Annual revision of the national income and product accounts.

Seskin, Eugene P. ; McCulla, Stephanie H.

Annual Estimates, 1999-2001

Quarterly Estimates, 1999:I-2002:I

IN this issue of the SURVEY OF CURRENT BUSINESS, the Bureau of Economic Analysis (BEA) presents revised estimates of the national income and product accounts (NIPA's) for 1999-2001 and the first quarter of 2002. (1) As is usual in annual NIPA revisions, these estimates incorporate newly available source data that are more complete, more detailed, and otherwise more appropriate than those that were previously incorporated.

Both the revised and the previously published estimates show similar quarterly patterns of growth in real gross domestic product (GDP) in 1999 and 2000. However, the revised estimates show that GDP declined in each of the first three quarters of 2001, whereas the previously published estimates showed positive, albeit decelerating, growth in the first two quarters of 2001 and a decline in the third quarter. Both sets of estimates show GDP growth resuming in the fourth quarter of 2001.

Additional highlights of this year's annual revision are the following:

* The growth rate of real GDP from 1998 to 2001 was revised down from 3.1 percent to 2.7 percent. The largest contributors to the downward revision were downward revisions to the growth in personal consumption expenditures (PCE) and nonresidential fixed investment.

* For 2001, the revised estimates show that real GDP grew 0.3 percent; the previous estimate was 1.2 percent. Most of the revision was accounted for by slower growth of PCE and by larger declines in nonresidential fixed investment and in inventory investment.

* The percent change at an annual rate in real GDP was revised down from 1.3 percent to -0.6 percent for the first quarter of 2001, was revised down from 0.3 percent to -1.6 percent for the second quarter of 2001, and was revised up from -1.3 percent to -0.3 percent for the third quarter of 2001.

* For 2001, personal income was revised down 0.4 percent. Wages and salaries was revised down 2.9 percent, and personal interest income was revised up 9.8 percent.

* Both the revised and the previously published estimates show that the slowdown in real GDP growth began in the second half of 2000, that the contraction in 2001 was mild, and that the trough was in the third quarter of 2001.

* Both sets of estimates show that the major contributors to the slowdown in real GDP growth from 2000 to 2001 were downturns in investment spending and exports and a slowdown in consumer spending. The contributions of these components were partly offset by a downturn in imports (which are subtracted in calculating GDP).

This annual revision features several important changes in methodology.

*A new methodology and revision schedule for the quarterly estimates of wages and salaries and related income-side components will enable the more timely incorporation of the comprehensive wage and salary tabulations of employees covered by State unemployment insurance from the Bureau of Labor Statistics (BLS). This change will reduce annual revisions to wages and salaries and thus provide more timely and reliable information to budget forecasters and other data users. (See the box "Revisions to Wages and Salaries and to Profits" on page 24.)

* Several new price indexes have been introduced to improve the real estimates of PCE, of foreign transactions, and of Federal Government spending (consumption expenditures and gross investment).

The first section of this article discusses the impact of the revisions on key NIPA measures of economic activity, and the second section provides a summary of the revisions and the major source data underlying them. The third section describes the changes in the methodology used to prepare the estimates and a change in the presentation of the NIPA tables. Appendix A shows, in current dollars, the revised annual estimates and the revisions for the five summary accounts of the NIPA's. Tables presenting most of the revised monthly, quarterly, and annual NIPA estimates and the "advance" estimates for the second quarter of 2002 follow this article. In addition, tables presenting historical estimates for GDP and other major NIPA series from 1929 forward begin on page 123.

Impact of the Revisions

According to the revised estimates, the economy grew at a slower rate than that indicated by the previously published estimates: From the fourth quarter of 1998 to the first quarter of 2002, the average annual rate of change in real GDP was revised down 0.4 percentage point to 2.4 percent (table 1). In the revised estimates, PCE, equipment and software, imports of goods, and residential fixed investment were weaker; imports of services, nonresidential structures, and Federal nondefense spending were stronger; and change in private inventories, exports of goods and services, Federal defense spending, and State and local spending were little revised.

From its cyclical trough in the first quarter of 1991 to its peak in the fourth quarter of 2000, GDP expanded at an average annual rate of 3.5 percent (unrevised from the previous estimate). After the fourth-quarter peak, real GDP decreased a total of 0.6 percent (0.8 percent at an average annual rate) in the first three quarters of 2001. GDP then increased 2.7 percent in the fourth quarter of 2001 and 5.0 percent in the first quarter of 2002 (annual rates). The previous estimates had shown that GDP decreased a total of 0.3 percent (1.3 percent at an annual rate) and that the decrease occurred in only a single quarter--the third quarter of 2001; it then increased 1.7 percent in the fourth quarter of 2001 and 6.1 percent in the first quarter of 2002 (annual rates).

For 1999, the percent change in real GDP from the preceding year was unrevised at 4.1 percent (chart 1). For 2000 and 2001, the percent changes were revised down: From 4.1 percent to 3.8 percent for 2000 and from 1.2 percent to 0.3 percent for 2001. (In the annual NIPA revisions since 1979, the revisions to the annual estimates of real GDP--without regard to sign--have averaged 0.3 percentage point.)

CHART 1

Revisions to Annual Percent Changes in Featured Measure

[GRAPHICS OMITTED]

On a fourth-quarter-to-fourth-quarter basis, the increase in real GDP during 1999 was revised down from 4.4 percent to 4.3 percent, the increase during 2000 was revised down from 2.8 percent to 2.3 percent, and the increase during 2001 was revised down from 0.5 percent to 0.1 percent.

The revisions to the quarterly estimates of the percent change in real GDP for 2001 were particularly notable: For the first quarter, down 1.9 percentage points to -0.6 percent; for the second quarter, down 1.9 percentage points to -1.6 percent; for the third quarter, up 1.0 percentage point to -0.3 percent; and for the fourth quarter, up 1.0 percentage point to 2.7 percent. In terms of indicating whether the economy was picking up or slowing down, the revised estimates for 1999 and 2000 mirror the previously published estimates for all eight quarters. Both the revised and previously published estimates also show a pickup in growth in the first quarter of 2002. (2)

The revised estimates show about the same rate of increase in prices as that shown by the previously published estimates. From the fourth quarter of 1998 to the first quarter of 2002, the average annual rate of increase in the price index for gross domestic purchases was unrevised at 1.8 percent, and the average annual rate of increase in the GDP price index was unrevised at 1.9 percent (table 2). The percent change from the preceding year for the price index for gross domestic purchases was unrevised at 1.5 percent for 1999, was revised down 0.1 percentage point to 2.5 percent for 2000, and was revised up 0.2 percentage point to 1.9 percent for 2001 (chart 1).

Summary of the Revisions

In general, the annual revisions to real GDP reflect four factors: (1) Revisions to the current-dollar components of GDP for which chained-dollar estimates are prepared by deflation, (2) revisions to the prices used in deflation, (3) revisions to the quantities used to estimate components of real GDP by extrapolation or direct valuation, and (4) revisions resulting from the use of revised and updated weights in the calculation of real GDP. (3) In this year's annual revision, the first factor accounted for most of the revisions.

The first part of this section describes the revisions to the percent changes in the annual estimates of real GDP and its major components, and the second part describes the revisions to the quarterly estimates. The third part describes the revisions to the current-dollar NIPA estimates and discusses the sources of these revisions. The fourth part describes the revisions to the annual price estimates.

Annual real GDP estimates

The annual percent change in real GDP was unrevised at 4.1 percent for 1999, was revised down 0.3 percentage point to 3.8 percent for 2000, and was revised down 0.9 percentage point to 0.3 percent for 2001 (table 3).

For 2000, the largest contributors to the downward revision to real GDP growth were fixed investment in equipment and software, PCE for nondurable goods, and PCE for durable goods; the contributions of these components were partly offset by an upward revision to change in private inventories. For 2001, the largest contributors to the downward revision to real GDP growth were PCE for services, equipment and software investment, change in private inventories, and State and local consumption expenditures and gross investment; the contributions of these components were partly offset by an upward revision to Federal nondefense consumption expenditures and gross investment.

Revisions to the components of real GDP. The annual percent change in real PCE was revised down for all 3 years: 0.1 percentage point to 4.9 percent for 1999, 0.4 percentage point to 4.4 percent for 2000, and 0.6 percentage point to 2.5 percent for 2001 (table 4). For 1999, the downward revision was primarily accounted for by PCE for durable goods, particularly motor vehicles and parts. For 2000, the revision reflected downward revisions to all three major components of PCE: PCE for nondurable goods (mainly "other" nondurable goods and clothing and shoes), PCE for durable goods (widespread), and PCE for services (mainly housing services, medical care, and "other" services). For 2001, the revision was primarily accounted for by a large downward revision to PCE for services (mainly "other" services).

The change in nonresidential fixed investment was revised down for all 3 years: 0.1 percentage point to 8.1 percent for 1999, 2.1 percentage points to 7.8 percent for 2000, and 2.0 percentage points to -5.2 percent for 2001. For 2000, the revision was more than accounted for by a downward revision to equipment and software (mainly computers and peripheral equipment). For 2001, both equipment and software and, to a lesser extent, nonresidential structures contributed to the revision. Within equipment and software, the revision primarily reflected downward revisions to information processing equipment and software and to transportation equipment. Within nonresidential structures, the downward revision primarily reflected downward revisions to nonresidential buildings and to utilities.

The change in residential investment was unrevised at 6.7 percent for 1999, was revised up 0.3 percentage point to 1.1 percent for 2000, and was revised down 1.2 percentage points to 0.3 percent for 2001. For 2001, the revision was mostly accounted for by "other" structures, specifically, by improvements to residential structures.

The change in private inventories was revised up for all 3 years: $0.7 billion (chained 1996 dollars) for 1999, $14.4 billion for 2000, and $0.3 billion for 2001. For 2000, nonfarm inventory investment more than accounted for the revision.

The change in exports of goods and services was revised up 0.2 percentage point to 3.4 percent for 1999, was revised up 0.2 percentage point to 9.7 percent for 2000, and was revised down 0.9 percentage point to -5.4 percent for 2001. For 1999, an upward revision to exports of services was partly offset by a downward revision to exports of goods. For 2000, an upward revision to exports of services accounted for most of the revision. For 2001, both exports of services and exports of goods were revised down.

The change in imports of goods and services was revised up 0.4 percentage point to 10.9 percent for 1999, was revised down 0.2 percentage point to 13.2 percent for 2000, and was revised down 0.2 percentage point to -2.9 percent for 2001. For 1999, an upward revision to imports of services was partly offset by a downward revision to imports of goods. For 2000, the revision was mostly accounted for by a downward revision to imports of services. For 2001, a downward revision to imports of goods was partly offset by an upward revision to imports of services.

The change in government consumption expenditures and gross investment was revised up 0.6 percentage point to 3.9 percent for 1999, was unrevised at 2.7 percent for 2000, and was revised up 0.1 percentage point to 3.7 percent for 2001. For 1999, an upward revision to State and local government consumption expenditures accounted for most of the revision. For 2001, an upward revision to Federal nondefense consumption expenditures was largely offset by a downward revision to State and local government consumption expenditures and gross investment.

Quarterly estimates

Revisions to the quarterly (and monthly) NIPA estimates reflect the revisions to the annual estimates that resulted from the incorporation of newly available annual source data, the incorporation of new and revised monthly and quarterly source data (including the updating of seasonal factors that are used to indicate quarterly patterns), and the introduction of changes in methodology (see the section "Changes in Methodology").

For real GDP, the revisions to the 13 quarterly percent changes (at annual rates) averaged 0.9 percentage point (without regard to sign). In the annual NIPA revisions since 1979, the revisions to the quarterly estimates have averaged 0.7 percentage point.

The largest downward revisions to the percent changes in real GDP were 1.9 percentage points for the first and second quarters of 2001 (table 5 and chart 2). For the first quarter, the GDP growth rate was revised down to -0.6 percent; the largest contributors to the revision were change in nonfarm private inventories, exports of goods and services, PCE for services, and nonresidential investment in structures. For the second quarter, the growth rate was revised down to -1.6 percent; the largest contributors to the revision were change in nonfarm inventories, PCE for services, residential investment, and imports of services.

CHART 2

Revisions to Quarterly Percent Changes in Featured Measure

[GRAPHICS OMITTED]

The largest upward revisions to the percent changes in real GDP were 1.0 percentage point for the third and fourth quarters of 2001. For the third quarter, the GDP growth rate was revised up to -0.3 percent; the largest contributors to the revision were change in nonfarm private inventories, nonresidential investment in structures, PCE for durables, exports of services, and PCE for nondurables. For the fourth quarter, the growth rate was revised to 2.7 percent; the largest contributors to the revision were change in nonfarm inventories, equipment and software investment, and PCE for nondurable goods.

In general, the quarter-to-quarter pattern of changes in the revised estimates of gross domestic purchases prices was not markedly different from that of the previously published estimates. The revisions to the 13 quarterly percent changes (at annual rates) averaged 0.2 percentage point (without regard to sign). The largest downward revision was 0.5 percentage point, to 3.7 percent, for the first quarter of 2000; prices of PCE for services accounted for more than half of the revision. The largest upward revision was 0.6 percentage point, to 3.3 percent, for the first quarter of 2001; prices of nonresidential fixed investment, of PCE for services, and of State and local government spending accounted for most of the revision.

