This article is the first of two articles that present the 1992 benchmark input-output (I-O) accounts for the U.S. economy./1/ The second article will be published in the December 1997 SURVEY OF CURRENT BUSINESS./2/ The I-O accounts show the production of commodities (goods and services) by each industry, the use of commodities by each industry, the commodity composition of gross domestic product (GDP), and the industry distribution of value added. These I-O accounts are used in a variety of analytical and statistical contexts, including in studies of interindustry relationships within the economy and as the framework and benchmarks for other statistical series.
This article describes the preparation of the 1992 I-O accounts and discusses some of the improvements that have been made. In addition, it describes the make and use tables, illustrates how these tables are used, and discusses the concepts and methods underlying the I-O accounts. The 1992 I-O estimates are presented in this article in summary form; that is, they are aggregated to 97 I-O industries from 498-industry detail. The make (production) of commodities by industries is shown in table 1; the use (consumption) of commodities by industries, in table 2.1; and the components of value added by industries, in table 2.2. These tables are available at the summary and detailed levels on diskette (see the box "Data Availability" on page 37).
This article also presents supplementary tables and two appendixes. The supplementary tables link the I-O accounts to the national income and product accounts (NIPA's)./3/ These tables permit more extensive analyses with the I-O estimates. The first appendix provides a concordance between the industry codes used in the I-O accounts and the 1987 Standard Industrial Classification (SIC). The second appendix provides a list of the value-added and final-use components that are included in the I-O accounts.
In response to user needsas expressed, for example, by the interagency Working Group on the Quality of Economic Statisticsthe Bureau of Economics Analysis (BEA) implemented a program to speed up the availability of benchmark I-O accounts./4/ This goal was later formalized in BEA's Strategic Plan, which was developed with data users and data suppliers in 1995. The Strategic Plan included making the benchmark I-O accounts available to users within 5 years of the date of an economic census or within 1 year after the release of all the data from that census, as part of the goal to develop new and improved measures of output and prices./5/ The 1992 benchmark I-O accounts have met this goal./6/
The benchmark I-O accounts are based primarily on data collected from the economic censuses conducted every 5 years by the Bureau of the Census. The economic censuses provide comprehensive dataincluding information on industry and commodity production, materials consumed, and operating expensesthat are not available on a more frequent basis. The 1992 benchmark I-O accounts used data from economic censuses of the following industries: Mining; manufacturing; wholesale trade; retail trade; transportation, communications, and utilities; finance, insurance, and real estate; and services. In addition, the I-O accounts used data from the 1992 Census of Agriculture, the 1992 Census of Construction Industries, and the 1992 Census of Governments.
In preparing the 1992 benchmark I-O accounts, BEA first estimated industry and commodity outputs for the I-O make and use tables. The industry and commodity outputs are represented by the shaded cells in the I-O make table, shown in the upper panel of chart 1, and in the I-O use table, shown in the lower panel. Where there are gaps in coverage by the economic censuses, BEA used data from other sources, such as the U.S. Department of Agriculture, U.S. Department of Energy, U.S. Department of Transportation, U.S. Department of Treasury, Office of Management and Budget, other Government agencies, and private organizations.
Second, BEA prepared estimates of the commodity inputs required by an industry to produce its output. In the use table shown in chart 1, commodity inputs are represented by the upper cells in an industry column. Most of the detailed data available to estimate commodity inputs are obtained from the economic censuses, which included selected purchased services for most industries and materials consumed for manufacturing. When only aggregate data were available, BEA combined that information (for example, purchases of fuel by manufacturing industries) with information on purchases of individual commodities (for example, purchases of petroleum products, natural gas, and coal in the category of purchased fuels) to estimate purchases of specific commodities by an industry (for example, purchases of natural gas by a manufacturing industry).
Third, BEA prepared estimates of value added by all industries. In the I-O accounts, value added consists of three componentscompensation of employees, indirect business tax and nontax liability, and "other value added"which are represented by the lower cells in an industry column of the use table. To estimate compensation of employees and indirect business tax and nontax liability, BEA used data from the NIPA's and from the Bureau of Labor Statistics, Bureau of the Census, Office of Management and Budget, and the U.S. Department of Treasury. BEA then derived "other value added" as a residual by subtracting total intermediate inputs, compensation of employees, and indirect business tax and nontax liability from total industry output.
Finally, BEA completed the estimates of detailed final-use categories. For most final-use categories, BEA used the same data and procedures as in the past. Most of the estimates of personal consumption expenditures and gross private fixed investment were prepared using the commodity-flow method./7/ For example, using the commodity-flow method, office equipment for private investment was estimated as a residual after government investment was subtracted from the total supply of office equipment. The estimates of inventories held by industries were mostly based on economic census data; these estimates were then distributed to commodities on the basis of information from previous benchmark accounts. The estimates of exports and imports of commodities were based on data from the Bureau of the Census and BEA's U.S. balance of payments accounts. For the estimates of Federal Government and State and local government, total consumption and investment expenditures by type of purchase were obtained from the NIPA's; these estimates were then distributed to I-O commodities on the basis of information from previous benchmark accounts and the 1992 economic censuses.
