and the International Standard Industrial Standard Industrial
Classification (ISIC) SystemClassification (ISIC) System
NAICS more closely aligned to ISIC than the 1987 SIC system
Both NAICS and ISIC emphasize classification by production technology
Primary Differences between Primary Differences between NAICS and ISICNAICS and ISIC
NAICS separately identifies an information sector– Recognizes the similarities in production of various
types of information– UN Statistical Commission is considering
incorporating this sector into next revision of ISIC
NAICS uses a single, production-based framework in organizing industrial activities whereas ISIC uses multiple criteria
BEA data submissions BEA data submissions to OECDto OECD
OECD utilizes ISIC, thereby requiring data adjustments
Under SIC system:– Data adjustments were made with little difficulty– Eased by the use of an international concordance– In some cases, conversion not perfect
Example: fishing
BEA is currently developing a concordance between NAICS and ISIC
Implementation ScheduleImplementation Schedule Highly dependent upon implementation schedule
of source data– Census Bureau
1997 Economic Census was first data converted to NAICS Census annual surveys converted beginning in 1998
– Bureau of Labor Statistics (BLS) Employment and wage data converted beginning in 2001 Producer price indices converted in 2004
– Internal Revenue Service (IRS) Data conversion beginning in 2000
Difficult 4-year transition period
BEA Release Schedule BEA Release Schedule on a NAICS basison a NAICS basis
December 2002:– 1997 Benchmark Input-Output Accounts
December 2003:– Comprehensive Revision of the NIPA’s
Data beginning in 1998 for type of income, employment, and hours by industry
2004:– GDP estimates (value added) and regional
estimates (gross state product) by industry
Historical Time-SeriesHistorical Time-Series
BEA intends to convert industry estimates from SIC to NAICS for years prior to 1997 for GDP, investment, capital stock
ComplicationsComplications
Limited availability of source data
Heavy reliance on concordances
Few direct one-to-one matches– Matrix of 1997 conversion weights for receipts,
payroll, and employment available– Conversion matrix likely to become inaccurate over
time due to fixed weights– Applicability of conversion matrix to data items not
available in the matrix
Progress Made by Progress Made by Other AgenciesOther Agencies
Federal Reserve Board– Converted indices of industrial production for manufacturing
back to 1972
Census Bureau– Converted monthly and annual series for wholesale and retail
trade sales and inventories back to 1992
Bureau of Labor Statistics– Converted monthly payroll, employment, and related series
for all detailed NAICS industries back to 1990
BEA will review these procedures for its conversion of investment, capital stock, and GDP by industry
Other issuesOther issues
Preparation of volume estimates
Ensuring consistency of converted industry estimates to related series in the national accounts, including GDP estimates
Appropriate level of industry detail in converted series
User FeedbackUser Feedback
Overall positive– NAICS is a more accurate reflection of today’s
economy than SIC
Concerns– Transition creates breaks in the data– Future revisions to NAICS may lead to more
frequent disruptions in data flow and time series
Presentation of the NIPA’sPresentation of the NIPA’s
BEA actively participated in preparing System of National Accounts (SNA) 1993
Since 1993 BEA has been moving towards consistency with SNA– Chain index– Saving and capital formation– Software
Changes for 2003 Changes for 2003 Comprehensive RevisionComprehensive Revision
Most definitions of transactions (and terminology) will conform with SNA.
Some differences between the NIPA’s and SNA 1993 will remain:– Sectoral definitions
Treatment of government enterprises
– Maintenance of non-SNA aggregates important to U.S. users
7 NIPA Summary Accounts7 NIPA Summary Accounts
1. Domestic income and product
2. Private enterprise income
3. Personal income and outlay
4. Government receipts and expenditures
5. Foreign transactions current
6. Domestic capital
7. Foreign transactions capital
Domestic Income and Domestic Income and Product AccountProduct Account
Shows GDP by final uses on the right side of the account, while uses of income are on the left
Left side based on generation of income account
Differences from SNA: – Private, government GFCF are separated – Government GFCF is aggregated with
government final consumption
Private Enterprise Private Enterprise Income AccountIncome Account
Based on the SNA entrepreneurial income account
Differs from SNA: – Government enterprises are not included– Payments of other current transfers are
classified as uses– Dividends presentation differs from the SNA
Personal Income and Personal Income and Outlay AccountOutlay Account
Personal sector– Consolidation of the household and nonprofit
institutions serving households
Represents consolidation of SNA’s :– Allocation of primary income– Secondary distribution of income – Use of disposable income accounts
Differs from SNA:– Pension accounting – Disposable personal income accounting
Government Receipt Government Receipt and Expendituresand Expenditures
Consolidates the SNA:– Allocation of primary income– Secondary distribution of income– Use of disposable income accounts
General government enterprises are consolidated with general government
Remaining NIPA Remaining NIPA Summary AccountsSummary Accounts
Foreign transactions current accountDomestic capital account Foreign transactions capital account
Presentation is largely consistent with SNA convention
BEA’s CommitmentBEA’s Commitment
Harmonizing its national accounts with the international community
Continuing in the role of being an effective resource for explaining the national accounts
Guiding U.S. data users in the transition to SNA 1993 concepts
Plans for improvementPlans for improvement
Work with Federal Reserve Board to integrate NIPA’s with flow of funds accounts
Conference on Research in Income and Wealth--Architecture of national accounts– April, 2004, Washington DC– See http://www.nber.org/CRIW/