Annual current-dollar estimates

Table 6 summarizes the current-dollar revisions to major NIPA components. It shows the subcomponent series for which revisions were $4.0 billion or more (absolute value) for any of the 3 years covered by this annual revision, and it lists the major source data that underlie the revised estimates. Note that the incorporation of new and revised source data for a given year usually results in a revision to the level of an estimate not only for that year but also for subsequent years.

The annual revision incorporated data from the following Federal statistical sources: Census Bureau annual surveys for 2000 and revised monthly indicators for 1999-2001 of manufactures, of merchant wholesale trade, and of retail trade; Census Bureau annual surveys of services for 2000 and 2001 and of State and local governments for 1999 and 2000; Census Bureau monthly surveys of the value of construction put in place for 1999-2001; Federal Government budget data for fiscal years 2001 and 2002; Internal Revenue Ser-. rice (IRS) tabulations of tax returns for corporations for 1999 and 2000 and for sole proprietorships and partnerships for 2000; BLS tabulations of wages and salaries of employees covered by State unemployment insurance for 2001; Department of Agriculture farm statistics for 2001; and BEA's international transaction accounts for 1999-2001.

Details about the sources of the major revisions to the NIPA components follow.

Gross domestic product (GDP). The level of current-dollar GDP was revised up $5.7 billion, or 0.1 percent, for 1999; was revised down $48.3 billion, or 0.5 percent, for 2000; and was revised down $125.9 billion, or 1.2 percent, for 2001.

By major component, for 1999, upward revisions to State and local government spending were partly offset by a downward revision to PCE for goods. For 2000, downward revisions to PCE for goods, to equipment and software investment, and to PCE for services were partly offset by upward revisions to change in private inventories and to State and local government spending. For 2001, downward revisions to PCE for services, to equipment and software investment, to PCE for goods, and to exports of services, an upward revision to imports of services, and a downward revision to nonresidential structures were partly offset by an upward revision to Federal Government spending, a downward revision to imports of goods, and an upward revision to State and local government spending.

PCE for goods. PCE for goods was revised down for all 3 years: $6.2 billion for 1999, $32.4 billion for 2000, and $36.2 billion for 2001. For 1999, motor vehicles and parts accounted for most of the revision. For 2000 and 2001, the revisions reflected downward revisions to "goods other than motor vehicles and parts" and to motor vehicles and parts.

"Goods other than motor vehicles and parts" was revised down for all 3 years: $0.6 billion for 1999, $22.2 billion for 2000, and $22.4 billion for 2001. These revisions resulted from the incorporation of revised annual data for 1999 and newly available annual data for 2000 on retail sales and food services sales and of revised monthly sales data for 2001.

For 2000 and 2001, the revisions to "goods other than motor vehicles and parts" reflected downward revisions to "other nondurable goods" to clothing and shoes, to "other durable goods," and to furniture and household equipment. Within "other nondurable goods," downward revisions to magazines, newspapers, and sheet music and to toilet articles and preparations were partly offset by upward revisions to drug preparations and sundries. Within "other durable goods," the downward revision was mostly accounted for by "wheel goods, sports and photographic equipment, boats, and pleasure aircraft."

Motor vehicles and parts was revised down for all 3 years: $5.6 billion for 1999, $10.2 billion for 2000, and $13.8 billion for 2001. For 1999 and 2000, the revisions were more than accounted for by "other motor vehicles" (specifically new trucks), reflecting the incorporation of revised product shipments data from the Census Bureau's annual survey of manufactures (ASM) for 1999 and new ASM data for 2000. For 2001, the revision was mostly accounted for by "other motor vehicles"--specifically new trucks--reflecting the extrapolation of the revised 2000 estimates using unit sales and price data from trade sources.

PCE for services. PCE for services was revised up $2.5 billion for 1999, was revised down $12.3 billion for 2000, and was revised down $41.2 billion for 2001. For 2000, the revision primarily reflected downward revisions to transportation services and to medical care services. For 2001, a large downward revision to "other services" and smaller downward revisions to transportation services and to household operation services were partly offset by an upward revision to medical care services.

For 2000, the downward revision to transportation services was more than accounted for by net auto insurance premiums, reflecting the incorporation of revised trade source data on premiums and benefits. The downward revision to medical care services was primarily accounted for by "other professional medical services," reflecting the incorporation of revised data from the Census Bureau service annual survey (SAS). (4)

For 2001, the downward revision to "other services" was primarily accounted for by personal business services, but personal care services also contributed. The downward revision to personal business services was to imputed financial services--that is, "services furnished without payment by financial intermediaries except life insurance carriers" (5) and to brokerage charges and investment counseling. Within imputed financial services, the downward revision was primarily to commercial banks and regulated investment companies. The revision to commercial banks primarily reflected the incorporation of new flow-of-funds data on assets by sector from the Federal Reserve Board. The revision to regulated investment companies was primarily due to the incorporation of trade source data on mutual fund assets. The revision to brokerage charges and investment counseling was more than accounted for by equities commissions, primarily reflecting the incorporation of data on New York Stock Exchange specialists' quoted spreads for 2001 and the incorporation of newly available NASDAQ data on market-maker spreads (see the section "Changes in Methodology"). The downward revision to transportation services was more than accounted for by net auto insurance premiums, reflecting the incorporation of newly available trade source data. The downward revision to household operation was mostly accounted for by domestic service, reflecting the incorporation of revised BLS data on employment, hours, and earnings for private households. The upward revision to medical care services was mostly accounted for by hospitals, reflecting the incorporation of new SAS data for 2001.

Nonresidential structures. Nonresidential structures was revised up $0.2 billion for 1999, was revised up $0.6 billion for 2000, and was revised down $5.8 billion for 2001.

For 2001, downward revisions to industrial structures and commercial structures were partly offset by an upward revision to petroleum and natural gas well drilling and exploration. The revisions to industrial and commercial structures primarily reflected the incorporation of revised Census Bureau data on the value of construction put in place. (6) The upward revision to petroleum and natural gas primarily reflected newly incorporated trade source data on drilling footage.

Equipment and software. Equipment and software was revised down for all 3 years: $1.3 billion for 1999, $27.9 billion for 2000, and $38.7 billion for 2001. For 2000, the largest contributor to the revision was computers and peripheral equipment. For 2001, the revision primarily reflected downward revisions to information processing equipment and software (mainly computers and peripheral equipment and software) and to transportation equipment (notably trucks, buses, and truck trailers).

The downward revisions to computers and peripheral equipment reflected the incorporation of newly available data from the Census Bureau's 2000 Annual Survey of Manufactures (ASM) and of revised data from the Census Bureau's monthly industry shipments for 2001. The revision to software primarily reflected the incorporation of newly available data from the Census Bureau's 2001 Service Annual Survey. The revision to trucks, buses, and truck trailers reflected the incorporation of revised and newly available data from the Census Bureau's 2000 ASM.

Residential fixed investment. Residential fixed investment was revised up $0.2 billion for 1999, was revised up $0.9 billion for 2000, and was revised down $1.5 billion for 2001. For 2001, a downward revision to improvements to residential structures was partly offset by an upward revision to single-family structures; both revisions reflected the incorporation of revised Census Bureau data on the value of construction put in place. (7)

Change in private inventories. The change in private inventories was revised up $0.9 billion for 1999, was revised up $14.2 billion for 2000, and was revised down $1.9 billion for 2001. (8)

The revisions to the change in farm inventories were negligible for 1999 and 2000; for 2001, the change was revised up $3.3 billion. (9)

The change in private nonfarm inventories was revised up $1.0 billion for 1999, was revised up $14.7 billion for 2000, and was revised down $5.1 billion for 2001. For 2000, the upward revision was more than accounted for by upward revisions to the changes in book value for "other industries," for manufacturing, and for retail trade, reflecting the incorporation of newly available tabulations of inventory book value data from IRS tabulations of tax return data for corporations and for sole proprietorships and partnerships for 2000 and the incorporation of newly available book value data from the Census Bureau annual survey of manufactures and annual retail trade survey.

For 2001, downward revisions to the changes in book value for merchant wholesale trade, for retail trade, and for manufacturing were partly offset by an upward revision to the inventory valuation adjustment (IVA). The revisions to the changes in book value reflected the incorporation of revised monthly book value data from Census Bureau monthly surveys. The revision to the IVA reflected the incorporation of newly available information from the Census Bureau on the accounting methods used in inventory reporting and revised BEA unit labor cost indexes.

Net exports of goods and services. Net exports of goods and services was revised up $1.0 billion for 1999, was revised down $1.5 billion for 2000, and was revised down $19.1 billion for 2001. For 2001, a downward revision to exports of services, an upward revision to imports of services, and a downward revision to exports of goods were partly offset by a downward revision to imports of goods. The revisions to exports and imports of services primarily reflected the incorporation of revised data from BEA's international transactions accounts (ITA's). The revised ITA estimates primarily reflected the use of updated source data. (10) In addition, the revision to exports of services reflected the incorporation of a revised NIPA adjustment for "services furnished without payment by financial intermediaries except life insurance carriers." The revision to imports of goods primarily reflected the incorporation of revised NIPA adjustments for U.S. territories and Puerto Rico (see footnote 3 in NIPA table 4.5B).

As usual, the ITA revisions were incorporated into the NIPA's at their "best level," beginning with estimates for 1999. (The revisions to the ITA's for years before 1999 will be incorporated in the next comprehensive NIPA revision.) As a result, there are discontinuities between the NIPA estimates for 1998 and those for 1999 (table 7). For current-dollar net exports of goods and services (and for current-dollar GDP), the change from 1998 to 1999 is understated by only $0.1 billion.

Government consumption expenditures and gross investment. Government consumption expenditures and gross investment was revised up for all 3 years: $8.5 billion for 1999, $10.0 billion for 2000, and $18.5 billion for 2001.

Federal Government consumption expenditures and gross investment was revised up $1.0 billion for 1999, was revised down $1.0 billion for 2000, and was revised up $12.4 billion for 2001. For 2001, the upward revision was primarily accounted for by nondefense consumption expenditures for "other" services, primarily reflecting revised Federal budget data for fiscal year 2001, preliminary budget data for fiscal year 2002, and National Science Foundation data on research and development expenditures.

State and local government consumption expenditures and gross investment was revised up for all 3 years: $7.5 billion for 1999, $11.0 billion for 2000, and $6.1 billion for 2001. For 1999 and 2000, the revisions were primarily accounted for by upward revisions to consumption expenditures for "other" services. For 2001, the revision reflected an upward revision to consumption expenditures that was partly offset by a downward revision to gross investment. The revision to consumption expenditures reflected upward revisions to compensation of employees and to "other" services. The revision to gross investment was more than accounted for by a downward revision to structures.

The upward revisions to "other" services for all 3 years reflected the incorporation of revised data for fiscal year 1999 and newly available data for fiscal year 2000 from Census Bureau surveys of government finances and a change in the methodology for estimating brokers' fees (see the section "Changes in Methodology"). The upward revision to compensation of employees reflected the incorporation of newly available BLS tabulations of wages and salaries of employees covered by State unemployment insurance for 2001. The downward revision to structures for 2001 reflected the incorporation of revised Census Bureau data on the value of construction put in place.

Net receipts of income. Net receipts of income from the rest of the world, which is excluded from GDP but included in gross national product (GNP), was revised up for all 3 years: $29.5 billion for 1999, $35.5 billion for 2000, and $27.2 billion for 2001. For 1999 and 2000, the upward revisions primarily reflected downward revisions to income payments to the rest of the world. For 2001, a downward revision to income payments was partly offset by a downward revision to income receipts from the rest of the world.

The revisions for all 3 years primarily reflected the incorporation of the annual revision of the ITA's. Specifically, the revised estimates of income payments primarily reflected the incorporation of results from the U.S. Treasury's Benchmark Survey of Foreign Portfolio Investment in the United States for March 2000; the revised estimates of income receipts primarily reflected updated source data. (11)

The incorporation of the ITA revisions into the NIPA's at their "best level" resulted in discontinuities between the NIPA estimates for 1998 and those for 1999 (table 7). For net receipts of income, the change from 1998 to 1999 is overstated by $13.8 billion. The discontinuity is more than accounted for by interest paid to the rest of the world, reflecting the incorporation of results from the Treasury Department's benchmark survey of portfolio investment.

Gross national product (GNP). GNP was revised up $35.3 billion, or 0.4 percent, for 1999; was revised down $12.8 billion, or 0.1 percent, for 2000; and was revised down $98.7 billion, or 1.0 percent, for 2001. The revisions to GNP differ from those to GDP because of the revisions to net receipts of income. Because GNP includes both net exports of goods and services and net receipts of income, it also has a discontinuity between the estimates for 1998 and 1999; the change is overstated by $13.7 billion.