The 1992 I-O accounts incorporated three types of changes: Definitional and classificational, to more accurately reflect the evolving U.S. economy; methodological, to increase the accuracy and reliability of the estimates; and statistical, to introduce newly available and revised source data.
Major definitional and classificational changes.The 1992 I-O accounts incorporated the definitional changes that were introduced as part of the comprehensive NIPA revision released in January 1996./8/ The change that most affected the I-O accounts was the new treatment of government purchases that distinguishes between government investment and consumption expenditures and that is symmetrical with the treatment of private fixed assets./9/ Also included are the improved estimates of contributions by the Federal Government to the retirement programs of civilian employees and military personnel in employee compensation./10/
Additional definitional and classificational changes that were incorporated into the 1992 I-O accounts included the following:
Major methodological changes.The 1992 I-O accounts incorporated the results of major methodological changes that were introduced as part of the comprehensive NIPA revision. For example, the improved estimates of purchases of new autos and of investment in nonresidential structures were incorporated into the estimates of final uses, and the new estimates of voluntary contributions to thrift savings plans were incorporated into the estimates of compensation of employees.
For estimates of indirect business tax and other nontax liability, the 1992 I-O accounts incorporated the improved industry assignment of commodity taxes that was introduced in the comprehensive revision of gross product originating (GPO) released in August 1996./11/ These taxes are now classified in a more consistent and comprehensive manner than in the previous benchmark accounts.
In addition, the 1992 I-O accounts incorporated improved measures of output and inputs for the transportation industries and improved measures of the freight charges incurred to transport commodities by different modes. These improvements resulted from a review of the methods and source data used to prepare transportation estimates for the I-O accounts by the staff of the Department of Transportation./12/ Where feasible, BEA incorporated suggested improvements from this review into the 1992 I-O accounts.
Major statistical changes.The 1992 I-O accounts incorporated newly expanded data from the 1992 economic censuses, which covered about 95 new industries and marked the most significant expansion in scope of the census in the past 50 years. These data were collected primarily in the two new economic censusesFinancial, Insurance, and Real Estate and Transportation, Communications, and Utilities. The I-O accounts also incorporated newly expanded data for the expenses of auxiliary establishments and for the expenses of manufacturing, wholesale trade, retail trade, and service industries. These data, together with data from new annual surveys for transportation and for communications, were used to estimate inputs for these industries.
The I-O accounts for the U.S. economy show the production of commodities by each of 498 industries in the make table and the consumption of commodities by these industries in the use table. The use table also shows the commodity composition of gross domestic product (GDP) and the industry distribution of value added.
The I-O accounts show the relationships between all the industries in the economy and all the commodities that these industries produce and use. The estimates of the commodities are shown in producers' prices./13/ When producers' prices are used, transportation costs and wholesale and retail trade margins are treated separately as commodities that are produced and used by industries (see the section "Definitions and conventions for valuation of transactions").
The I-O accounts consist of five basic tables: (1) Make, (2) use, (3) commodity-by-industry direct requirements, (4) commodity-by-commodity total requirements, and (5) industry-by-commodity total requirements./14/ Only the make and use tables are presented in this article. The remaining three tables and their descriptions will be published in the December 1997 SURVEY.
The make table.The make table (shown as a schematic in chart 1 and with estimates in table 1) shows the value in producers' prices of each commodity produced by each industry. In each row, one "diagonal" cell shows the value of the production of the commodity for which the industry has been designated the "primary" producer; in chart 1, these cells are shaded in the interior of the make table. The entries in the other cells in the row show the value of the production of commodities for which the industry is a "secondary" producer./15/ For example, the industry "newspapers and periodicals" (row 26A in table 1) is the primary producer of the commodity "newspapers and periodicals" (column 26A in table 1). This industry is also a secondary producer of the following commodities: Other printing and publishing (column 26B); scientific and controlling instruments (column 62); advertising (column 73D); and scrap, used and secondhand goods (column 81). The sum of all the entries in the row is the total output of that industry.
The entries in each column of the make table represent the production by both primary and secondary producers of the commodity in the column. For example, computer and data processing services (column 73A) includes the output by the primary producerthe industry "computer and data processing services" (row 73A)and by the following secondary producers: Computer and office equipment (row 51); legal, engineering, accounting, and related services (row 73B); and other business and professional services, except medical (row 73C). The sum of all the entries in the column is the total output of that commodity.
