Glossary

The difference between private capital consumption allowances (CCA) and private consumption of fixed capital (CFC).

Consists of tax-return-based depreciation charges for corporations and nonfarm proprietorships and of historical-cost depreciation (calculated by BEA) for farm proprietorships, rental income of persons, and nonprofit institutions.

The change in the physical volume of inventories owned by private business, valued at the average prices of the period. It differs from the change in the book value of inventories reported by many businesses; the difference is the inventory valuation adjustment (IVA).

Investment in which a resident of one country obtains a lasting interest in, and a degree of influence over, the management of a business enterprise in another country. In the United States, the criterion used to distinguish direct investment from other types of investment is ownership of at least 10 percent of the voting securities of an incorporated business enterprise or an equivalent ownership interest of an unincorporated business enterprise.

Funds that parent companies provide to their affiliates net of funds that affiliates provide to their parents. For U.S. direct investment abroad, capital flows also include funds that U.S. direct investors pay to unaffiliated foreign residents when foreign affiliates are acquired and funds that U.S. investors receive from them when foreign affiliates are sold. Similarly, for foreign direct investment in the United States, capital flows include funds that foreign direct investors pay to unaffiliated U.S. residents when U.S. affiliates are acquired and funds that foreign direct investors receive from them when U.S. affiliates are sold. Foreign direct investment in the United States capital flows also include debt and equity transactions between U.S. affiliates and members of their foreign parent groups other than their foreign parents. Direct investment capital flows consist of equity capital flows, intercompany debt, and reinvested earnings. Direct investment capital flows are components of the financial account (international).

Return that direct investors receive on their investment in affiliates abroad. It consists of the direct investors' share in the earnings of the affiliates, plus net interest on intercompany debt.

The value of direct investors' equity in, and net outstanding loans to, their affiliates. The position may be viewed as the direct investors' net financial claims on their affiliates, whether in the form of equity (including retained earnings) or debt.

A measure of the value of direct investors' equity in, and net outstanding loans to, their affiliates in which the equity portion of the position is valued based on the current cost of plant and equipment, land, and inventories. This measure values the direct investors' shares of the affiliates' investment in plant and equipment, using the current cost of capital equipment; in land, using general price indexes; and in inventories, using estimates of their replacement cost.

A measure of the value of direct investors' equity in, and net outstanding loans to, their affiliates in which the direct investors' investment is valued at book value. It largely reflects prices at the time of the investment rather than prices of the current period and is not ordinarily adjusted to reflect the changes in the current costs or the replacement costs of tangible assets or in stock market valuations of firms.

A measure of the value of direct investors' equity in, and net outstanding loans to, their affiliates, in which the equity portion of the position is valued at current stock market prices. This measure revalues direct investors' equity based on indexes of stock market prices.

Equity capital increases and decreases. Equity capital increases consist of payments by parent companies to third parties abroad for the purchase of capital stock or other equity interests when they acquire an existing business, payments made to acquire additional ownership interests in their affiliates, and capital contributions to their affiliates. Equity capital decreases are funds that parent companies receive (except from distributions of earnings) when they reduce their equity interest in their affiliates.

Consists of purchases of residential and nonresidential structures, equipment and intellectual property products by private businesses, by nonprofit institutions, and by governments in the United States. (Owner-occupied housing is treated like a business in the NIPAs.)

Ownership or control, directly or indirectly, by one foreign person, or entity, of 10 percent or more of the voting securities of an incorporated U.S. business enterprise or an equivalent interest in an unincorporated U.S. business enterprise.

The value of services produced by government, measured as the purchases made by government on inputs of labor, intermediate goods and services, and investment expenditures. It is the sum of government consumption expenditures and government gross investment.

Expenditures consisting of government purchases of structures, equipment, and own-account production of structures and software. It includes investment expenditures by both general government agencies and government enterprises.

The costs incurred and the incomes earned in the production of gross domestic product (GDP). In theory, GDI should equal GDP, but in practice they differ because their components are estimated using largely independent and less-than-perfect source data. The difference between the two is termed the statistical discrepancy.

The sum of gross private domestic fixed investment, the change in private inventories, and government gross investment.

Gross domestic product (GDP) measures the value of final goods and services produced within the United States. Also known as value added, GDP is the value of goods and services produced by private industry and government, less the value of goods and services used up in production. GDP is also equal to the sum of personal consumption expenditures, gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment.

A set of accounts that present the contribution of each private industry and government to the Nation's gross domestic product (GDP). An industry's contribution is measured by its value added, which is equal to its gross output minus its intermediate purchases from domestic industries or from foreign sources. The GDP-by-industry accounts are consistent with the annual input-output (I-O) accounts.

A measurement of a state's output; it is the sum of value added from all industries in the state. GDP by state is the state counterpart to the Nation's gross domestic product (GDP).

Measures the prices paid for goods and services produced by the U.S. economy and is derived from the prices of personal consumption expenditures (PCE), gross private domestic investment, net exports of goods and services, and government consumption expenditures and gross investment. It differs from the gross domestic purchases price index in that it ignores price changes in imports of goods and services and includes price changes in exports of goods and services.

The market value of goods and services purchased by U.S. residents, regardless of where those goods and services were produced. It is gross domestic product (GDP) minus net exports of goods and services. Equivalently, it is the sum of personal consumption expenditures (PCE), gross private domestic investment, and government consumption expenditures and gross investment.

Measures the prices paid for goods and services purchased by U.S. residents. This index is derived from the prices of personal consumption expenditures (PCE), gross private domestic investment, and government consumption expenditures and gross investment. It differs from the gross domestic product (GDP) price index in that it excludes price changes in exports of goods and services and includes price changes in imports of goods and services.

The sum of gross private domestic investment, government gross investment, and balance on current account, national income and product accounts.

The market value of goods and services produced by labor and property supplied by U.S. residents, regardless of where they are located. It was used as the primary measure of U.S. production prior to 1991, when it was replaced by gross domestic product (GDP).