The national income and product accounts: preliminary, revised estimates, 1977

Survey of Current Business, May, 1984 by Gerald F. Donahoe

THIS article presents preliminary revised estimates of the national income and product accounts (NIPA's) for 1977. The revised estimates are consistent with BEA's input-output (I-O) tables for 1977, which are shown elsewhere in this issue of the SURVEY OF CURRENT BUSINESS. The estimates are subject to further revision when the next comprehensive revision of the NIPA's is completed in late 1985. At that time definitional changes may be introduced; further statistical revisions for 1977 are expected to be small.

The first part of this article provides a brief overview of the revisions in the NIPA aggregates and major components, and the second part describes the new data sources and estimating procedures incorporated into the revised estimates.

Revisions in the NIPA

Aggregates and Major

Components

The presently published and preliminary revised estimates, and the amount of the revision, are shown in table A for the five NIPA summary accounts.

The revised estimate of GNP is $58 billion, or 3 percent, higher than the presently published estimate. Personal consumption expenditures (PCE) accounts for most of the upward revision; nonresidential producers' durable equipment (PDE) and residential investment also have large upward revisions. Nonresidential structures, net exports of goods and services, and State and local government purchases are revised up moderately. The change in business inventories is revised down moderately, and Federal Government purchases is revised down slightly.

The revised estimate of national income is $55 billion, or 3-1/2 percent, higher than the presently published estimate. Proprietors' income, wages and salaries, and net interest have large upward revisions; rental income of persons has a large downward revision. As a result, charges against GNP, which is GNP measured as the sum of incomes and nonfactor charges, is revised up $55-1/2 billion. Reflecting the larger upward revision in GNP than in charges against GNP, the statistical discrepancy--the difference between them--is revised up slightly, from $1-1/2 billion to $4 billion.

Most of the revisions in national income components also affect personal income, which is revised up $55-1/2 billion, or 3-1/2 percent. Disposable personal income--personal income less personal tax and nontax payments--is revised up $56 billion, and personal outlays up $42 billion. As a result, personal saving is revised up $14 billion, and the personal saving rate--personal saving as a percentage of disposable personal income--is revised up from 5.9 percent to 6.7 percent.

New Data Sources and

Estimating Procedures

The I-O tables and the preliminary revised NIPA estimates reflect the introduction of improved adjustments for misreporting on tax returns. The improved adjustments incorporate newly available information about the extent of underreporting of income and about the failure to file income and employment tax return (nonfiling). Tax return information is used directly in estimating several income components (including compensation of employees and proprietors' income) and indirectly--via the Census Bureau's use of tax returns to make estimates for small firms--for two product components (PCE and gross private domestic investment). The sources and procedures used to prepare the adjustments will be described in an article in the June SURVEY.

For the components affected, the total revisions and the revisions in the misreporting adjustments are shown in the accompanying tabulation. The remainder of this article describes the sources and procedures underlying other major revisions in the NIPA components. GNP

Personal consumption expenditures.--The revisions in goods mostly are from the incorporation of the detailed commodity-flow procedure used to develop the interindustry flows for the I-O tables. The presently published lished estimates are, for the most part, extrapolated from the 1972 I-O levels using survey data on retail sales.

The new commodity-flow calculations incorporate data on sales from the 1977 economic censuses and trade margins from the 1977 Annual Retail Trade Survey and the 1977 Annual Trade Survey (which covers wholesale trade). In addition, the commodity-flow estimates for 1977 include adjustments for undercoverage in the sales data of the economic censuses in mining, manufacturing, and wholesale trade due to the exclusion of businesses with no paid employees.

Most of the upward revision in goods purchases is in jewelry and watches, food, clothing, and toys Truck purchases are revised up substantially, and used car purchases are revised down substantially. The upward revision in PCE trucks, from new information on the consumer-business allocation, is offset in GNP by a downward revision in PDE trucks. Purchases of kitchen and other household appliances and of radios and televisions also are revised down.

A variety of new data sources and estimating procedures are incorporated in the revised services estimates. The largest upward revision is in religious and welfare activities, which is measured as the current account expenditures (including depreciation) of religious, social welfare, and similar organizations. The revision is from the incorporation of data from the 1977 Census of Service Industries, which covered these organizations for the first time.