An industry's share of the production of a commodity can be determined from the values in the make table by calculating the entry in a given column as a percentage of the column total. For example, the production of the commodity "scientific and controlling instruments" (column 62) totaled $107.9 billion, of which the industry "scientific and controlling instruments" (row 62) produced $100.5 billion or about 93 percent of the total commodity output.
The estimates of industry and commodity total output are based primarily on data from the quinquennial economic censuses conducted by the Bureau of the Census. (Table A shows the principal data sources used to estimate industry and commodity outputs for the 1992 I-O accounts.) Economic census data are used for most industries, but data from other Government agencies and private sources are used for the I-O industries that are not covered by the economic census data, such as education and religious organizations. In addition, data from other Government agencies are used to supplement the economic census data for some industries; for example, data on financial statistics for major private electric utilities from the U.S. Department of Energy are used to supplement the data on electric utilities from the 1992 Census of Transportation, Communications, and Utilities.
BEA makes two adjustments to the economic census data. First, it adds estimates of the output for establishments that are not covered by the economic censuses. This adjustment includes estimates for nonpayroll firms in mining, manufacturing, and wholesale trade and for noncensus-covered industries in agriculture, forestry, and fisheries, in services (such as education and religious organizations), and in transportation (such as railroads). Second, BEA adjusts the data for misreported tax return information, because in some cases, the Census Bureau data for receipts reflect tax return records rather than information collected from surveys. Therefore, the tax return data must be adjusted to account for nonfilers and for filers who misreport receipts to the Internal Revenue Service. /16/ The largest adjustments are to the data for the services industries in which partnerships and sole proprietorships are more prevalent.
After these adjustments are made, BEA redefines the SIC-based economic census data using the I-O classification system in order to attain greater similarity in the input structures for commodities produced by an I-O industry. For example, restaurants in hotels are redefined to the "eating and drinking places" industry. (See the section "Definitions and conventions for classification.")
The use table.The data in the use table (shown as a schematic in the lower panel of chart 1) are presented in two parts: Table 2.1 shows the value in producers' prices of each commodity used by each industry or by each final user (represented by the upper left and right quadrants of chart 1); table 2.2 shows detail on the components of value added and total intermediate inputs that are used by each industry to produce its output (represented by the lower left quadrant of chart 1)./17/ In table 2.1, the entry in each row shows the commodity that is used by the industry or final user in the column. For example, the commodity "radio and TV broadcasting" (row 67) is used by the industries "communications, except radio and TV" (column 66), "radio and TV broadcasting" (column 67), and "advertising" (column 73D) and by persons in personal consumption expenditures (column 91).
To facilitate the presentation, the rows and columns of table 2.2 are reversed from those shown in chart 1 as follows: The industries are shown in the rows, and the total intermediate inputs, the components of value added, and the total output for each industry are shown in the columns. For example, for the industry "radio and TV broadcasting" (row 67), compensation of employees was $8.4 billion, indirect business tax and nontax liability was $0.5 billion, and "other value added" was $2.9 billion. Total intermediate inputs was $17.6 billion, which is the sum of the intermediate inputs for industry shown in table 2.1. The total output for this industry was $29.4 billion.
The column total for industries in table 2.1 equals the industry output in table 2.2. For example, the industry output for the radio and TV broadcasting industry (column 67) in table 2.1 equals the total industry output for that industry (row 67) in table 2.2, or $29.4 billion.
In table 2.1, the sum of the intermediate uses of the commodity by industries (upper left quadrant of chart 1) and all sales to final users (upper right quadrant of chart 1) equals total commodity output. The sum of the intermediate inputs consumed by each industrythat is, the raw materials, semifinished products, and services that the industry purchasedand the value added by the industry equals total industry output. In the I-O accounts, GDP can be measured either as the sum of all final uses of commodities or as the sum of value added by industries.
The use table shows the variation in the share of commodity output that is sold to final users. In table 2.1, some commodities, such as apparel (row 18), were sold almost entirely to final users; therefore, the demand for these commodities is affected primarily by changes in the buying patterns of the final users. Other commodities, such as industrial and other chemicals (row 27A), were used almost entirely as intermediate inputs; for these commodities, production is indirectly connected to final uses.
The use table also shows the variation in the usage of commodities by industries. For example, in table 2.1, the commodity "paper and allied products, except containers" (row 24), with a total commodity output of $98.5 billion, was used by most industries. The largest user was "other printing and publishing" (column 26B), which used $16.1 billion, or 16 percent of the total commodity output. In contrast, metal containers (row 39), with $13.2 billion of commodity output, were used by only 17 industries. The largest user was the industry "food and kindred products" (column 14), which used $9.4 billion, or 71 percent of the total commodity output.
