National Income and Product Accounts

The reduction in the value of deposits of subsoil assets (such asminerals and oil) as a result of the physical removal and using up of the assets, and the reduction in the value of uncultivated biological assets (suchas natural forests and fish stocks in the open seas) beyond sustainable levels of extraction. In the NIPAs, natural resource discoveries are not considered to be capital formation, so reductions in these resources are not treated as charges against current production.

The most common method for preparing inflation-adjusted, or “quantity,” estimates for most detailed NIPA components. In this method, the quantity estimate for a NIPA component is derivedby dividing its current-dollar value by the value of an appropriate price index—that is, one whose definition and coverage most closelymatch those of the series being deflated.

Portion of federal government consumption expenditures and gross investment that covers the military activities of the U.S. Department of Defense and the defense-related activities of other governmentagencies, such as certain atomic energy activities of the U.S. Department of Energy.

Three sets of NIPA estimates that provide initial pictures ofU.S. economic activity for a given quarter. These estimates are released successively in the 3 months following the end of the quarter: the “advance” estimates are released near the end of the first month, the “second” estimates are released near the end of the second month, and the “third” estimates are released near the end of the thirdmonth.

Production that takes place during the current period—that is, during the period being measured. In measuring GDP, the final sales recorded for product-side components—such as personal consumption expenditures— in the current period may include goods that were produced in earlier periods, so the recording of changes in inventories provides a means to allocate production to the period in which it actually occurred.

Estimates valued in the prices of the period when the transactions occurred—that is, at “market value.” Also referred to as “nominal estimates” or as “current-price estimates.”

The valuing of an asset at the prices prevailing at the time the valuation is made. It incorporates the effects of both depreciation and the changes in the market prices of that type of asset. For example, the 2010 current-cost estimate for an asset is based on the price that would have been paid to acquire that asset in 2010, and the 2011 current-cost estimate for that asset is based on the price that would have been paid to acquire that asset in 2011.

Adjustments that are made to source data in order to account forNIPA definitions and concepts or for information that is not contained in the source data, either because the data were not collected or because the data were incomplete.

The net income, before taxes, from current production of entities that are treated as corporations in the NIPAs. For corporate businesses, it is defined as gross output less the following expenses: intermediate inputs, compensation of employees, taxes on production and imports (less subsidies), consumption of fixed capital, net interest and miscellaneous payments, and business current transfer payments. The estimates are based on receipts less expenses from corporate income tax returns,with adjustments to account for differences between federal tax law and NIPA concepts.

In classification by legal form of organization in the NIPAs,corporate business comprises all entities required to file federal corporate tax returns, IRS Form 1120 series. It also includes mutual financial institutions and cooperatives subject to federal income tax, private noninsured pension funds, nonprofit organizations that primarily serve business, Federal Reserve banks, and federally sponsored credit agencies.