BEA's mid-decade strategic plan: a progress report

Survey of Current Business, June, 1996

New and improved output measures

In order to extend the use of quality-adjusted prices in the measurement of real GDP, BEA will continue to work with BLS on the prices of "high-tech" products, such as computer software, modems, fax machines, and other telecommunications equipment. BEA plans to work with the Census Bureau to extend their work on the quality adjustment of construction from residential to nonresidential structures. BEA will also extend its conceptual and empirical work with BLS and with other researchers on developing new concepts and methods for measuring difficult-to-measure services, such as insurance, finance, and medical care.

To acquire more reliable source data and thereby to improve the reliability of the estimates of real GDP,BEA will work with the Census Bureau to improve the coverage of those components of GDP that have accounted for a large share of the revisions. In part, these revisions arise because the source data that are used for the current estimates of certain components are inadequate or are available only with a substantial lag; as a result, BEA has been forced to use partial data, proxy indicators, and projections of past trends. Initially, BEA and the Census Bureau will work to extend existing surveys or to develop new surveys in the following areas: New and expanding service industries; retail and wholesale trade, in which the nature of the business and the methods of distribution are constantly changing; and construction, in which a large volume of rebuilding and remodeling activity is unrecorded.

To modernize its national and regional accounts, BEA will improve their structure and organization. Specifically, work is underway to provide (1) clearer and separate pictures of the activities of nonprofit institutions and of households and (2) a more comprehensive picture of the activities of Federal and State and local governments and the enterprises (such as hospitals and tollroad authorities) associated with them. These improvements will help bring the U.S. accounts more closely in line with international economic accounting guidelines. Finally, work will proceed to update and better integrate BEA'S input-output accounts, GDP by industry estimates, and gross state product by industry estimates.

Better measures of investment, saving, and wealth

To prepare estimates of investment in software and to improve the estimates of depreciation and capital stock, BEA will extend the empirical work on used-asset prices to other assets. The improved estimates of depreciation that were released in January 1996 incorporated information on the general pattern of depreciation based on a survey of studies of used-asset prices; direct information on used-asset prices was incorporated only for automobiles and for computers and peripheral equipment.

Improved coverage of international transactions

BEA has progressed in closing many of the gaps in the coverage of international transactions by exchanging data with other countries and, in cooperation with the Treasury Department and the Federal Reserve System, by improving the coverage of surveys. Nevertheless, gaps remain in some areas, and new gaps are emerging in others. In the coverage of goods and services, two of the largest remaining gaps are in financial services and in computer software. In the capital accounts, large gaps remain in the coverage of U.S. portfolio investments abroad and foreign portfolio investments in the United States. In addition, new gaps are emerging as a result of the growth in new financial instruments that are not separately identified or that are not fully covered by the existing data collection system.