Finally, the use table shows the variation in the use of total value-added inputs by industries to produce their outputs. For example, in table 2.2, the industry "real estate and royalties" (row 71B) required $412.2 billion of value-added inputs, or 75 percent of its total output; of this total, $48.4 billion was for compensation of employees, $79.7 billion was for indirect business tax and nontax liability, and $284.2 billion was for "other value added." In contrast, the industry "livestock and livestock products" (row 1) required $15.6 billion of total value-added inputs, or 17 percent of its total output; of this total, $4.5 billion was for compensation of employees, $1.3 billion was for indirect business tax and nontax liability, and $9.8 billion was for "other value added."
The estimates of intermediate inputs in the use table are primarily based on data from the economic censuses. Much of these data are for broad expense categories, such as office supplies, that must be allocated to I-O commodities, such as postal services, paper, and envelopes. In cases in which estimates of expenses are not available, BEA uses commodity shipments and other related information. For example, the estimates of the purchases of spark plugs are allocated using the stock of cars, trucks, and buses by industry. (Table B shows the principal sources and methods used to estimate intermediate and value-added inputs for 1992 I-O industries.)
The estimates of final uses of commodities are prepared from source data on purchases or by using the commodity-flow method. For example, the estimates of exports and imports are based on source data from the Census Bureau and BEA's U.S. balance of payments accounts. In the commodity-flow method, which is used mainly for personal consumption expenditures and producers' durable equipment, domestic output is adjusted for exports and imports; trade margins and transportation costs are added to estimate supply in purchasers' value. Then, either a percentage of this supply is attributed to final users, or the supply is adjusted for intermediate purchases and the residual is attributed to final users./18/
Two of the components of value added by industry are estimated directly using a variety of data sources (table B). Most of the estimates of compensation of employees by industry are based on census data. The estimates of indirect business tax and nontax liability by industry are prepared in two parts: For excise and general sale taxes, the values are estimated as part of each industry's output; for other indirect business taxes, such as property taxes, estimates are distributed on the basis of a variety of source data, including State government tax collections and highway statistics. The remaining component is shown as "other value added," which is derived as a residual by subtracting the total intermediate inputs, compensation of employees, and indirect business tax and nontax liability from total industry output.
The I-O accounts have a variety of uses that range from an analytical tool to study industry production to a framework for benchmarking other economic statistics programs. This section describes the uses of the I-O accounts in studying interindustry relationships in the U.S. economy and in preparing economic statistics. It also describes some of the assumptions that analysts must make when they use I-O accounts as an economic tool for analysis.
Analytical uses.The I-O accounts are an important analytical tool because they show the interdependence among the producers and consumers in the economy. Using the I-O accounts, analysts can estimate the direct and indirect effects of changes in final uses on industries and commodities.
For example, the I-O accounts can show how an increase in consumer demand for motor vehicles will affect the rest of the economy. It will likely cause an increase in the production of motor vehicles that could result in increased steel production and that, in turn, could require increases in the production of chemicals, iron ore, limestone, and coal. It could also require an increase in the production of upholstery fabrics that could require more natural fibers, more synthetic fibers, and more plastics and that, in turn, could require increases in the production of "electric services (utilities)" and "plastics materials and resins." In the I-O accounts, these effects are quantified in the total requirements tables./19/
Similarly, the requirements tables can be used to estimate the effects of a strike or natural disaster on the economy or, supplemented with additional information, to estimate the effects of an increase in demand for U.S. exports on employment. The Federal Emergency Management Agency, the Department of Defense, and the Census Bureau, among others, have used the I-O accounts for such studies.
When the I-O accounts are augmented with regional data by BEA, they can show economic effects by region. For example, the regional I-O accounts can be used to estimate the potential impact of a planned Federal Government shutdown of a military base./20/ When the I-O accounts are augmented with international data, they can be used to estimate the effects of exchange-rate changes on the profitability and activities of manufacturing industries that rely on imported inputs./21/
Analysts using the I-O tables to estimate the effects of changes in final uses on industries and commodities need to be aware of the underlying I-O assumptions. For example, the I-O tables are based on a set of relationships that exist between producers and consumers in a given year; these relationships reflect constant technology and relative prices. The interindustry relationships reflect the average input structure in each industry for that year, but these relationships do not necessarily reflect those of an additional unit of production. Therefore, for analyses that require alternative assumptions, other economic tools may be required.
Statistical uses.The I-O accounts are used in several ways to prepare economic statistics. For example, the final-use components of personal consumption expenditures and of gross private domestic investmentadjusted to reflect the definitional, classificational, and statistical changes made after the completion of the benchmark I-O accountsprovide the benchmarks for the NIPA's.
The benchmark I-O accounts are also used as a framework to weight and to calculate index numbers for price, volume, and value. For example, the Bureau of Labor Statistics uses data from the I-O accounts as weights in compiling industry price indexes.
