Annual industry accounts: revised estimates for 2001-2003

Survey of Current Business, Jan, 2005 by George M. Smith, Matthew J. Gruenberg, Tameka R.L Harris, Erich H. Strassner

On December 20, 2004, the Bureau of Economic Analysis (BEA) released revised estimates of the integrated annual GDP-by-industry accounts and input-output (I-O) accounts for 2001-2003. The revised and more detailed estimates incorporate newly available data on the industry composition of growth. As a result, these estimates provide an updated picture of economic activity in the United States, and they confirm and clarify trends that were indicated by previously published estimates.

For 2003, the revised estimates show an acceleration in real GDP that was more broad-based and more balanced than that shown by the previous estimates. Highlights of the estimates include

* Real growth in 8 of the 15 broad private-sector industry groups equaled or exceeded their growth in 2000--before the 2001 recession.

* Services-producing industries continued to lead economic growth in 2003. These industries grew 3.2 percent and accounted for more than two-thirds of the 3.0-percent growth in real GDP.

* Durable-goods manufacturing industries grew sharply in 2003; growth accelerated to 6.1 percent from 1.3 percent in 2002. These industries accounted for most of the acceleration in private goods-producing industries, which grew 2.8 percent--just 0.4 percentage point less than the 2003 growth in services-producing industries.

* Information and communications technology (ICT) industries contributed strongly to economic growth in 2003. The computer and electronic products industry in the durable-goods manufacturing group increased 28.4 percent. The information industry group, which includes software publishing and information and data processing, increased 5.7 percent. Growth also turned up in the computer systems design and related services industry.

* The finance, insurance, real estate, rental, and leasing services industry group contributed more than any other industry group to real GDP growth in 2003, mainly because of strong growth in the securities, commodity contracts, and investments industry. The industries in this group accounted for a fifth of current-dollar GDP in 2003.

* Oil and gas extraction and the petroleum and coal products industries accounted for about 25 percent of the growth in the GDP price index in 2003, reflecting a sharp upturn in petroleum prices.

The revised annual industry estimates for 2001-2003 were derived from BEA's integrated GDP by industry and annual input-output (I-O) accounts. These revised estimates reflect the 2004 annual revision of the national income and product accounts (NIPAs). The revised estimates also reflect the incorporation of newly available source data on the industry composition of GDP growth that are more complete and more detailed. The data were consistently incorporated using the integrated annual industry accounts methodology that combines the source data within an I-O framework and that balances and reconciles industry production with commodity usage (see the appendix on methodology).

With the release of the revised 2001-2003 estimates, BEA has improved the annual industry accounts in several ways:

* The availability of the annual I-O accounts has been accelerated to 12 months after the end of the reference year. Previously, the I-O accounts were available after a 3-year lag.

* The revised estimates for 2003 were derived using the enhanced integrated methodology and provide information on 65 industries. The previous estimates for 2003 were derived using summary source data and an abbreviated methodology and were limited to 21 industry groups and subgroups. (1)

* Revisions to the 2001-2003 estimates were the first revisions to the industry accounts that were based on the North American Industry Classification System (NAICS).

* The updated estimates for 2001-2002 include the first revisions to the annual I-O accounts.

The remainder of this article is organized into four main parts: A summary of industry performance based on the new data; a note about related NIPA classification and methodology changes; a look at revisions to the previously published estimates; and an appendix that discusses the methodological steps used to revise the annual industry estimates.

Detailed industry performance measures are presented in tables 1-18 at the end of the article (see the box "Data Availability").

Industry Performance

Information and communications technology industries

The revised estimates confirm that information and communications technology (ICT) industries were key components of economic growth in both private goods-producing industries and private services-producing industries in 2001-2003. (2) The estimates also show that the prices of ICT goods and services remained under pressure.

Real value added. BEA's annual industry accounts provide a measure of how much an industry contributes to total U.S. economic growth. In the industry accounts, the contribution, or value added, of each industry can be distinguished from the contribution of the other industries that supply that industry's inputs. Real value added is calculated by deducting an industry's intermediate inputs from its gross output. Thus real value added provides a measure of the contributions of a specific industry's capital and labor to total real GDP or to inflation.