Gross domestic income (GDI). GDI, which measures the costs incurred and the incomes earned in the production of GDP, was revised down for all 3 years: $28.2 billion for 1999; $50.3 billion for 2000; and $158.6 billion for 2001 (see the addenda to table 6).

For 1999, the revision to GDI reflected downward revisions to domestic corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj), to consumption of fixed capital (CFC), and to domestic net interest that were partly offset by an upward revision to proprietors' income with IVA and CCAdj.

For 2000, the revision to GDI reflected a large downward revision to domestic corporate profits with IVA and CCAdj and smaller downward revisions to CFC and to indirect business tax and nontax liability that were partly offset by a large upward revision to domestic net interest and smaller upward revisions to compensation of employees and to rental income of persons with CCAdj.

For 2001, the revision to GDI reflected a large downward revision to compensation of employees and smaller downward revisions to domestic corporate profits with IVA and CCAdj, to CFC, to indirect business tax and nontax liability, to proprietors' income with IVA and CCAdj, and to rental income of persons with CCAdj that were partly offset by a large upward revision to domestic net interest and a downward revision to "subsidies less current surplus of government enterprises," which is subtracted in the calculation of GDI.

Statistical discrepancy. Revisions to the statistical discrepancy reflect the differences between the revisions to GDP and those to GDI. (12) For 1999, the statistical discrepancy was revised from -$72.7 billion to -$38.8 billion (from -0.8 percent to -0.4 percent of GDP), reflecting a downward revision to GDI and an upward revision to GDP. For 2000, the statistical discrepancy was revised from -$130.4 billion to -$128.5 billion (revised less than 0.1 percentage point at -1.3 percent of GDP), reflecting a downward revision to GDI that was mostly offset by a downward revision to GDP. For 2001, the statistical discrepancy was revised from -$149.8 billion to -$117.3 billion (from -1.5 percent to -1.2 percent of GDP), reflecting a large downward revision to GDI that was partly offset by a large downward revision to GDP.

Compensation of employees. Compensation of employees was revised down $1.9 billion for 1999, was revised up $8.2 billion for 2000, and was revised down $135.1 billion for 2001. For 2000, the revision was more than accounted for by an upward revision to other labor income. For 2001, the revision reflected a very large downward revision to wage and salary accruals that was partly offset by an upward revision to other labor income.

For 2000, the revision to other labor income reflected upward revisions to employer contributions to group health and life insurance and to private pension and profit-sharing plans that were partly offset by downward revisions to employer contributions to publicly administered government retirement plans. The revisions to employer contributions to group health and life insurance and to private pension and profit-sharing plans reflected the incorporation of more complete source data. The revision to employer contributions to publicly administered government retirement plans reflected the incorporation of revised and new data from Census Bureau surveys of State and local government finances for fiscal years 2000 and 2001.

For 2001, the revision to wage and salary accruals reflected a very large downward revision to private wages and salaries and a smaller downward revision to Federal Government wages and salaries that were partly offset by an upward revision to State and local government wages and salaries. The revisions to private and to State and local government wages and salaries reflected the incorporation of BLS tabulations of wages and salaries of employees covered by State unemployment insurance (UI). (13) (See the box "Revisions to Wages and Salaries and to Profits" on page 24.) The revision to Federal Government wages and salaries reflected the incorporation of payroll data from the Office of Personnel Management for 2001 and Federal Government budget data for fiscal years 2001 and 2002. The upward revision to other labor income for 2001 cannot be attributed to the same level of component detail as the revision for 2000, because the previously published estimates were prepared at a less detailed level.

Proprietors' income with IVA and CCAdj. Proprietors' income with IVA and CCAdj was revised up $6.4 billion for 1999, was revised down $0.2 billion for 2000, and was revised down $15.6 billion for 2001. For 1999, the upward revision was primarily accounted for by nonfarm proprietors' income. For 2000, a downward revision to farm proprietors' income was largely offset by an upward revision to nonfarm proprietors' income. For 2001, both farm and nonfarm proprietors' income were revised down.

For 2000 and 2001, the downward revision to farm proprietors' income reflected the incorporation of revised and newly available information from the U.S. Department of Agriculture.

For 2000, the upward revision to nonfarm proprietors' income reflected an upward revision to the CCAdj that was partly offset by a downward revision to nonfarm proprietors' income without CCAdj. The revision to nonfarm proprietors' income was based on newly available IRS tabulations of sole proprietorship and partnership tax returns for 2000. For 2001, a downward revision to nonfarm proprietors' income without CCAdj that reflected the incorporation of the retroactive provisions of the Job Creation and Worker Assistance Act of 2002 on a best-level basis and on revisions to the industry-specific indicators used for extrapolation was partly offset by an upward revision to the CCAdj. (14)

Rental income of persons with CCAdj. Rental income of persons with CCAdj was revised up $1.4 billion for 1999, was revised up $5.0 billion for 2000, and was revised down $4.7 billion for 2001. For 2000, the upward revision was primarily accounted for by rental income of persons without CCAdj and reflected upward revisions to rent for owner-occupied and tenant-occupied dwellings and to royalties. Downward revisions to two categories of expenses--mortgage interest and property insurance--also contributed to the revision. For 2001, the downward revision reflected a downward revision to rental income that was partly offset by an upward revision to the CCAdj. The revision to rental income primarily reflected an upward revision to closing-cost expenses (see the section "Changes in Methodology"); the revision to the CCAdj reflected the incorporation of revised prices for residential housing.

Corporate profits with IVA and CCAdj. Corporate profits with IVA and CCAdj was revised down for all 3 years: $19.4 billion for 1999, $88.3 billion for 2000, and $35.5 billion for 2001. The downward revisions were mostly accounted for by profits before tax, but revisions to the CCAdj also contributed. (For more information on the revisions to profits, see the box "Revisions to Wages and Salaries and to Profits.") For 1999 and 2000, both the CCAdj and the IVA were revised down; for 2000, the revision to the CCAdj accounted for about a fourth of the revision to corporate profits. For 2001, the downward revision to the CCAdj was partly offset by an upward revision to the IVA. (For more information about the CCAdj, see the entry "Consumption of fixed capital.")

For all 3 years, downward revisions to domestic profits were slightly offset by upward revisions to rest-of-the-world profits. The revisions to domestic profits primarily reflected the incorporation of revised IRS tabulations of corporate tax returns for 1999, of newly available preliminary tabulations for 2000, and of other data from regular sources. The revisions to rest-of-the-world profits reflected the incorporation of the annual revision of the ITA's.

Net interest. Net interest was revised up for all 3 years: 20.1 billion for 1999, $78.8 billion for 2000, and $95.5 billion for 2001. (15)

For 1999, the revision reflected a downward revision to monetary interest received by the rest of the world that was partly offset by an upward revision to imputed interest received by domestic business.

For 2000, downward revisions to monetary interest received by domestic corporate business and by the rest of the world and an upward revision to monetary interest paid by domestic nonfarm sole proprietorships and partnerships were partly offset by a downward revision to monetary interest paid by domestic corporate business and by an upward revision to imputed interest received by domestic corporate business.

The revisions to domestic monetary interest reflected the incorporation of revised and newly available IRS tabulations of tax return data for corporations and for sole proprietorships and partnerships. The revisions to monetary interest received by the rest of the world reflected the incorporation of the annual revision of the ITA's. The revisions to imputed interest received reflected the incorporation of revised data from the Federal Reserve Board (FRB) flow-of-funds accounts on business deposits at commercial banks.

For 2001, the upward revision to net interest was attributable to the revisions to the 2000 levels and to newly incorporated regular source data from regulatory agencies, particularly data from the FRB flow-of-funds accounts. (16)

Consumption of fixed capital (CFC). CFC, which is the charge for the using up of private and government fixed capital, was revised down for all 3 years: $6.2 billion for 1999, $12.4 billion for 2000, and $22.1 billion for 2001. The revisions were mostly accounted for by downward revisions to the private component of CFC that reflected the incorporation of revised BEA estimates of fixed investment--primarily for computers and trucks--and of revised prices. (The estimates of investment and prices are direct inputs into the calculation of both private and government net capital stocks, which are used to calculate the CFC.)

Private capital consumption allowances (CCA)--that is, tax-return-based depreciation for corporations and nonfarm proprietorships and historical-cost depreciation (using consistent service lives) for farm proprietorships, rental income of persons, and nonprofit institutions--was revised down for all 3 years: $6.0 billion for 1999, $19.2 billion for 2000, and $12.7 billion for 2001. These revisions primarily reflected the incorporation of revised and newly available IRS tax return data. For all 3 years, downward revisions to the corporate component were partly offset by upward revisions to the noncorporate component. The revisions to the corporate component for 1999 and 2000 reflected the incorporation of revised and newly available IRS tax return data for corporations; for 2001, the revision reflected the incorporation of revised BEA projections of IRS depreciation and amortization on the basis of BEA estimates of investment flows and IRS service lives and depreciation conventions. The revisions to the noncorporate component for 1999 and 2000 reflected the incorporation of revised and newly available IRS tax return data for nonfarm proprietorships and partnerships; for 2001, the revision reflected the incorporation of revised BEA projections of IRS tax return data for nonfarm proprietorships and partnerships.

Private capital consumption adjustment (CCAdj), which is derived as the difference between private CCA and private CFC, was revised down $0.1 billion for 1999, was revised down $7.3 billion for 2000, and was revised up $8.0 billion for 2001.

Nonfactor income. Nonfactor income--which comprises indirect business tax and nontax liability, business transfer payments, and "subsidies less current surplus of government enterprises"--was revised up $0.8 billion for 1999, was revised down $5.8 billion for 2000, and was revised down $13.8 billion for 2001. For 2000 and 2001, the revisions primarily reflected downward revisions to indirect business taxes that were partly offset by downward revisions to "subsidies less current surplus of government enterprises," which is subtracted in aggregating nonfactor incomes.

The downward revisions to indirect business taxes were mainly to State and local indirect business taxes--specifically to general sales taxes--reflecting the incorporation of newly available and revised data from Census Bureau surveys of State and local government finances.

The downward revisions to "subsidies less current surplus of government enterprises" were mostly accounted for by the Federal Government component for 2000 and by the State and local government component for 2001. The downward revisions to Federal Government "subsidies less current surplus of government enterprises" were mostly accounted for by the current surplus of government enterprises for the U.S. Postal Service, reflecting newly incorporated financial data for fiscal years 2000 and 2001 from the U.S. Postal Service. The downward revisions to State and local government "subsidies less current surplus of government enterprises" were accounted for by the current surplus of government enterprises for 1999 and 2000 and by subsidies for 2001. For 2001, the downward revision to subsidies was accounted for by the incorporation of revised estimates of electricity expenditures by the State of California.

National income. National income--income that originates from production--was revised up $6.6 billion for 1999, was revised up $3.5 for 2000, and was revised down $95.5 billion for 2001. These revisions reflected the previously described revisions to compensation of employees, proprietors' income, rental income of persons, corporate profits, and net interest.

Personal income and its disposition. Personal income--income received by persons from participation in production, from government and business transfer payments, and from government interest--was revised up $9.2 billion for 1999, was revised up $87.4 billion for 2000, and was revised down $38.2 billion for 2001. These revisions partly reflected the previously described revisions to the components of national income that are included in personal income--wage and salary disbursements, other labor income, proprietors' income, and rental income of persons--and to the components of personal income--personal dividend income and personal interest income--that are derived from related components of national income. The revisions also reflected revisions to transfer payments to persons and to personal contributions for social insurance.

Personal dividend income--which consists of dividend income received by persons from all sources and which equals national income dividends less dividends received by government--was revised down for all 3 years: $15.1 billion for 1999, $3.5 billion for 2000, and $7.1 billion for 2001. These revisions reflected the incorporation of revised and newly available IRS tabulations of corporate tax return data, the annual revision of the ITA's, and data from public financial statements.

Personal interest income--which consists of monetary and imputed interest received by persons from all sources and which equals net interest plus interest paid by persons and interest paid by government less interest received by government--was revised up for all 3 years: $19.2 billion for 1999, $76.4 billion for 2000, and $97.7 billion for 2001. These revisions primarily reflected the previously described revisions to net interest.

Transfer payments to persons was revised down $1.1 billion for 1999, was revised up $1.2 billion for 2000, and was revised up $21.6 billion for 2001. For 2001, the revision primarily reflected upward revisions to State and local government transfer payments to persons and to Federal Government transfer payments to persons. The revision to State and local government transfer payments was mostly accounted for by medical care payments and reflected the incorporation of newly available data from the Centers for Medicare and Medicaid Services. The revision to Federal Government transfer payments was mostly accounted for by unemployment benefits and reflected the incorporation of newly available data from the Department of Labor.

Personal contributions for social insurance--which is subtracted in calculating personal income--was revised up $0.3 billion for 1999, was revised up $0.7 billion for 2000, and was revised down $1.0 billion for 2001.

Personal tax and nontax payments was revised down for all 3 years: $0.1 billion for 1999, $1.8 billion for 2000, and $14.1 billion for 2001. For 2001, the revision was more than accounted for by a downward revision to State and local tax and nontax payments, reflecting the incorporation of revised and newly available data from Census Bureau surveys of State and local government finances.

