U.S. Quarterly GDP by Industry Accounts: Methods and Research Results Brian C. Moyer 13th OECD-NBS Workshop on National Accounts Haikou, China November 30 – December 4, 2009

2 Motivation  Higher frequency industry data for business cycle and policy analysis  New price and quantity measures in a NIPA framework provide an industry breakout of quarterly GDP growth  Available shortly after the 3 rd estimate of quarterly GDP from the NIPAs  New information to improve the NIPAs

3 Why now?  Framework established through recent integration of BEA’s annual I-O and GDP by industry accounts  Combined best available source data using quality weighting  Provided consistent measures of output, inputs, and value added by industry  Accelerated availability of annual I-O accounts  Higher-frequency source data now available  Census Bureau’s quarterly surveys  Bureau of Labor Statistics’ price indexes

4 Overview of methods  Benchmarked to the annual I-O and GDP by industry accounts  Extrapolations of nominal output and value added based on:  Receipts, shipments, and sales from the Census Bureau  Income-by-Industry data from the NIPAs  Wage and salary data from the BLS  Estimates of final expenditures indirectly measured using “commodity flow” method  Based on ratios of domestic supply  International trade data from the Census Bureau  Inventory data from the NIPAs  Statistics prepared in a balanced I-O framework

5 Overview of methods  Real value added based on double deflation, where output and inputs are deflated separately  Deflation of nominal output and inputs using:  Producer price indexes  PCE implicit price deflators  International price indexes  Implicit price indexes based on industrial production indexes  Domestic and imported inputs deflated separately  Aggregation using Fisher formulas, including contributions to GDP price and quantity growth

6 Research results ▪ Real value added for “All industries” tracks well with real GDP ▪ Industry composition provides good indication of:  Direction of change  Acceleration/Deceleration  Growth relative to trend ▪ Results are sensitive to business cycle fluctuations

7 Real GDP for “All industries”

8 Case study: Wholesale trade