The I-O accounts use two classification systemsone for industries and another for commoditiesand both systems generally use the same I-O numbers and titles. This section first discusses the I-O industry classification system and then the I-O commodity classification system.
The I-O industry classification system.This system is based on the Standard Industrial Classification (SIC) system, which classifies establishments into industries on the basis of the primary activities of the establishments. Establishments are defined as economic units that are typically at a single location where business is conducted or where services or industrial operations are performed./22/
The I-O industry classification system differs from the SIC system in three major ways. First, the I-O industry system redefines some secondary production of some SIC industries to other industries. Second, the I-O industry classification system includes "special industries" that are not considered to be industries in the SIC system. Third, because of data limitations, the I-O industry system includes three industriesagriculture, construction, and real estatethat are defined on an activity basis rather than an establishment basis.
Redefinitions result in the shift of output and inputs related to the secondary activities of some establishments to the SIC industries in which they are primary activities. (A primary activity must make up the largest proportion of the establishment's output; all the other activities are secondary.) The I-O industry classification system only redefines the secondary activities of an SIC industry for which the related inputs are very different from those required for the industry's primary activity. For example, both the output and related inputs of restaurants in hotels are moved from the SIC industry "hotels and lodging places" (in which "hotels and lodging" is the primary activity) to the industry "eating and drinking places" (in which "eating and drinking" is the primary activity), because the input structure of "meals and beverages" is very different from that of the industry's primary activity. After the redefinition is completed, the total outputs for both I-O industriesthat is, "eating and drinking places" and "hotels and lodging places"are different from their SIC industry counterparts. However, total outputs for the I-O commodities remain unchanged from their counterparts in the SIC system. The purpose of redefinitions in the I-O analytical framework is to attain a greater degree of homogeneity in the inputs required by an I-O industry to produce its commodities.
The following activities are redefined:
The redefinitions affected most industries, but the total output that was redefined for most industries was small for the 1992 I-O accounts. Redefinitions had a significant effect on the following industries: Automotive repair and services (I-O industry 75) has $138.4 billion in total industry output after $1.0 billion was removed and $48.1 billion was added from wholesale and retail trade; eating and drinking places (I-O industry 74) has $280.7 billion in total output after $1.0 billion was removed and $45.6 billion was added; wholesale trade (I-O industry 69A) has $569.0 billion in total output after $51.0 billion was removed and $31.0 billion was added; and retail trade (I-O 69B) has $522.5 billion in total output after $82.7 billion was removed and $13.9 billion was added.
Special industries are included in the I-O system, but they are not considered industries in the SIC system. In the SIC, government establishments engaged in business-like activities (defined in divisions 18), such as the U.S. Postal Service and the local water authorities, are classified in the same SIC industry as private establishments. In the I-O system, these establishments are classified in Federal Government enterprises (I-O 78) and State and local government enterprises (I-O 79)./23/
Another special industry created for the I-O accounts, general government (I-O 82), covers all other government establishments and is similar in scope to SIC industry division 9, Public Administration. The output and value added of this industry are defined as compensation of employees and consumption of fixed capital of general government agencies.
The I-O system also includes a special industry for the inventory valuation adjustment (I-O 85), which is an adjustment needed to eliminate inventory profits or losses from the change in the inventory component of output.
Activity-based industries are necessary for agriculture, construction, and real estate. Agriculture industries are classified by commodity, such as dairy farm products, because source data on the production of agriculture commodities by establishment, such as data on the production of milk products by dairy farms, are not available.
Construction is classified by type of activity, such as the construction of new highways and streets, rather than by the type of construction contractor, such as heavy construction contractors who pave asphalt roads, partly because source data are not available, but more importantly, because construction is an atypical activity in that it is performed in almost all industries; most establishments perform maintenance and repairs, and some perform their own new construction. Therefore, this type of activity is referred to as force-account construction.
To adequately represent construction activities in the U.S. economy, the output associated with all construction activities performed by the nonconstruction industries is redefined to the construction industry. Similarly, the intermediate and value-added inputs for this work are moved to the construction industries.
The real estate industry includes all real estate rental receipts and all imputed rents for owner-occupied housing and for buildings and equipment owned and used by nonprofit institutions primarily serving households. Rental receipts are included in this industry because of a lack of data for individual industries. Imputed rents are included in the I-O accounts to make them consistent with the NIPA's.
The I-O commodity classification system.In this system, each commodity is assigned the code of the industry in which the commodity is the primary product. This code is then used to group the production of the commodity in the industry in which it is the primary product with its production in other industries in which it is a secondary product. In a few cases, the I-O system reclassifies SIC-defined commodity groups, and a secondary product is created from an SIC-defined primary product. The output of the SIC-defined product is moved to the I-O-defined primary product group; therefore, the output represents the total output of the product, regardless of the classification of the establishments that produce it.