Reflecting the revisions to personal income and to personal tax and nontax payments, disposable personal income (DPI) was revised up $9.4 billion for 1999, was revised up $89.2 billion for 2000, and was revised down $24.1 billion for 2001.

Personal outlays--PCE, interest paid by persons, and "personal transfer payments to the rest of the world (net)"--was revised down for all 3 years: $3.9 billion for 1999, $44.7 billion for 2000, and $75.4 billion for 2001. For 2000, a downward revision to PCE accounted for the revision; for 2001, a downward revision to PCE more than accounted for the revision.

Personal saving--the difference between DPI and personal outlays--was revised up for all 3 years: $13.1 billion for 1999, $133.8 billion for 2000, and $51.3 billion for 2001. For 1999, the revision primarily reflected the upward revision to DPI. For 2000, the revision reflected the large upward revision to DPI and the large downward revision to personal outlays. For 2001, the revision reflected the large downward revision to personal outlays that was partly offset by the downward revision to DPI. Largely reflecting the revisions to personal saving, the personal saving rate--personal saving as a percentage of DPI--was revised up from 2.4 percent to 2.6 percent for 1999, was revised up from 1.0 percent to 2.8 percent for 2000, and was revised up from 1.6 percent to 2.3 percent for 2001.

Gross saving and investment. Gross saving was revised down $3.3 billion for 1999, was revised up $22.2 billion for 2000, and was revised down $78.4 billion for 2001. Gross saving as a percentage of GNP was revised down 0.1 percentage point to 18.3 percent for 1999, was revised up 0.3 percentage point to 18.4 percent for 2000, and was revised down 0.6 percentage point to 16.5 percent for 2001.

For 1999, a downward revision to gross government saving was partly offset by an upward revision to gross private saving. The revision to gross government saving reflected downward revisions to the Federal Government current surplus and to the State and local government current surplus. The revision to gross private saving was more than accounted for by an upward revision to personal saving.

For 2000, an upward revision to gross private saving was partly offset by a downward revision to gross government saving. The revision to gross private saving reflected a large upward revision to personal saving that was partly offset by a large downward revision to undistributed corporate profits with IVA and CCAdj. The revision to gross government saving reflected downward revisions to the State and local government current surplus and to the Federal Government current surplus.

For 2001, a large downward revision to gross government saving was partly offset by an upward revision to gross private saving. The revision to gross government saving reflected large downward revisions to the State and local government current surplus and to the Federal Government current surplus. Within gross private saving, a large upward revision to personal saving was partly offset by downward revisions to undistributed corporate profits with IVA and CCAdj, to noncorporate CFC, and to corporate CFC.

Gross investment--the sum of gross private domestic investment, gross government investment, and net foreign investment--was revised up $30.7 billion for 1999, was revised up $24.1 billion for 2000, and was revised down $45.8 billion for 2001. The revision for 1999 was accounted for by an upward revision to net foreign investment. The revision for 2000 reflected an upward revision to net foreign investment that was partly offset by a downward revision to gross private domestic investment. The revision for 2001 was more than accounted for by a downward revision to gross private domestic investment.

Annual price estimates

Revisions to the chain-type price indexes result from the incorporation of newly available and revised source data, from the introduction of methodological changes that affect the use of source data, and from the regularly scheduled incorporation of annual weights for the most recent year (2001). In this annual revision, the source data for price indexes that were used for deflation and the source data that affect implicit prices were revised. (17) Methodological changes included the introduction of a new price index for services of security and commodity brokers within PCE, exports and imports, and State and local government consumption expenditures; a new price index for insurance services within exports and imports; and new price indexes for several categories of Federal defense and nondefense services (see the section "Changes in Methodology"). In addition, the prices used for deflation reflected updated seasonal factors.

Newly available source data resulted in revisions to the implicit prices for four types of PCE for services--automobile insurance, health insurance, brokerage and investment charges, and "services furnished without payment by financial intermediaries except life insurance carriers"--and in revisions to the implicit prices for Federal Government and State and local government compensation of employees. The revisions to most of these prices reflected the previously discussed revisions to the corresponding current-dollar estimates.

The annual percent increase in the chain-type price index for gross domestic purchases was unrevised at 1.5 percent for 1999, was revised down 0.1 percentage point to 2.5 percent for 2000, and was revised up 0.2 percentage point to 1.9 percent for 2001 (see the addendum to table 8 and chart 1). The annual percent increase in the price index for GDP was unrevised at 1.4 percent for 1999, was revised down 0.2 percentage point to 2.1 percent for 2000, and was revised up 0.2 percentage point to 2.4 percent for 2001.

For 1999, the revisions to the prices of all the major components of GDP were small. For 2000, the largest contributor to the downward revision to the price index for gross domestic purchases was PCE for services; within services, the largest contributor was transportation services (primarily insurance).

For 2001, the largest contributors to the upward revision to the price index for gross domestic purchases were PCE for services, State and local government spending, and equipment and software. Within PCE for services, the largest contributor was medical care services (primarily, hospitals and nursing homes). Within State and local government spending, the largest contributor was "compensation of general government employees, except own-account investment." Within equipment and software, the largest contributor was computers and peripheral equipment.

Changes in Methodology

This section describes the changes in the source data and in the estimation methods that were incorporated into this year's annual revision. (18) One presentational change is also discussed.

Earlier incorporation of comprehensive data on wages and salaries. When the final estimates of GDP for the current quarter are released (in September, December, March, and June), BEA will now also release revised estimates of private wages and salaries and affected income-side aggregates for the previous quarter (for example, in September 2002, BEA will release revised wages and salaries for the first quarter of 2002). (19) This new revision schedule will permit the incorporation of the most recently available wage and salary data from the State unemployment insurance (UI) program on a more timely basis and thus improve the quality of the wage and salary estimates.

Underlying this change is a new method for estimating quarterly wages and salaries. Specifically, the quarterly estimates of wages and salaries have been improved by interpolating and extrapolating using seasonally adjusted quarterly information from BLS tabulations of wages and salaries of employees covered by State UI. Previously, only the annual estimates reflected data from this source; the quarterly estimates of wages and salaries were interpolated and extrapolated based on employment, hours, and average hourly earnings from the establishment survey of the BLS current employment statistics, a less comprehensive data source. Differences between the two data sources are described more fully in the box on page 24.

NAICS and improved estimates of PCE services. The estimates of personal consumption expenditures (PCE) for services are now prepared using data collected by the Census Bureau on a North American Industry Classification System (NAICS) 1997 basis. Previously, the estimates were prepared using data that were collected on a NAICS basis but were converted to a Standard Industrial Classification (SIC) basis by BEA.

PCE for services is estimated on a commodity basis rather than on an industry basis. Data collected on an industry basis, such as those reported in the Census

Bureau service annual survey (SAS), are allocated to commodities using "merchandise-line" and "sources-of-revenue" data from the 1997 Economic Census. Using the NAICS-based industry data improves the estimates of PCE for services by providing increased coverage and more detail than the SIC-based data. Industries that were not included in the SIC-based SAS are now reported in the NAICS-based SAS and can be used to estimate commodities within recreation services, household operation services, and "other services"; previously, the estimates for most of these commodities were prepared using data on sales, receipts, or wages for broader or less-related industries. The increased level of detail in the NAICS-based SAS enables BEA to allocate the industry-based data more accurately on the basis of merchandise lines or sources of revenue.

Improved measures of imputed commissions on equities transactions. Annual, quarterly, and monthly estimates of imputed commissions on equities transactions are now based on newly available source data on the quoted spreads of "market makers" from the NASDAQ National Market System. (20) Commissions on equities are included in brokerage charges and investment counseling within PCE for services and within State and local consumption expenditures for "other" services; they are also treated as an expense in the calculation of corporate profits as part of an adjustment to IRS source data for "costs of trading or issuing corporate securities." Previously, the annual estimates of spreads were based on historical samples of bid-ask spreads on NASDAQ stocks and on an examination of changes in spreads over time; for the quarterly and monthly estimates of spreads, the annual values were held constant.

Improved extrapolators for components of PCE services. Quarterly and monthly estimates of hotel and motel services and of postage expenses have been improved. The estimates of hotel and motel services for the most recent month are now extrapolated using estimates of room revenue that are, in turn, based on estimates of monthly occupancy rates, room rates, and room supply. Monthly occupancy and room rates are extrapolated using weekly trade source data, and estimates of monthly room supply are extrapolated using the number of available rooms based on trade source data. Previously, the estimates for hotel and motel services for the most recent month were extrapolated judgmentally.

Monthly and quarterly estimates of postage expenses are now interpolated and extrapolated using data on quarterly revenues for single-piece letters, flats, and parcels from the "Revenue, Pieces, and Weight Report" of the U.S. Postal Service. These data are adjusted from postal service accounting periods to calendar quarters and then seasonally adjusted and interpolated to months using the consumer price index for postage. Previously, estimates of postage expenses were judgmentally interpolated and extrapolated.

Improved estimates of closing costs in rental income. The quarterly estimates of rental income of persons with capital consumption adjustment are primarily calculated as space rent less expenses. Closing costs are a large and often volatile component of expenses; these costs include mortgage origination fees, which are about 1 percent of the value of mortgage originations, and other costs such as those associated with title insurance, attorney fees, and surveys. The estimates of closing costs have been improved by using more accurate data on mortgage originations. Specifically, the annual estimates of total closing costs are now interpolated using quarterly data on the value of mortgage originations reported to the Federal Reserve Board (FRB) under the Home Mortgage Disclosure Act (HMDA). Previously, the quarterly values of mortgage originations were judgmentally estimated. The quarterly values for 1998 remain judgmental estimates, and those for years prior to 1998 are based on information from the Department of Housing and Urban Development.

The HMDA data are currently available through the fourth quarter of 2000 and cover about three-fourths of the total value of residential mortgage originations. The data include adjustments for originations by small lenders and by other parties who are not required to report to the FRB. Beginning with the first quarter of 2001, the HMDA data are extrapolated using a two-quarter moving average of the Mortgage Bankers Association index of mortgage loan applications received by commercial banks, thrift institutions, and mortgage banking companies. These institutions receive about two-fifths of all residential mortgage applications.

Improved price measures for GDP components. The price measures of some components of PCE, exports and imports, and Federal Government consumption expenditures have been improved.

New price indexes are introduced for financial services within PCE for services and foreign transactions. Within PCE for services, producer price indexes (PPI's) for brokerage services are now used in the deflation of some components of brokerage and investment counseling. Previously, real estimates of these components were based on volume and trade data from the Securities and Exchange Commission and from trade sources and on the value of trading in U.S. Government and agency securities deflated by the BLS consumer price index (CPI) for all items. Within exports and imports, beginning with the fourth quarter of 2000, the PPI for security brokers, dealers, and investment banking companies replaces an annual implicit price deflator (IPD) from BEA's GDP-by-industry estimates for security and commodity brokers.

Within PCE for services, passenger fare payments by U.S. residents to U.S. carriers on international flights are now deflated using the corresponding BLS international price index. Previously, these passenger fare payments were deflated using the BLS import price index for air passenger fares.

Within PCE for services, real estimates of the commercial bank component of "services furnished without payment by financial intermediaries except life insurance" are based on a measure of unpriced output calculated as total output less priced output. For the most recent year, the total output measure is now extrapolated using data for most of the components of the BLS output index; the index itself is not available. (21) Previously, estimates of the commercial bank component for the most recent year were extrapolated based on a judgmental trend.

A new price index is now used in the deflation of net insurance (premiums less losses), a component of exports and imports of services. Beginning with the first quarter of 1999, a weighted average of the PPI's for "life insurance carriers" and "premiums for property and casualty insurance" replaces an annual IPD from BEA's GDP-by-industry for insurance carriers.

Installation support services, weapons support services, personnel support services, and printing within Federal defense consumption expenditures and "other" services and printing within nondefense consumption expenditures are now deflated using price indexes derived from PPI's, employment cost indexes, and CPI's. Previously, weighted averages of indexes derived from average hourly earnings were used.

Presentational change. Only one presentational change is introduced as part of this annual revision. Beginning with the second quarter of 2002, the quarterly estimates of net interest--shown in NIPA tables 1.9 and 1.14--will be published with each quarterly GDP estimate. Previously, the quarterly estimates of net interest were published only with the preliminary and final GDP estimates for the first three quarters of each year and only with the final estimate for the fourth quarter. The reliability of the source data available for the advance estimates of quarterly net interest is similar to that available for the preliminary estimate.

