estimating the components of u.s. quarterly gdp: general methods and special procedures
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Estimating the Components of U.S. Quarterly GDP: General methods and special procedures. Brian C. Moyer Deputy Chief National Income and Wealth Division. 10 th OECD-NBS Workshop on National Accounts Paris, France November 6-10, 2006. Overview of quarterly GDP. - PowerPoint PPT PresentationTRANSCRIPT
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Estimating the Components of U.S. Quarterly GDP: General methods and special procedures
Brian C. MoyerDeputy ChiefNational Income and Wealth Division
10th OECD-NBS Workshop on National Accounts
Paris, FranceNovember 6-10, 2006
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2www.bea.gov
Overview of quarterly GDP
Expenditures approach used to estimate quarterly GDP
GDP = C + I + G + (X - M)
Quarterly GDP revision cycle “Advance” estimate “Preliminary” estimate “Final” estimate Annual revision Comprehensive revision
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3www.bea.gov
Overview of quarterly GDP
Source data A wide variety of data are used
Federal agency data—shipments, inventories, construction-put-in-place, prices, etc.
Trade source data—motor vehicle unit sales and prices, consumer spending on services, etc
BEA’s international transactions accounts Trend-based data also used, especially for an
advance estimate Assumptions about missing data are
published Availability and quality of data improve with
each successive revision of the estimate
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4www.bea.gov
Overview of quarterly GDP
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Estimating quarterly GDP
Annual current-price estimates are “benchmarked” to the input-output tables in economic census years
Annual current-price estimates are calculated by interpolating between input-output tables and by extrapolating forward from the most recent input-output table with annual indicators
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Estimating quarterly GDP
Quarterly current-price estimates are calculated by interpolating and extrapolating with seasonally-adjusted quarterly indicators
Detailed constant-price estimates are calculated Deflation method Quantity extrapolation method Direct valuation method
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Estimating quarterly GDP
Detailed constant-price estimates are aggregated Fisher chain-type price and volume indexes Chained-volume estimates Contributions estimates
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Estimating quarterly GDP
In addition …
For certain components of GDP, special procedures are used to prepare the quarterly estimates Consumer spending on goods Private investment in equipment Change in private inventories
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9www.bea.gov
Consumer spending on goods
“Retail control method” used to prepare current-price quarterly indicators for consumer spending on goods (excluding motor vehicles)
Quarterly retail trade survey data are available only on an industry basis; estimates of consumer spending must be prepared on a product basis
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10www.bea.gov
Retail control method
Transformation matrix System of linear equations that relate retail
sales by industry to purchases by product Based on relationships in economic census
year
“Control group” used to extrapolate total consumer spending on goods
Some products are estimated independently Tobacco Gasoline and oil Prescription drugs
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11www.bea.gov
Private investment in equipment
“Commodity-flow method” used to prepare current-price estimates for detailed components of private investment in equipment
Quarterly data on private investment in equipment are not available; an abbreviated commodity-flow method provides estimates based on the supply and use of commodities
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Commodity-flow method
For a detailed component of private investment in equipment,
net supply = shipments + commodity taxes – exports + imports - government purchases – change in inventories
private investment in equipment = net supply – intermediate purchases – consumer purchases + margin + transportation costs
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Change in private inventories (CIPI)
Inventory stocks are reported by firms at “book value” using a variety of accounting methods—LIFO, FIFO, average cost, etc.
For the NIPAs, CIPI must be valued at current cost—that is, the change in book value must be adjusted for holding gains and losses
CIPI can be negative at both the industry and aggregate levels
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Estimating CIPI
Step 1.—Compute a monthly price index by industry
Weighted average price index that reflects the composition of commodities held in inventory by the industry in a given month
Composition of commodities based on data from the economic census
Commodity price indexes are primarily producer price indexes
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Estimating CIPI
Step 2.—Compute an end-of-month price index, PE
t, by industry
Calculated as a two-month moving average of the monthly price index, computed in step 1
Step 3.—Compute a monthly average price index, PA
t, by industry
Calculated as a two-month moving average of the end-of-month price index, PE
t
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Estimating CIPI
Step 4.—Compute a monthly cost index, PC
t, by industry
Represents the cost of acquiring inventories held by the industry in a given month
In general, inventories are acquired over several months; a “turnover pattern” is applied to the monthly average price index, PA
t
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Estimating CIPI
Step 5.—Compute monthly current-price CIPI by industry
CIPI Non-LIFOt = PA
t * [(Bt / PCt) – (Bt-1 / PC
t-1)] * (1 - L)
where Bt is the book-value stock of inventories and L is the percentage of the inventories valued using the LIFO method
CIPI LIFOt = (Bt - Bt-1) * L
CIPIt = CIPI Non-LIFOt + CIPI LIFO
t
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Estimating CIPI
Step 6.—Compute monthly constant-price CIPI by industry Calculated as current-price CIPI deflated
with the industry-based average monthly price index, PA
t
Constant-price CIPIt = (CIPIt / PAt)
Constant-price CIPI by industry provides the deflation-level components used to compute Fisher price and volume indexes for major aggregates, including gross private domestic investment and GDP
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Estimating CIPI
Step 7.—Compute a monthly inventory valuation adjustment, IVAt, by industry Calculated as the difference between
current-price CIPI and the change in book value
IVAt = CIPIt – (Bt – Bt-1)
Represents the adjustment needed to remove holding gains or losses
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Estimating CIPI
Step 8.—Compute constant-price inventory stocks by industry Calculated by accumulating constant-price
CIPI
Constant-price inventory stockt = constant-price inventory stockt‑1 + constant-price
CIPIt
Constant-price inventory stocks by industry provide the deflation-level components used to compute aggregate chained-volume inventory stocks (using the Fisher chained-index formula)
Changes, over time, in the aggregate chained-volume inventory stocks are the NIPA estimates of chained-volume CIPI