| Issues, problems, and uses
affected
| Quantitative indicators
(e.g., potential size of gap, size of revision, size of component treated
differently or added)
| Statistical source(s) of
the problem
| Proposed actions
|
| Need for new
and improved output measures |
Difficulties in measuring and defining
certain components of real GDP
 Uses affected: Analysis of economic growth, especially of
economy's long-term, noninflationary growth potential; macroeconomic policy;
forecasting; business, budget, and investment planning
| Possible understatement of growth,
especially in fixed investment; potential for understatement in real GDP growth/1/
| Difficulties in measuring quality changes,
especially in investment goods
| Methodology and structure: Extension
of quality adjustment of prices used in real GDP, including hedonic work on
goods amenable to such measurement: High-tech goods and nonresidential
structures. |
| | No
quantitative indicator of the difficulties of defining output | Difficulties in defining output | Methodology and structure: Further conceptual
work on more difficult-to-measure goods and services. |
|
| Revisions to key components of GDP and
national income
Uses affected: Macroeconomic policy; forecasting; business,
budget, and investment planning
| 1.4-9.4 percentage point (+/-) revisions to
quarterly changes (SAAR) for key components of current-dollar GDP:/2/
Change in business inventories, $13 billion
Trade in goods and services, $9 billion
Government purchases, $8 billion
Consumer expenditures for services, $6 billion
Consumer expenditures for goods, $4-$5 billion
1.4-8.5 percentage point (+/-) revisions to quarterly changes (SAAR) for
key components of national income
| Inability of existing source data used in
the quarterly estimates to capture change in the economy
| Data modification and extension:
More frequent updating of sample frames for existing surveys, including
trade and manufacturing.
Data extension: More frequent surveys for certain growing sectors such as
international trade in services, medical care, and State and local government
purchases.
Data extension: Extension of existing surveys such as those for
inventories, services, and employee compensation (including bonus payments) to
fill gaps in coverage. |
| | | Difficulties in seasonal adjustment | Methodology and structure: Improvements in
seasonal adjustment for volatile components such as inventories and trade in
goods and services. |
| | | Errors in projections for missing source data | Methodology and structure: Improvements in
projections for components such as inventories, trade in goods and services, and
bonus payments. |
|
Overstatement of real GDP growth in recent
years (and understatement in earlier years)
Uses affected: Analysis of economic growth, especially of current
growth relative to long-term, noninflationary growth; macroeconomic policy;
forecasting; business, budget, and investment planning | 0-1.2 percentage point overstatement of quarterly
rates of change in real GDP (average 1991:I-1994:III, 0.4 percentage point)/3/ | Substitution bias,
specifically the use of fixed weights (1987) inappropriate for the current
period | Methodology and structure:
Introduction of more current weights for real GDP for current estimates and more
appropriate weights for historical estimates. |
|
Outdated and inconsistent view of the
structure and organization of production
Uses affected: Federal and State and local tax analysis and
budget planning; business location and marketing studies; regional analysis;
industrial organization studies; and cross-border analysis of trade effects
| For industry classifications,
inconsistencies across U.S. industries and incompatibilities among North
American countries, with special attention needed for new and emerging
industries, service industries, and high-tech industries (for a discussion of
quantitative indicators, see text)
| Outdated and inconsistent industry
classification system, source data, and industry accounts | Methodology and structure: Develop a new
industrial classification system.
Data modification and extension: Implement a new industrial
classification system, starting with a restructuring of surveys.
Methodology and structure: Update and better integrate the
input-output, industry, gross state product, and GDP estimates within the
context of modernizing the accounts along the lines of the new international
guidelines.
|
| Need
for better measures of investment, savings, and wealth |
| Extend the concept and update the
measurement of investment and wealth/capital stock
Uses affected: Analysis of sources of economic growth,
productivity, returns to public and private investment; tax and expenditures
policies
| Treating government spending on structures
and equipment and government and business spending on computer software as fixed
investment would raise investment and reproducible capital stock in national
wealth by about 20 percent.
Government capital, $2,863 billion
Computer software, $20-$40 billion
Treating other candidates as investment in satellite accounts would raise
wealth/capital stock, for example:
R&D capital, $1,050-$1,380 billion
Natural resources, $950-$1,600 billion
| Exclusion of certain types of public and
private expenditures that contribute to the nation's wealth and productive
capacity
| Methodology and structure: Expand
the accounting for investment and wealth/capital stock by (1) inclusion of
government spending on structures and equipment and government and business
spending on computer software and other intangibles in investment in the
national accounts and (2) inclusion of research and development and natural
resources in satellite accounts, in the context of modernizing the accounts
along the lines of the new international guidelines. |
|
| | No
quantitative indicator of the need to update measurement | Use of straight-line depreciation | Methodology and structure: Use of
conceptually and empirically based depreciation patterns and valuation methods |
|
| Need for better integration and measurement
of investment, saving, and wealth/capital stocks
Uses affected: Analysis of sources of economic growth,
productivity, returns to public and private investment, and saving; tax and
expenditure policies
| 3-9 percentage point differences—conceptual
and statistical—between NIPA and flow of funds measures of personal saving
rates/4/.
Treating government "investment" in GDP consistently with
international guidelines would eliminate more than half of the apparent 5.8
percentage point shortfall in U.S. versus European investment rates/5/. For 1993, investment as a percent of GDP:
NIPA rate is 13.7 percent; adding government "investment"
raises the rate to 16.7 percent.
Average rate for Europe is 19.5 percent.
| Lack of complete integration between
financial and real accounts
| |
| Need to fill gaps in
the coverage of international transactions |
Gaps in the coverage of international trade
in certain goods and services, income, and capital
Uses affected: Analysis of trade, monetary, and regulatory
policy; forecasting; business and investment planning
| Gaps in key components:
Trade in goods and services, as much as $10-$20 billion/6/
Capital flows, as much as $100, and stocks as much as $200 billion/6/
| Inability of existing data collection
systems to capture new markets and types of goods, services, and financial
instruments and intermediaries
| Data modification and extension:
Extension of existing surveys to cover new products, services, and markets.
Methodology and structure: Extension of data exchanges with other
countries and central banks.
New data: Development of new surveys such as for financial services
and portfolio investment. |