Appendix A. Revisions to the National Income and Product Accounts
[Billions of dollars]

                                                          1999

                                                    Revised  Revision

                                                   Account 1. National
                                                    Income and Product
                                                         Account

Compensation of employees                           5,308.8      -1.9
  Wage and salary accruals                          4,475.6      -1.8
    Disbursements                                   4,470.4      -1.8
    Wage accruals less disbursements                    5.2       0.0
  Supplements to wages and salaries                   833.2      -0.2
    Employer contributions for social insurance       323.0      -0.6
    Other labor income                                510.2       0.5

Proprietors' income with inventory valuation and
  capital consumption adjustments                     678.4       6.4

Rental income of persons with capital consumption
  adjustment                                          149.1       1.4

Corporate profits with inventory valuation and
  capital consumption adjustments                     805.8     -19.4
  Corporate profits with inventory valuation
    adjustment                                        757.9     -15.5
    Profits before tax                                762.1     -14.2
      Profits tax liability                           247.8      -5.2
      Profits after tax                               514.3      -9.0
        Dividends                                     328.4     -15.1
        Undistributed profits                         185.9       6.1
    Inventory valuation adjustment                     -4.2      -1.3
  Capital consumption adjustment                       47.9      -3.8

Net interest                                          526.6      20.1

National income                                     7,468.7       6.6

Business transfer payments                             41.5       0.2
  To persons                                           31.3       0.2
  To the rest of the world                             10.2       0.0
Indirect business tax and nontax liability            712.9      -0.2
Less: Subsidies less current surplus of
  government enterprises                               32.5      -0.8

Consumption of fixed capital                        1,145.2      -6.2
  Private                                             947.3      -6.0
  Government                                          197.9      -0.2
    General government                                168.6      -0.3
    Government enterprises                             29.3       0.1

Gross national income                               9,335.8       1.2

Less: Income receipts from the rest of the world      316.9       3.1
Plus: Income payments to the rest of the world        294.1     -26.4

Gross domestic income                               9,313.1     -28.2

Statistical discrepancy                               -38.8      33.9

GROSS DOMESTIC PRODUCT                              9,274.3       5.7

Personal consumption expenditures                   6,246.5      -3.7
  Durable goods                                       755.9      -5.0
  Nondurable goods                                  1,830.1      -1.2
  Services                                          3,660.5       2.5

Gross private domestic investment                   1,636.7       0.0
  Fixed investment                                  1,577.2      -1.0
    Nonresidential                                  1,173.5      -1.1
    Structures                                        283.7       0.2
    Equipment and software                            889.8      -1.3
  Residential                                         403.7       0.2
Change in private inventories                          59.5       0.9

Net exports of goods and services                    -249.9       1.0
  Exports                                             989.3      -0.5
  Imports                                           1,239.2      -1.4

Government consumption expenditures and gross
  investment                                        1,641.0       8.5
  Federal                                             565.0       1.0
    National defense                                  364.3      -0.2
    Nondefense                                        200.7       1.2
  State and local                                   1,076.0       7.5

GROSS DOMESTIC PRODUCT                              9,274.3       5.7

                                                   Account 2. Personal
                                                    Income and Outlay
                                                         Account

Personal tax and nontax payments                    1,159.1      -0.1

Personal outlays                                    6,453.3      -3.9
  Personal consumption expenditures                 6,246.5      -3.7
  Interest paid by persons                            179.5      -0.2
  Personal transfer payments to the rest of the
    world  (net)                                       27.3       0.1

Personal saving                                       174.0      13.1

PERSONAL TAXES, OUTLAYS, AND SAVING                 7,786.5       9.2

Wage and salary disbursements                       4,470.4      -1.8

Other labor income                                    510.2       0.5

Proprietors' income with inventory valuation and
  capital consumption adjustments                     678.4       6.4

Rental income of persons with capital consumption
  adjustment                                          149.1       1.4

Personal dividend income                              328.0     -15.1
  Dividends                                           328.4     -15.1
  Less: Dividends received by government                0.4       0.0

Personal interest income                              969.2      19.2
  Net interest                                        526.6      20.1
  Net interest paid by government                     263.1      -0.7
  Interest paid by persons                            179.5      -0.2

Transfer payments to persons                        1,018.5      -1.1
  From business                                        31.3       0.2
  From government                                     987.2      -1.2

Less: Personal contributions for social
  insurance                                           337.4       0.3

PERSONAL INCOME                                     7,786.5       9.2

                                                  Account 3. Government
                                                       Receipts and
                                                   Expenditures Account

Consumption expenditures                            1,336.3       8.3

Transfer payments                                     998.5      -1.6
  To persons                                          987.2      -1.2
  To the rest of the world (net)                       11.4      -0.2

Net interest paid                                     263.1      -0.7

Less: Dividends received by government                  0.4       0.0

Subsidies less current surplus of government
  enterprises                                          32.5      -0.8

Less: Wage accruals less disbursements                  0.0       0.0

Current surplus or deficit (-), national income
  and product accounts                                150.2     -11.1
  Federal                                             111.9      -7.3
  State and local                                      38.3      -3.8

GOVERNMENT CURRENT EXPENDITURES AND SURPLUS         2,780.3      -5.8

Personal tax and nontax payments                    1,159.1      -0.1

Corporate profits tax liability                       247.8      -5.2

Indirect business tax and nontax liability            712.9      -0.2

Contributions for social insurance                    660.4      -0.3
  Employer                                            323.0      -0.6
  Personal                                            337.4       0.3

GOVERNMENT CURRENT RECEIPTS                         2,780.3      -5.8

Exports of goods and services                         989.3      -0.5

Income receipts                                       316.9       3.1

RECEIPTS FROM THE REST OF THE WORLD                 1,306.2       2.6

Imports of goods and services                       1,239.2      -1.4

Income payments                                       294.1     -26.4

Transfer payments to the rest of the world (net)       48.9      -0.1
  From persons (net)                                   27.3       0.1
  From government (net)                                11.4      -0.2
  From business                                        10.2       0.0

Net foreign investment                               -276.0      30.6

PAYMENTS TO THE REST OF THE WORLD                   1,306.2       2.6

                                                    Account 5. Gross
                                                        Saving and
                                                   Investment Account

Gross private domestic investment                   1,636.7       0.0

Gross government investment                           304.7      O.1

Net foreign investment                               -276.0      30.6

GROSS INVESTMENT                                    1,665.4      30.7

Personal saving                                       174.0      13.1

Wage accruals less disbursements (private)              5.2       0.0

Undistributed corporate profits
  with inventory valuation and
  capital consumption adjustments                     229.6       0.9

Consumption of fixed capital                        1,145.2      -6.2
  Private                                             947.3      -6.0
  Government                                          197.9      -0.2
    General government                                168.6      -0.3
    Government enterprises                             29.3       0.1

Government current surplus or deficit (-),
  national income and product accounts                150.2     -11.1

Statistical discrepancy                               -38.8      33.9

GROSS SAVING AND STATISTICAL DISCREPANCY            1,665.4      30.7

                                                           2000

                                                    Revised  Revision

                                                    Account 1. National
                                                    Income and Product
                                                          Account

Compensation of employees                           5,723.4       8.2
  Wage and salary accruals                          4,836.3      -0.9
    Disbursements                                   4,836.3      -0.9
    Wage accruals less disbursements                    0.0       0.0
  Supplements to wages and salaries                   887.1       9.1
    Employer contributions for social insurance       342.9      -0.9
    Other labor income                                544.2      10.0

Proprietors' income with inventory valuation and
  capital consumption adjustments                     714.8      -0.2

Rental income of persons with capital consumption
  adjustment                                          146.6       5.0

Corporate profits with inventory valuation and
  capital consumption adjustments                     788.1     -88.3
  Corporate profits with inventory valuation
    adjustment                                        767.3     -65.7
    Profits before tax                                782.3     -63.1
      Profits tax liability                           259.4     -12.1
      Profits after tax                               522.9     -51.0
        Dividends                                     376.1      -3.5
        Undistributed profits                         146.8     -47.5
    Inventory valuation adjustment                    -15.0      -2.6
  Capital consumption adjustment                       20.8     -22.6

Net interest                                          611.5      78.8

National income                                     7,984.4       3.5

Business transfer payments                             43.7      -0.2
  To persons                                           33.0      -0.1
  To the rest of the world                             10.6      -0.2
Indirect business tax and nontax liability            753.6      -9.1
Less: Subsidies less current surplus of
  government enterprises                               34.1      -3.5

Consumption of fixed capital                        1,228.9     -12.4
  Private                                           1,018.0     -11.9
  Government                                          210.9      -0.4
    General government                                179.5      -0.6
    Government enterprises                             31.5       0.3

Gross national income                               9,976.5     -14.7

Less: Income receipts from the rest of the world      383.4      -0.8
Plus: Income payments to the rest of the world        360.0     -36.3

Gross domestic income                               9,953.1     -50.3

Statistical discrepancy                              -128.5       1.9

GROSS DOMESTIC PRODUCT                              9,824.6     -48.3

Personal consumption expenditures                   6,683.7     -44.7
  Durable goods                                       803.9     -15.7
  Nondurable goods                                  1,972.9     -16.7
  Services                                          3,906.9     -12.3

Gross private domestic investment                   1,755.4     -12.1
  Fixed investment                                  1,691.8     -26.3
    Nonresidential                                  1,265.8     -27.3
    Structures                                        314.2       0.6
    Equipment and software                            951.6     -27.9
  Residential                                         426.0       0.9
Change in private inventories                          63.6      14.2

Net exports of goods and services                    -365.5      -1.5
  Exports                                           1,101.1      -1.8
  Imports                                           1,466.6      -0.3

Government consumption expenditures and gross
  investment                                        1,751.0      10.0
  Federal                                             589.2      -1.0
    National defense                                  374.9      -0.5
    Nondefense                                        214.3      -0.5
  State and local                                   1,161.8      11.0

GROSS DOMESTIC PRODUCT                              9,824.6     -48.3

                                                    Account 2. Personal
                                                     Income and Outlay
                                                           Account

Personal tax and nontax payments                    1,286.4      -1.8

Personal outlays                                    6,918.6     -44.7
  Personal consumption expenditures                 6,683.7     -44.7
  Interest paid by persons                            205.4       0.1
  Personal transfer payments to the rest of the
    world  (net)                                       29.5      -0.1

Personal saving                                       201.5     133.8

PERSONAL TAXES, OUTLAYS, AND SAVING                 8,406.6      87.4

Wage and salary disbursements                       4,836.3      -0.9

Other labor income                                    544.2      10.0

Proprietors' income with inventory valuation and
  capital consumption adjustments                     714.8      -0.2

Rental income of persons with capital consumption
  adjustment                                          146.6       5.0

Personal dividend income                              375.7      -3.5
  Dividends                                           376.1      -3.5
  Less: Dividends received by government                0.4       0.0

Personal interest income                            1,077.0      76.4
  Net interest                                        611.5      78.8
  Net interest paid by government                     260.1      -2.6
  Interest paid by persons                            205.4       0.1

Transfer payments to persons                        1,070.3       1.2
  From business                                       33.00      -0.1
  From government                                   1,037.3       1.3

Less: Personal contributions for social
  insurance                                          358.40       0.7

PERSONAL INCOME                                     8,406.6      87.4

                                                  Account 3. Government
                                                      Receipts and
                                                   Expenditures Account

Consumption expenditures                            1,431.2       8.5

Transfer payments                                   1,050.8      0.80
  To persons                                        1,037.3      1.30
  To the rest of the world (net)                       13.6      -0.4

Net interest paid                                     260.1      -2.5

Less: Dividends received by government                  0.4       0.0

Subsidies less current surplus of government
  enterprises                                          34.1      -3.5

Less: Wage accruals less disbursements                  0.0       0.0

Current surplus or deficit (-), national income
  and product accounts                                224.8     -26.6
  Federal                                             206.9     -11.7
  State and local                                     18.00     -14.8

GOVERNMENT CURRENT EXPENDITURES AND SURPLUS         3,000.6     -23.3

Personal tax and nontax payments                    1,286.4      -1.8

Corporate profits tax liability                       259.4     -12.1

Indirect business tax and nontax liability            753.6      -9.1

Contributions for social insurance                    701.3      -0.2
  Employer                                            342.9      -9.0
  Personal                                            358.4       0.7

GOVERNMENT CURRENT RECEIPTS                         3,000.6     -23.3

Exports of goods and services                       1,101.1      -1.8

Income receipts                                       383.4      -0.8

RECEIPTS FROM THE REST OF THE WORLD                 1,484.5      -2.6

Imports of goods and services                       1,466.6      -0.3

Income payments                                       360.0     -36.3

Transfer payments to the rest of the world (net)       53.7      -0.7
  From persons (net)                                   29.5      -0.1
  From government (net)                                13.6      -0.4
  From business                                        10.6      -0.2

Net foreign investment                              -395.8        347

PAYMENTS TO THE REST OF THE WORLD                   1,484.5      -2.6

                                                    Account 5. Gross
                                                        Saving and
                                                    Investment Account

Gross private domestic investment                   1,755.4     -12.1

Gross government investment                           319.8       1.5

Net foreign investment                               -395.8      34.7

GROSS INVESTMENT                                    1,679.4      24.1

Personal saving                                       201.5     133.8

Wage accruals less disbursements (private)              0.0       0.0

Undistributed corporate profits
  with inventory valuation and
  capital consumption adjustments                     152.6     -72.7

Consumption of fixed capital                        1,228.9     -12.4
  Private                                           1,018.0     -11.9
  Government                                          210.9      -0.4
    General government                                179.5      -0.6
    Government enterprises                             31.5       0.3