For example, in the SIC system, the primary product of the newspaper industry is defined as newspaper sales and newspaper advertising. In the I-O system, the primary product of the newspaper industry is newspaper sales. The advertising component is considered to be a secondary activity; therefore, advertising receipts or output are moved to the advertising commodity group. The total output for the I-O newspaper industry remains unchanged.
Reclassifications affected a small percentage of commodities, and for most of these commodities, the values were not very large. However, some commodities had significant reclassified sales. For example, the commodity "newspapers and periodicals" (I-O 26A) has $19.9 billion in total commodity output after $35.4 billion was moved to the advertising commodity (I-O 73D).
In several cases, there is no I-O commodity classification that corresponds to an industry classification. If a commodity is the primary product of more than one SIC industry, then the commodity is reclassified and given the I-O commodity number that corresponds to the I-O industry that is the largest producer of the commodity. As a result, the following detailed I-O commodities have no commodity output: Forest products (commodity 2.0701); knit outerwear mills (commodity 18.0201); knit underwear and nightwear mills (commodity 18.0202); knitting mills, n.e.c. (commodity 18.0203); fertilizers, mixing only (commodity 27.0202); cold-rolled steel sheet, strip, and bars (commodity 37.0104); steel pipe and tubes (commodity 37.0105); secondary nonferrous metals (commodity 38.0600); copper foundries (commodity 38.1200); nonferrous castings, n.e.c. (commodity 38.1300); Federal electric utilities (78.0200); State and local government passenger transit (commodity 79.0100); and State and local government electric utilities (commodity 79.0200).
This section describes the underlying definitions and conventions for valuation that are used in preparing the estimates of transactions in commodities. It also describes the valuation used in wholesale trade, retail trade, imports of goods and services, exports of goods and services, and the change in business inventories.
Transactions in commodities are valued at producers' prices in the I-O accounts. These prices exclude distribution costs (wholesale and retail trade margins and transportation costs), but they include excise taxes collected and remitted by producers. Transportation costs and trade margins are shown as separate purchases by the users of the commodities. The sum of the producers' value, transportation costs, and trade margins equals the purchasers' value. Thus, the flows of commodities for resale to and from wholesale trade and retail trade are not shown. If trade were shown as buying and reselling commodities, industrial and final users would make most of their purchases from a single sourcetrade.
To show the relationship between the production of commodities and their purchase by intermediate and final users, commodities are shown as if they move directly to users. Wholesale and retail trade margins on commodities are shown as purchases by users and are included in the trade rows of use table 2.1 (rows 69A and 69B). Transportation costs are the freight charges paid to move the commodity from the producer to the intermediate user or the final user. All transportation costs are shown as a purchase by users, and are included in the transportation rows of the use table (rows 65AE and 68B).
Wholesale trade has one primary productdistributive services for the sales of goods to retailers, intermediate users, and final users. Distributive services provided by wholesalers include merchandise handling, stocking, selling, and billing. Wholesale trade output consists of trade margins and nonmargin output; both exclude the cost of resales. They are included in the wholesale trade row of use table 2.1 (row 69A).
The trade margin output occurs when an establishment buys and resells the good. It is measured in two parts. For merchant wholesalers and agents and brokers (on their own account), the trade margin is measured as wholesale sales less the cost of goods sold plus taxes collected by the distributor. For manufacturers' sales branches, it is measured as expenses plus taxes collected by the sales branches.
Nonmargin output occurs when the wholesale trade service is purchased separately from the commodity, such as when a wholesaler acts as a broker between buyer and seller. It is measured as the sum of the expenses on goods sold by manufacturers' sales offices, commissions on goods sold by agents and brokers, and customs duties. Customs duties are considered to be taxes collected by wholesalers and are included in output.
Retail trade has one primary productdistributive services for the sale of goods. Its output consists of the retail trade margins, which are measured as retail sales less the cost of goods sold plus the taxes collected by retail trade establishments. All retail trade margins are included in the retail trade row of use table 2.1 (row 69B).
Retail trade margins apply primarily to purchases by persons. However, some retail trade margin is applied to purchases by business and government; for example, retail trade margins are applied to some purchases of personal computers by business for gross private fixed investment; retail trade margins also are applied to some intermediate purchases by business, for example, office supplies and gasoline.
Imports of goods and services, a component of final uses, are measured by commodity at domestic port values. The domestic port value of an import commodity is considered to be equivalent to the producers' price of a domestically produced commodity. Adjustments to convert the commodity imports of goods to foreign port value are included in the imports of transportation and wholesale trade. For example, the imports of apparel (row 18, column 95) in table 2.1 is -$38.5 billion, the value of imports at the port of entry to the United States. This value consists of a foreign port value of -$31.8 billion, vessel charges of -$0.7 billion, air charges of -$0.9 billion, and customs duty of -$5.1 billion. The vessel and air charges are subtracted from the transportation rows (rows 65C and 65D, column 95) to be netted against balance of payments estimates of the total imports of transportation services. The duty is subtracted from the wholesale trade row (row 69A, column 95). The net result of including domestic port value in the commodity row and subtracting the transportation charges and duty in the transportation and wholesale rows is the foreign port value for the import.
Imports of services are valued at producers' prices. There are no margins or transport costs associated with services.
Imports also include a special category referred to as "noncomparable imports." Noncomparable imports consist of goods purchased by U.S. residents abroad and of service imports with no domestic counterparts, such as port expenditures by U.S. airlines in other countries. These imports are distributed directly to industries and final users and are shown as noncomparable imports in use table 2.1 (row 80). All other imports are assumed either to be consumed within the U.S. boundaries or to have domestic equivalents.
In past benchmarks, noncomparable imports also included domestically consumed imported goods, such as bananas and coffee, that had no significant domestic counterparts. However, most imported goods now have domestic counterparts, so the 1992 benchmark I-O accounts do not include domestically consumed imports of goods in this category.
Exports of goods and services, a component of final uses, are measured by commodity at producers' pricesthe same as other domestically produced commodities. Transportation and trade commodities, which are required to move exports from the producer to the port of exit, are included in the transportation and trade rows of use table 2.1. For example, exports of computer and office equipment are $22.9 billion (row 51, column 94), which represents the value of the computer and office equipment in producers' prices. The transportation costs, $0.2 billion, and the trade margins, $3.7 billion (row 51 and under the column exports of goods and services in table C), required to move the exports of computers and office equipment from producer to the port of exit are included in the rows for transportation (rows 65AE and 68B) and for trade (rows 69A and 69B) in table 2.1.
Change in business inventories, another component of final uses, is measured by commodity at the book-value change reported by industries in the economic censuses. The inventory valuation adjustment, which is needed to remove inventory profits or losses from total gross domestic product in the I-O accounts, is shown as a single entry in table 2.1 (row 85, column 93). In the 1992 I-O accounts, the inventory valuation adjustment is -$8.0 billion.
Four supplementary tables are presented in this articletables C, D, E, and F. Tables C, D, and E are bridges between the I-O accounts and the NIPA's. They present the I-O commodity composition of NIPA final demand in producers' and purchasers' prices. Specifically, table C presents the composition of all NIPA final-demand components; table D, the composition of personal consumption expenditures categories shown in NIPA table 2.4; and table E, the composition of NIPA producers' durable equipment categories shown in NIPA table 5.8./24/
Table F presents a reconciliation of the I-O estimates of exports and imports with those in the NIPA's. Both exports and imports are adjusted so that total GDP is unchanged. The adjustments are necessary because the NIPA'sunlike the I-O accountsinclude the U.S. merchandise that is returned to the United States from other countries in imports and because the NIPA exports include the foreign merchandise that is reexported from the United States to other countries./25/
1. Earlier benchmark I-O accounts covered 1947, 1958, 1963, 1967, 1972, 1977, 1982, and 1987. The 1987 I-O accounts were presented in the April and May 1994 issues of the SURVEY OF CURRENT BUSINESS.
2. The December SURVEY will present the following summary I-O tables: Commodity-by-industry direct requirements per dollar of industry output; commodity-by-commodity total requirements, direct and indirect, per dollar of delivery to final use; and industry-by-commodity total requirements, direct and indirect, per dollar of delivery to final use.
3. The 1992 I-O estimates will be incorporated into the NIPA's during the next comprehensive NIPA revision.
4. See "Improving the Quality of Economic Statistics: The 1992 Economic Statistics Initiative," SURVEY 71 (March 1991): 45.
5. See "Mid-Decade Strategic Review of BEA's Accounts: Maintaining and Improving Their Performance," SURVEY 75 (February 1995): 3666; "Mid-Decade Strategic Review of BEA's Economic Accounts: An Update," SURVEY 75 (April 1995): 4856; and "BEA's Mid-Decade Strategic Plan: A Progress Report," SURVEY 76 (June 1996): 5255.
6. The 1987 benchmark I-O accounts were released in the spring of 19947 years after the 1987 economic census and 3 years after the publication of the 1982 benchmark I-O accounts. To speed up the availability of the 1987 I-O accounts, BEA devised a set of procedures that captured the most important parts of the 1987 economic census data, but that abbreviated the process of assembling the wide variety of other non-census data needed to complete a full benchmark. The use of these abbreviated procedures to prepare the 1987 benchmark I-O accounts enabled BEA to more quickly turn its resources towards preparing a complete set of benchmark accounts for 1992.
7. See the box "Personal Consumption Expenditures and Producers' Durable Equipment" below.
8. See "Improved Estimates of the National Income and Product Accounts for 195995: Results of the Comprehensive Revision," SURVEY 76 (January/February 1996): 127.