Government current surplus or deficit (-),
  national income and product accounts                224.8     -26.6

Statistical discrepancy                              -128.5       1.9

GROSS SAVING AND STATISTICAL DISCREPANCY            1,679.4      24.1

                                                          2001

                                                    Revised  Revision

                                                    Account 1. National
                                                    Income and Product
                                                          Account

Compensation of employees                           5,874.0    -135.1
  Wage and salary accruals                          4,950.6    -147.6
    Disbursements                                   4,950.6    -147.6
    Wage accruals less disbursements                    0.0       0.0
  Supplements to wages and salaries                   924.3      12.5
    Employer contributions for social insurance       353.9      -4.1
    Other labor income                                570.4      16.6

Proprietors' income with inventory valuation and
  capital consumption adjustments                     727.9     -15.6

Rental income of persons with capital consumption
  adjustment                                          137.9      -4.7

Corporate profits with inventory valuation and
  capital consumption adjustments                     731.6     -35.5
  Corporate profits with inventory valuation
    adjustment                                        675.1     -25.6
    Profits before tax                                670.2     -28.3
      Profits tax liability                           199.3     -16.7
      Profits after tax                               470.9     -11.6
        Dividends                                     409.6      -7.0
        Undistributed profits                          61.2      -4.7
    Inventory valuation adjustment                      5.0       2.8
  Capital consumption adjustment                       56.5      -9.9

Net interest                                          649.8      95.5

National income                                     8,122.0     -95.5

Business transfer payments                             42.5      -2.1
  To persons                                           33.4      -1.6
  To the rest of the world                              9.1      -0.5
Indirect business tax and nontax liability            774.8     -19.2
Less: Subsidies less current surplus of
  government enterprises                               47.3      -7.5

Consumption of fixed capital                        1,329.3     -22.1
  Private                                           1,106.8     -20.8
  Government                                          222.4      -1.4
    General government                                187.7      -1.7
    Government enterprises                             34.8       0.4

Gross national income                               10,221.4   -131.2

Less: Income receipts from the rest of the world      316.9     -18.3
Plus: Income payments to the rest of the world        295.0     -45.5

Gross domestic income                               10,199.4   -158.6

Statistical discrepancy                              -117.3      32.5

GROSS DOMESTIC PRODUCT                              10,082.2   -125.9

Personal consumption expenditures                   6,987.0     -77.5
  Durable goods                                       835.9     -22.4
  Nondurable goods                                  2,041.3     -13.8
  Services                                          4,109.9     -41.2

Gross private domestic investment                   1,586.0     -47.9
  Fixed investment                                  1,646.3     -46.1
    Nonresidential                                  1,201.6     -44.4
    Structures                                        324.5      -5.8
    Equipment and software                            877.1     -38.7
  Residential                                         444.8      -1.5
Change in private inventories                         -60.3      -1.9

Net exports of goods and services                    -348.9     -19.1
  Exports                                           1,034.1     -16.3
  Imports                                           1,383.0       2.9

Government consumption expenditures and gross
  investment                                        1,858.0      18.5
  Federal                                             628.1      12.4
    National defense                                  399.9       0.9
    Nondefense                                        228.2      11.6
  State and local                                   1,229.9       6.1

GROSS DOMESTIC PRODUCT                              1,008.2    -125.9

                                                    Account 2. Personal
                                                    Income and Outlay
                                                    Account

Personal tax and nontax payments                    1,292.1     -14.1

Personal outlays                                    7,223.5     -75.4
  Personal consumption expenditures                 6,987.0     -77.5
  Interest paid by persons                            205.4       2.2
  Personal transfer payments to the rest of the
    world  (net)                                       31.1      -0.1

Personal saving                                       169.7      51.3

PERSONAL TAXES, OUTLAYS, AND SAVING                 8,685.3     -38.2

Wage and salary disbursements                       4,950.6    -147.6

Other labor income                                    570.4      16.6

Proprietors' income with inventory valuation and
  capital consumption adjustments                     727.9     -15.6

Rental income of persons with capital consumption
  adjustment                                          137.9      -4.7

Personal dividend income                              409.2      -7.1
  Dividends                                           409.6      -7.0
  Less: Dividends received by government                0.4       0.0

Personal interest income                            1,091.3      97.7
  Net interest                                        649.8      95.5
  Net interest paid by government                     236.0      -0.1
  Interest paid by persons                            205.4       2.2

Transfer payments to persons                        1,170.4      21.6
  From business                                        33.4      -1.6
  From government                                   1,137.0      23.2

Less: Personal contributions for social
  insurance                                           372.3      -1.0

PERSONAL INCOME                                     8,685.3     -38.2

                                                  Account 3. Government
                                                       Receipts and
                                                   Expenditures Account

Consumption expenditures                            1,522.2      23.9

Transfer payments                                   1,146.6     24.50
  To persons                                        1,137.0     23.20
  To the rest of the world (net)                        9.6       1.3

Net interest paid                                     236.0      -0.1

Less: Dividends received by government                  0.4       0.0

Subsidies less current surplus of government
  enterprises                                          47.3      -7.5

Less: Wage accruals less disbursements                  0.0       0.0

Current surplus or deficit (-), national income
  and product accounts                                 40.7     -95.8
  Federal                                              72.0     -47.0
  State and local                                     -31.3     -48.9

GOVERNMENT CURRENT EXPENDITURES AND SURPLUS         2,992.3     -55.1

Personal tax and nontax payments                    1,292.1     -14.1

Corporate profits tax liability                       199.3     -16.7

Indirect business tax and nontax liability            774.8     -19.2

Contributions for social insurance                    726.1       -51
  Employer                                            353.9       -41
  Personal                                            372.3      -1.0

GOVERNMENT CURRENT RECEIPTS                         2,992.3     -55.1

Exports of goods and services                       1,034.1     -16.3

Income receipts                                       316.9     -18.3

RECEIPTS FROM THE REST OF THE WORLD                 1,351.1     -34.4

Imports of goods and services                       1,383.0       2.9

Income payments                                       295.0     -45.5

Transfer payments to the rest of the world (net)       49.8       0.7
  From persons (net)                                   31.1      -0.1
  From government (net)                                 9.6       1.3
  From business                                         9.1      -0.5

Net foreign investment                               -376.7       7.4

PAYMENTS TO THE REST OF THE WORLD                   1,351.1     -34.4

                                                    Account 5. Gross
                                                        Saving and
                                                    Investment Account

Gross private domestic investment                   1,586.0    -47.9

Gross government investment                           335.8      -5.4

Net foreign investment                               -376.7       7.4

GROSS INVESTMENT                                    1,545.1     -45.0

Personal saving                                       169.7      51.3

Wage accruals less disbursements (private)              0.0       0.0

Undistributed corporate profits
  with inventory valuation and
  capital consumption adjustments                     122.7     -11.8

Consumption of fixed capital                        1,329.3     -22.1
  Private                                           1,106.8     -20.8
  Government                                          222.4      -1.4
    General government                                187.7      -1.7
    Government enterprises                             34.8       0.4

Government current surplus or deficit (-),
  national income and product accounts                 40.7     -95.8

Statistical discrepancy                              -117.3      32.5

GROSS SAVING AND STATISTICAL DISCREPANCY            1,545.1     -45.8
Table 1. Real GDP and Its Major Components:
Change From 1998: IV to 2002:I

[Billions of chained (1996) dollars, seasonally adjusted annual rates]

                                               Previously published

                                                        Change for
                                                      1998:IV-2002:I

                                                              Percent
                                   1998:IV   2002:I  Dollars  (annual
                                                               rate)

  Gross domestic product           8,667.9  9,488.6    820.7      2.8

Personal consumption expenditures  5,784.7  6,593.5    808.8      4.1
  Durable goods                      767.3    996.8    229.5      8.4
  Nondurable goods                 1,715.3  1,931.1    215.8      3.7
  Services                         3,307.6  3,692.6    385.0      3.4

Gross private domestic investment  1,612.1  1,599.5    -12.6     -0.2
  Fixed investment                 1,531.7  1,618.8     87.1      1.7
    Nonresidential                 1,175.4  1,225.3     49.9      1.3
      Structures                     265.1    234.2    -30.9     -3.7
      Equipment and software         912.9  1,005.9     93.0      3.0
    Residential                      357.4    389.0     31.6      2.6
  Change in private inventories       80.0    -27.7   -107.7      ...

Net exports of goods and services   -239.2   -434.5   -195.3      ...
  Exports                          1,025.6  1,029.3      3.7      0.1
    Goods                            742.8    736.4     -6.4     -0.3
    Services                         283.3    291.9      8.6      0.9
  Imports                          1,264.8  1,463.8    199.0      4.6
    Goods                          1,070.6  1,256.5    185.9      5.1
    Services                         194.6    206.4     11.8      1.8

Government consumption
  expenditures and
  gross investment                 1,504.8  1,690.9    186.1      3.7
  Federal                            531.7    590.7     59.0      3.3
    National defense                 345.8    389.2     43.4      3.7
    Nondefense                       185.8    201.6     15.8      2.5
  State and local                    972.8  1,099.8    127.0      3.8

Addenda:
  Final sales of domestic product  8,588.5  9,501.6    913.1      3.2
  Gross domestic purchases         8,896.6  9,896.2    999.6      3.3
  Gross national product           8,662.0  9,475.3    813.3      2.8
  Gross domestic income            8,700.3  9,644.2    943.9      3.2

                                            Revised

                                               Change for
                                             1998:IV-2002:I

                                                     Percent
                                    2002:I  Dollars  (annual
                                                      rate)

  Gross domestic product           9,363.2    695.3      2.4

Personal consumption expenditures  6,513.8    729.1      3.7
  Durable goods                      975.9    208.6      7.7
  Nondurable goods                 1,921.4    206.1      3.6
  Services                         3,642.2    334.6      3.0

Gross private domestic investment  1,554.0    -58.1     -1.1
  Fixed investment                 1,576.4     44.7      0.9
    Nonresidential                 1,188.4     13.0      0.3
      Structures                     243.2    -21.9     -2.6
      Equipment and software         953.7     40.8      1.4
    Residential                      383.6     26.2      2.2
  Change in private inventories      -28.9   -108.9      ...

Net exports of goods and services   -446.6   -207.4      ...
  Exports                          1,030.6      5.0      0.1
    Goods                            738.1     -4.7     -0.2
    Services                         292.2      8.9      1.0
  Imports                          1,477.1    212.3      4.9
    Goods                          1,250.0    179.4      4.9
    Services                         225.5     30.9      4.6

Government consumption
  expenditures and
  gross investment                  1697.3    192.5      3.8
  Federal                            597.8     66.1      3.7
    National defense                 388.5     42.7      3.6
    Nondefense                       209.3     23.5      3.7
  State and local                   1099.3    126.5      3.8

Addenda:
  Final sales of domestic product  9,379.4    790.9      2.7
  Gross domestic purchases         9,778.2    881.6      2.9
  Gross national product           9,367.5    705.5      2.4
  Gross domestic income            9,470.4    770.1      2.6

                                    Revision in change

                                            Percentage
                                   Dollars    points

  Gross domestic product            -125.4     -0.4

Personal consumption expenditures    -79.7     -0.4
  Durable goods                      -20.9     -0.7
  Nondurable goods                    -9.7     -0.1
  Services                           -50.4     -0.4

Gross private domestic investment    -45.5     -0.9
  Fixed investment                   -42.4     -0.8
    Nonresidential                   -36.9     -1.0
      Structures                       9.0      1.1
      Equipment and software         -52.2     -1.6
    Residential                       -5.4     -0.4
  Change in private inventories       -1.2      ...

Net exports of goods and services    -12.1      ...
  Exports                              1.3      0.0
    Goods                              1.7      0.1
    Services                           0.3      0.1
  Imports                             13.3      0.3
    Goods                             -6.5     -0.2
    Services                          19.1      2.8

Government consumption
  expenditures and
  gross investment                     6.4      0.1
  Federal                              7.1      0.4
    National defense                  -0.7     -0.1
    Nondefense                         7.7      1.2
  State and local                     -0.5      0.0

Addenda:
  Final sales of domestic product   -122.2     -0.5
  Gross domestic purchases          -118.0     -0.4
  Gross national product            -107.8     -0.4
  Gross domestic income             -173.8     -0.6

NOTE. Chained (1996) dollar series are calculated as the product of
the chain-type quantity index and the 1996 current-dollar value of
the corresponding series, divided by 100. Because the formula for
the chain-type quantity indexes uses the weights of more than one
period, the corresponding chained-dollar estimates are usually not
additive.
Table 2. Chain-Type Price Indexes:
Change from 1998:IV to 2002:I
                                       Percent change for
                                         1998:IV-2002:I     Revision in
                                          (annual rate)        change
                                                             (percent-
                                       Previously           age points)
                                        published  Revised

Gross domestic product                        1.9      1.9          0.0
  Less: Exports of goods and services         0.2     -2.0         -0.4
  Plus: Imports of goods and services        -0.1      0.1          0.2

Equals: Gross domestic purchases              1.8      1.8          0.0
  Personal consumption expenditures           1.9      1.9          0.0
    Durable goods                            -2.1     -2.2         -0.1
    Nondurable goods                          2.0      2.0          0.0
    Services                                  2.7      2.7          0.0

  Gross private domestic investment           0.4      0.6          0.2
    Fixed investment                          0.5      0.6          0.1
      Nonresidential                         -0.6     -0.5          0.1
        Structures                            3.3      2.8         -0.5
        Equipment and software               -1.9     -1.5          0.4
      Residential                             3.6      3.8          2.0
    Change in private inventories             ...      ...          ...