9. The services of general government fixed assets, measured as depreciation, are now included in government consumption expenditures. However, the use of depreciation as a measure of the value of services of government fixed assets is only a partial measure of the total value. In theory, the service value of an asset should equal the reduction in the value of the asset due to its use during the current period (depreciation) plus a return equal to the current value the asset could earn if invested elsewhere (net return). The consumption of fixed capital by government does not provide an estimate of the full value of the services of government fixed assets, because the net rate of return on these assets is assumed to be zero. See Robert P. Parker and Jack E. Triplett, "Preview of the Comprehensive Revision of the National Income and Product Accounts: Recognition of Government Investment and Incorporation of a New Methodology for Calculating Depreciation," SURVEY 75 (September 1995): 3341.
10. See "Preview of the Comprehensive Revision of the National Income and Product Accounts: New and Redesigned Tables," SURVEY 75 (October 1995): 3134.
11. See Robert E. Yuskavage, "Improved Estimates of Gross Product by Industry, 195994," SURVEY 76 (August 1996): 140.
12. The staff of BEA and of the Bureau of Transportation Statistics of the U.S. Department of Transportation are developing a set of transportation satellite accounts for the United States, which are tentatively scheduled for release next year. These accounts will be based on the 1992 benchmark I-O accounts.
13. Estimates of purchases of I-O commodities in purchasers' prices can be derived by adding transportation costs and wholesale and retail trade margins to the values in producers' prices. These estimates are shown in table C for all I-O commodities included in NIPA final demand; in table D, for all I-O commodities included in personal consumption expenditures; and in table E, for all I-O commodities included in producers' durable equipment.
14. In the designation that is used for I-O tables, the content of the rows is referred to first, and that of the columns, second. For example, in a "commodity-by-industry" table, the commodities are in the rows, and the industries are in the columns.
15. Primary and secondary products and the classification of industries are discussed further in the section "Definitions and conventions for classification."
16. See Robert P. Parker, "Improved Adjustments for Misreporting of Tax Return Information Used to Estimate the National Income and Product Accounts, 1977," SURVEY 64 (June 1984): 1725.
17. Estimates of industry value added, referred to as "gross product originating," are provided in Sherlene K.S. Lum and Robert E. Yuskavage, "Gross Product by Industry, 194796" in this issue. A comparison of the GPO estimates with those from the 1992 I-O accounts is presented in "Note on Alternative Measures of Gross Product by Industry."
18. For more detailed information, see U.S. Department of Commerce, Bureau of Economic Analysis, Personal Consumption Expenditures, Methodology Paper Series MP-6 (Washington, DC: U.S. Government Printing Office, June 1990): 3134.
19. In an open economy, the production effects are likely to be reflected as an increase in both domestic production and imports. To separate the effects on domestic production from those on imports, analysts generally use a special set of I-O tables that includes an import matrix that identifies the intermediate purchases by producers that are obtained from foreign sources.
20. Estimates of regional economic effects derived from BEA's Regional Input-Output Modeling System are based mainly on two data sources: The U.S. benchmark I-O accounts and BEA's county estimates of wage and salary disbursements at the four-digit SIC level. These estimates are available from the BEA's Regional Economic Analysis Division. For more information, see U.S. Department of Commerce, Bureau of Economic Analysis, Regional Multipliers: A User Handbook for the Regional Input-Output Modeling System (RIMS II), Third Edition (Washington, DC: U.S. Government Printing Office, 1997).
21. Jose Campa and Linda S. Goldberg, "The Evolving External Orientation of Manufacturing: A Profile of Four Countries," Economic Policy Review 2 (1997): 5381.
22. Appendix A provides a list of I-O industries and the relationships of these industries to the 1987 SIC codes. For more information on the SIC, see Office of Management and Budget, Statistical Policy Division, Standard Industrial Classification Manual 1987 (Washington, DC: U.S. Government Printing Office, 1987): 1118.
23. Establishments defined as government enterprises follow the same classification used in the NIPA's. For more information, see U.S. Department of Commerce, Bureau of Economic Analysis, Government Transactions, Methodology Paper Series MP-5 (Washington, DC: U.S. Government Printing Office, November 1988): 6.
24. NIPA tables 2.4 and 5.8 are published annually in the SURVEY, most recently in the August 1997 issue.
25. Returned U.S. merchandise consists of domestically produced goods that were exported for processing, or assembly, or both and then returned to the United States. Reexports consists of the commodities that were previously imported into the United States and then exported from the United States in substantially the same condition as when they were imported. A timing adjustment is made for reexports that entered the country in an earlier year. The I-O accounts measure this value as general imports less imports for consumption, and the value is shown as a transaction between noncomparable imports and inventory change.