  Government consumption expenditures
    and gross investment                      2.7      2.8          0.1
    Federal                                   2.5      2.7          0.2
      National defense                        2.5      2.5          0.0
      Nondefense                              2.5      3.0          0.5
    State and local                           2.9      2.9          0.0

Addenda:
  Final sales of domestic product             1.9      1.9          0.0
  Gross national product                      1.9      1.9          0.0
Table 3. Revisions to Contributions to Percent Change in Real GDP

                                                       1999

                                     1998    Previ-
                                             ously    Revised  Revision
                                           published

Percent change at annual rate:

    Gross domestic product            4.3        4.1      4.1       0.0

Percentage points at annual rates:

  Personal consumption
    expenditures                     3.18       3.35     3.30     -0.05
    Durable goods                    0.80       0.97     0.92     -0.05
    Nondurable goods                 0.81       0.93     0.91     -0.02
    Services                         1.57       1.45     1.47      0.02

  Gross private domestic
    investment                       1.96       1.14     1.15      0.01
    Fixed investment                 1.80       1.29     1.29      0.00
      Nonresidential                 1.49       1.01     1.01      0.00
        Structures                   0.21      -0.07    -0.04      0.03
        Equipment and software       1.27       1.08     1.05     -0.03
      Residential                    0.32       0.28     0.28      0.00
    Change in private inventories    0.15      -0.15    -0.15      0.00

  Net exports of goods and
    services                        -1.20      -0.98    -1.01     -0.03
    Exports                          0.24       0.35     0.37      0.02
      Goods                          0.17       0.30     0.29     -0.01
      Services                       0.07       0.05     0.08      0.03
    Imports                         -1.44      -1.33    -1.38     -0.05
      Goods                         -1.20      -1.13    -1.29      0.02
      Services                      -0.24      -0.02    -0.09     -0.07

  Government consumption
    expenditures and
    gross investment                 0.34       0.58     0.68      0.10
    Federal                         -0.05       0.13     0.14      0.01
      National defense              -0.07       0.08     0.09      0.01
      Nondefense                     0.02       0.05     0.06      0.01
    State and local                  0.39       0.44     0.54      0.10

                                                 2000

                                     Previ-
                                      ously    Revised  Revision
                                    published

Percent change at annual rate:

    Gross domestic product                4.1      3.8      -0.3

Percentage points at annual rates:

  Personal consumption
    expenditures                         3.28     2.94     -0.34
    Durable goods                        0.77     0.65     -0.12
    Nondurable goods                     0.94     0.77     -0.17
    Services                             1.57     1.51     -0.06

  Gross private domestic
    investment                           1.19     1.08     -0.11
    Fixed investment                     1.28     1.03     -0.25
      Nonresidential                     1.25     0.98     -0.27
        Structures                       0.19     0.20      0.01
        Equipment and software           1.06     0.78     -0.28
      Residential                        0.04     0.05      0.01
    Change in private inventories       -0.09     0.06      0.15

  Net exports of goods and
    services                            -0.79    -0.75      0.04
    Exports                              1.01     1.04      0.03
      Goods                              0.85     0.85      0.00
      Services                           0.17     0.19      0.02
    Imports                             -1.81    -1.79      0.02
      Goods                             -1.54    -1.54      0.00
      Services                          -0.26    -0.24      0.02

  Government consumption
    expenditures and
    gross investment                     0.47     0.49      0.02
    Federal                              0.10     0.08     -0.02
      National defense                   0.00     0.00      0.00
      Nondefense                         0.10     0.08     -0.02
    State and local                      0.37     0.41      0.04

                                                2001

                                     Previ-
                                      ously    Revised  Revision
                                    published

Percent change at annual rate:


    Gross domestic product                1.2      0.3      -0.9

Percentage points at annual rates:

  Personal consumption
    expenditures                         2.10     1.67     -0.43
    Durable goods                        0.54     0.48     -0.06
    Nondurable goods                     0.36     0.39      0.03
    Services                             1.19     0.80     -0.39

  Gross private domestic
    investment                          -1.41    -1.90     -0.49
    Fixed investment                    -0.33    -0.65     -0.32
      Nonresidential                    -0.40    -0.66     -0.26
        Structures                       0.02    -0.05     -0.07
        Equipment and software          -0.42    -0.61     -0.19
      Residential                        0.07     0.01     -0.06
    Change in private inventories       -1.08    -1.24     -0.16

  Net exports of goods and
    services                            -0.12    -0.18     -0.06
    Exports                             -0.49    -0.59     -0.10
      Goods                             -0.44    -0.47     -0.03
      Services                          -0.06    -0.13     -0.07
    Imports                              0.37     0.42      0.05
      Goods                              0.33     0.40      0.07
      Services                           0.04     0.01     -0.03

  Government consumption
    expenditures and
    gross investment                     0.63     0.65      0.02
    Federal                              0.16     0.29      0.13
      National defense                   0.18     0.19      0.01
      Nondefense                        -0.02     0.10      0.12
    State and local                      0.47     0.36     -0.11
Table 4. Revisions to Percent Change in Real GDP

[Percent change from preceding year]

                                                      1999

                                    1998   Previ-
                                            ously    Revised  Revision
                                          published

  Gross domestic product             4.3        4.1      4.1       0.0

Personal consumption expenditures    4.8        5.0      4.9      -0.1
  Durable goods                     10.5       12.5     11.8      -0.7
  Nondurable goods                   4.1        4.7      4.7       0.0
  Services                           4.0        3.7      3.7       0.0

Gross private domestic
  fixed investment                  11.4        7.8      7.8       0.0
  Nonresidential                    12.5        8.2      8.1      -0.1
    Structures                       6.8       -2.0     -1.3       0.7
    Equipment and software          14.6       11.8     11.5      -0.3
  Residential                        8.0        6.7      6.7       0.0

Change in private inventories        ...        ...      ...       ...

Net exports of goods and services    ...        ...      ...       ...
  Exports                            2.1        3.2      3.4       0.2
    Goods                            2.1        3.9      3.8      -0.1
    Services                         2.3        1.6      2.5       0.9
  Imports                           11.8       10.5     10.9       0.4
    Goods                           11.7       12.4     12.2      -0.2
    Services                        11.9        1.1      4.2       3.1

Government consumption
  expenditures and
  gross investment                   1.9        3.3      3.9       0.6
  Federal                           -0.8        2.2      2.3       0.1
    National defense                -1.8        2.1      2.1       0.0
    Nondefense                       1.1        2.3      2.7       0.4
  State and local                    3.4        3.9      4.7       0.8

                                               2000

                                    Previ-
                                     ously    Revised  Revision
                                   published

  Gross domestic product                 4.1      3.8      -0.3

Personal consumption expenditures        4.8      4.4      -0.4
  Durable goods                          9.5      8.2      -1.3
  Nondurable goods                       4.7      3.9      -0.8
  Services                               4.0      3.8      -0.2

Gross private domestic
  fixed investment                       7.6      6.1      -1.5
  Nonresidential                         9.9      7.8      -2.1
    Structures                           6.2      6.5       0.3
    Equipment and software              11.1      8.2      -2.9
  Residential                            0.8      1.1       0.3

Change in private inventories            ...      ...       ...

Net exports of goods and services        ...      ...       ...
  Exports                                9.5      9.7       0.2
    Goods                               11.3     11.3       0.0
    Services                             5.3      6.0       0.7
  Imports                               13.4     13.2      -0.2
    Goods                               13.5     13.5       0.0
    Services                            12.6     11.6      -1.0

Government consumption
  expenditures and
  gross investment                       2.7      2.7       0.0
  Federal                                1.7      1.3      -0.4
    National defense                     0.1     -0.1      -0.2
    Nondefense                           4.6      3.6      -1.0
  State and local                        3.2      3.5       0.3

                                               2001

                                    Previ-
                                     ously    Revised  Revision
                                   published

  Gross domestic product                 1.2      0.3      -0.9

Personal consumption expenditures        3.1      2.5      -0.6
  Durable goods                          6.7      6.0      -0.7
  Nondurable goods                       1.8      2.0       0.2
  Services                               3.0      2.0      -1.0

Gross private domestic
  fixed investment                      -2.0     -3.8      -1.8
  Nonresidential                        -3.2     -5.2      -2.0
    Structures                           0.9     -1.7      -2.6
    Equipment and software              -4.4     -6.4      -2.0
  Residential                            1.5      0.3      -1.2

Change in private inventories            ...      ...       ...

Net exports of goods and services        ...      ...       ...
  Exports                               -4.5     -5.4      -0.9
    Goods                               -5.6     -5.9      -0.3
    Services                            -1.9     -4.0      -2.1
  Imports                               -2.7     -2.9      -0.2
    Goods                               -2.8     -3.3      -0.5
    Services                            -2.6     -0.5       2.1

Government consumption
  expenditures and
  gross investment                       3.6      3.7       0.1
  Federal                                2.7      4.8       2.1
    National defense                     4.7      5.0       0.3
    Nondefense                          -0.9      4.5       5.4
  State and local                        4.0      3.1      -0.9
Table 5. GDP, Real GDP, the GDP Price Index,
and the Gross Domestic Purchases Price Index:
Revisions to Percent Change From Preceding Quarter

[Percent change at annual rates; based
on seasonally adjusted annual rates]

                           GDP

             Previously   Revised   Revision
             published

1998:IV             7.8       ...        ...

1999:I              4.9       4.9        0.0
     II             3.0       3.5        0.5
     III            6.1       6.5        0.4
     IV            10.0       8.9       -1.1

2000:I              6.3       5.7       -0.6
     II             8.0       7.3       -0.7
     III            3.3       2.2       -1.1
     IV             3.7       3.2       -0.5

2001:I              4.6       3.0       -1.6
     II             2.4       0.9       -1.5
     III            0.9       1.9        1.0
     IV             1.5       2.2        0.7

2002:I              7.5       6.5       -1.0

                         Real GDP

             Previously   Revised   Revision
             published

1998:IV             6.7       ...        ...

1999:I              3.1       3.0       -0.1
     II             1.7       2.0        0.3
     III            4.7       5.2        0.5
     IV             8.3       7.1       -1.2

2000:I              2.3       2.6        0.3
     II             5.7       4.8       -0.9
     III            1.3       0.6       -0.7
     IV             1.9       1.1       -0.8

2001:I              1.3      -0.6       -1.9
     II             0.3      -1.6       -1.9
     III           -1.3      -0.3        1.0
     IV             1.7       2.7        1.0

2002:I              6.1       5.0       -1.1

                     GDP price index

             Previously   Revised   Revision
             published

1998:IV             1.1       ...        ...

1999:I              1.7       1.8        0.1
     II             1.4       1.5        0.1
     III            1.4       1.2       -0.2
     IV             1.8       1.7       -0.1

2000:I              3.8       3.1       -0.7
     II             2.1       2.3        0.2
     III            1.9       1.6       -0.3
     IV             1.8       2.1        0.3

2001:I              3.3       3.7        0.4
     II             2.1       2.5        0.4
     III            2.3       2.2       -0.1
     IV            -0.1      -0.5       -0.4

2002:I              1.2       1.3        0.1

                     Gross domestic
                  purchases price index

             Previously   Revised   Revision
             published

1998:IV             1.2       ...        ...

1999:I              1.5       1.4       -0.1
     II             2.0       2.1        0.1
     III            2.0       1.9       -0.1
     IV             2.2       2.2        0.0

2000:I              4.2       3.7       -0.5
     II             1.9       2.2        0.3
     III            2.3       2.2       -0.1
     IV             1.7       2.1        0.4

2001:I              2.7       3.3        0.6
     II             1.3       1.7        0.4
     III           -0.1      -0.2       -0.1
     IV             0.5       0.4       -0.1

2002:I              1.1       1.2        0.1
Table 6. NIPA Revisions: Selected
Component Detail and Major Source Data

                                               Billions of dollars

           NIPA component                   Revision in level   Revised
                                                                  2001
                                          1999   2000    2001    level

          Gross domestic product           5.7  -48.3  -125.9  10,082.2

  Personal consumption expenditures       -3.7  -44.7   -77.5   6,987.0

    Goods                                 -6.2  -32.4   -36.2   2,877.2
      Of which:
        Motor vehicles and parts          -5.6  -10.2   -13.8     361.3
          Of which:
            Other motor vehicles          -6.0  -10.6   -13.2     149.0
        Goods other than motor
          vehicles and parts              -0.6  -22.2   -22.4   2,515.9
          Of which:
            Furniture and
              household equipment          0.3   -2.5    -4.3     306.1
            Other durable goods            0.2   -3.1    -4.4     168.4
            Clothing and shoes             0.1   -5.4    -6.9     315.3
            Other nondurable goods        -0.2   -8.0    -7.0     555.0
    Services                               2.5  -12.3   -41.2   4,109.9
      Of which:
        Household operation                0.7    0.5    -5.9     406.3
          Of which:
            Domestic service               0.0    0.0    -5.7      14.6
        Transportation                     2.0   -5.0    -6.9     271.4
          Of which:
                  User-operated
                    transportation         1.6   -5.0    -7.8     218.6
                    Of which:
                      Insurance            0.0   -7.2    -8.3      32.1
            Medical care                  -2.7   -4.7    11.1   1,072.2
              Of which:
                Other professional
                  services                -1.4   -3.6    -2.3     153.5
                Hospitals                  0.2   -0.4     9.8     425.9
                  Of which:
                    Nonprofit              0.0    0.3     7.3     281.0
            Other services                 0.3   -3.8   -39.2   1,073.6
              Of which:
                Personal care              0.0   -1.2    -6.3      79.0
                Personal business         -2.1   -6.4   -32.4     634.3
                  Of which:
                    Brokerage charges
                      and investment
                      counseling           4.2    4.5    -8.0      74.2
                    Services furnished
                      without payment
                      by financial
                      intermediaries
                      except life
                      insurance
                      carriers            -5.0   -7.3   -20.7     259.5
                Education and research     2.6    4.1     2.4     174.9
                  Of which:
                    Higher education       1.9    2.5     1.6      87.6
                    Nursery,
                      elementary,
                      and secondary
                      schools              0.6    1.5     1.5      35.5

Gross private domestic Investment          0.0  -12.1   -47.9   1,586.0

    Fixed investment                      -1.0  -26.3   -46.1   1,646.3

      Nonresidential                      -1.1  -27.3   -44.4   1,201.6

        Structures                         0.2    0.6    -5.8     324.5
            Of which:
              Nonresidential
                buildings,
                excluding farm            -0.1   -3.9    -8.9     210.1
                Of which:
                  Industrial               0.0   -2.2    -4.1      25.6
                  Commercial               0.0   -1.1    -3.9     118.5
              Mining exploration,
                shafts, and wells          0.2    1.6     4.0      42.7
                Of which:
                  Petroleum and
                    natural gas            0.2    2.1     4.5      41.3

        Equipment and software            -1.3  -27.9   -38.7     877.1
          Of which:
            Information processing
              equipment and software       2.6  -19.6   -22.8     404.3
              Of which:
                Computers and
                  peripheral equipment    -0.4  -16.0   -13.5      74.2
                Software                   2.7   -3.7    -8.6     180.4
            Industrial equipment           1.1   -1.8    -3.1     159.0
              Of which:
                Special industry
                  machinery, nec           0.1   -4.3    -5.1      41.0
            Transportation equipment      -4.4   -6.2   -12.2     165.8
              Of which:
                Trucks, buses,
                  and truck trailers      -4.3   -6.8    -7.2      90.1
                Autos                     -0.3   -0.5    -2.4      34.1
                Aircraft                   0.2    1.4    -2.1      33.7
      Residential                          0.2    0.9    -1.5     444.8
          Structures                       0.1    1.2    -1.4     435.4
            Of which:
              Single-family
                structures                 0.0    0.0     2.5     232.1
              Improvements                 0.0    0.0    -4.4     104.6
    Change in private inventories          0.9   14.2    -1.9     -60.3
      Farm                                 0.0   -0.4     3.3       1.6
      Nonfarm                              1.0   14.7    -5.1     -61.9
          Change in book value             2.0   13.7   -10.5     -75.5
              Of which:
                Manufacturing              2.9    5.2    -4.0     -36.4
                Wholesale trade            0.1   -1.3    -4.8     -19.4
                  Of which:
                    Merchant wholesale
                      trade               -0.1   -0.1    -4.7     -16.5
                Retail trade               0.2    4.9    -4.5     -21.2

                  Of which:
                    Motor vehicle
                      dealers             -0.1    5.4    -2.3     -15.9
                Other industries          -1.2    6.0    -0.2       1.6
          Inventory valuation
            adjustment                    -0.9    0.9     5.4      13.6

Net exports of goods and services          1.0   -1.5   -19.1    -348.9

    Exports                               -0.5   -1.8   -16.3   1,034.1
        Goods                             -1.0   -0.6    -2.9     733.5
        Services                           0.5   -1.2   -13.4     300.6
    Imports                               -1.4   -0.3     2.9   1,383.0
        Goods                             -1.6   -1.8    -6.3   1,167.2
        Services                           0.2    1.6     9.2     215.8

Government consumption expenditures
    and gross investment                   8.5   10.0    18.5   1,858.0

    Federal consumption expenditures
      and gross investment                 1.0   -1.0    12.4     628.1
      Of which:
        Nondefense                         1.2   -0.5    11.6     228.2
          Consumption expenditures         1.8    0.1    12.1     184.0
            Of which:
              Services                     1.3    0.8    10.0     174.0
                Of which:
                  Other services           1.4    0.8    11.3      50.1
    State and local consumption
      expenditures                         7.5   11.0     6.1   1,229.9
      and gross investment                 6.3    8.9     9.5     993.7
      Consumption expenditures
        Of which:
          Services                         3.9    5.6     6.4     856.7
            Of which:
              Compensation of
                general government
                employees, except
                own-account
                investment                -0.5   -1.0     4.0     700.4
              Other services               4.4    6.8     3.3      60.9

        Gross investment                   1.2    2.1    -3.4     236.2
          Of which:
            Structures                     1.0    2.4    -5.5     177.6

Gross domestic product                     5.7  -48.3  -125.9  10,082.2

Plus: Net receipts of income              29.5   35.5    27.2      21.9
  Income receipts from the
    rest of the world                      3.1   -0.8   -18.3     316.9
  Less: Income payments to the
    rest of the world                    -26.4  -36.3   -45.5     295.0

Equals: Gross national product            35.3  -12.8   -98.7  10,104.1

Less: Statistical discrepancy (2)         33.9    1.9    32.5    -117.3

Equals: Gross national income              1.2  -14.7  -131.2  10,221.4

Compensation of employees                 -1.9    8.2  -135.1   5,874.9

  Wage and salary accruals                -1.8   -0.9  -147.6   4,950.6
    Of which:
      Wage and salary disbursements       -1.8   -0.9  -147.6   4,950.6
        Government                        -0.1    0.5     4.8     810.8
          Federal                         -0.2    0.0    -5.1     197.4
          State and local                  0.0    0.4    10.0     613.5
        Private                           -1.6   -1.4  -152.4   4,139.8
  Supplements to wages and salaries       -0.2    9.1    12.5     924.3
    Employer contributions for
      social insurance                    -0.6   -0.9    -4.1     353.9
      Federal social
        insurance funds                   -0.2    0.1    -2.5     346.6
      State and local social
        insurance funds                   -0.4   -1.0    -1.6       7.2

    Other labor income                     0.5   10.0    16.6     570.4
      Of which:
        Private pension and profit-
          sharing plans                    0.0    4.0     ...      75.9

        Publicly administered
          government
          retirement plans                -1.0   -4.1     ...     110.9
        Group health and life
          insurance                        1.2    6.3     ...     339.6

Proprietors' income
  with IVA and CCAdj                       6.4   -0.2   -15.6     727.9
    Farm                                   1.1   -8.0    -8.6      19.0
        Of which:
            Proprietors' income
              with IVA                     0.8   -8.0    -8.4      26.7
    Nonfarm                                5.3    7.8    -7.1     708.8
        Of which:
            Proprietors' income            1.6   -4.7   -20.5     621.6
            CCAdj                          3.9   13.0    12.9      86.3

Rental income of persons with CCAdj        1.4    5.0    -4.7     137.9
    Rental income of persons               3.2    4.1    -7.6     204.4
    CCAdj                                 -1.7    1.0     2.9     -66.5

Corporate profits with IVA and CCAdj     -19.4  -88.3   -35.5     731.6
    Profits before tax                   -14.2  -63.1   -28.3     670.2

        Of which:
            Domestic                     -19.8  -69.6   -29.8     519.4
                Mining                     0.0    6.7     9.5      15.8
                Construction              -0.3   -3.0    -4.6      39.4
                Manufacturing             -4.9    7.3     4.0      84.1
                Communications             0.2  -18.1   -14.5      -6.0
                Electric, gas, and
                  sanitary services       -1.8  -11.7   -11.1      31.6
                Retail trade              -1.5   -8.8    -6.9      79.0
                Finance, insurance,
                  and real estate         -9.3    2.5    15.8     211.1
                  Financial               -9.3   -3.4    10.6     190.6
                  Other                    0.0    6.0     5.2      20.5
                Services                  -2.7  -44.4   -25.0      17.6
            Rest of the world              5.6    6.5     1.5     150.8
                Receipts from the
                  rest of the world        2.2   -1.1   -18.4     172.4
                Less: Payments to the
                  rest of the world       -3.4   -7.6   -19.9      21.6
   IVA                                    -1.3   -2.6     2.8       5.0
   CCAdj                                  -3.8  -22.6    -9.9      56.5

Net Interest (3)                          20.1   78.8    95.5     649.8
    Monetary interest paid               -15.0    8.7     ...   2,639.2
        Of which:
            Domestic business            -16.1    7.7     ...   1,950.6
              Of which:
                Financial
                  corporations            -7.5  -10.8     ...     809.3
                Nonfinancial
                  corporations            -7.8   -2.5     ...     527.2
                Sole proprietorships
                  and partnerships        -0.2   23.4     ...     209.4
    Monetary interest received           -15.0    8.7     ...   2,639.2
        Of which:
            Domestic business            -16.2  -40.5     ...   1,668.3
                Of which:
                  Financial
                    corporations         -14.3  -27.3     ...   1,332.5
                  Nonfinancial
                    corporations          -1.7  -15.0     ...     280.7
            Persons                       23.8   77.5     ...     630.4
            Rest of the world            -23.7  -29.3     ...     246.5
                From business             -3.2   -4.6     ...     165.8
                From Federal
                  Government             -20.6  -24.7   -23.6      80.7
    Imputed interest paid
        (by domestic financial
        corporate business)                0.2    8.7     ...     574.5
        Of which:
            Life insurance carriers        0.5    6.1     0.2     201.3
    Imputed interest received              0.2    8.7     ...     574.5
        Of which:
            Domestic business              4.8    7.7     ...      84.3
            Persons                       -4.5   -1.2   -20.6     460.8
                From banks,
                  credit agencies,
                  and investment
                  companies               -5.0   -7.3   -20.7     259.5
                From life insurance
                  carriers                 0.5    6.1     0.2     201.3
            Rest of the world              0.1   -0.1    -4.6      18.3

Consumption of fixed capital              -6.2  -12.4   -22.1   1,329.3
    Of which:
        Private                           -6.0  -11.9   -20.8   1,106.8
            Corporate                     -3.7   -6.0    -9.5     789.1
            Noncorporate                  -2.3   -6.0   -11.3     317.7

            Capital consumption
              allowances                  -6.0  -19.2   -12.7   1,168.4
                Corporate                 -7.6  -28.6   -19.4     845.6
                Noncorporate               1.6    9.4     6.7     322.8

            Less: CCAdj                   -0.1   -7.3     8.0      61.6
                Corporate                 -3.8  -22.6    -9.9      56.5
                Noncorporate               3.9   15.4    18.0       5.1
                    Of which:
                      Nonfarm
                        proprietors'
                        income             3.9   13.0    12.9      86.3

Nonfactor income                           0.8   -5.8   -13.8     770.0
    Of which:
        Indirect business tax
          and nontax liability            -0.2   -9.1   -19.2     774.8
            Of which:
                State and local            0.2   -7.0   -18.6     664.4
        Less: Subsidies less current
          surplus of government
          enterprises                     -0.8   -3.5    -7.5      47.3
                Federal                   -0.4   -3.0    -2.1      50.3
                State and local           -0.4   -0.5    -5.5      -3.1

Addenda:
Gross domestic income                    -28.2  -50.3  -158.6  10,199.4

National income                            6.6    3.5   -95.5   8,122.0

Gross saving                              -3.3   22.2   -78.4   1,662.4

Personal income                            9.2   87.4   -38.2   8,685.3

    Wage and salary disbursements         -1.8   -0.9  -147.6   4,950.6
    Other labor income                     0.5   10.0    16.6     570.4
    Proprietors' income
      with IVA and CCAdj                   6.4   -0.2   -15.6     727.9
    Rental income of persons
      with CCAdj                           1.4    5.0    -4.7     137.9
    Personal dividend income             -15.1   -3.5    -7.1     409.2
    Personal interest income              19.2   76.4    97.7   1,091.3
        Of which:
            Net interest                  20.1   78.8    95.5     649.8
                Domestic business         -4.4   49.0    69.0     772.5
                Rest of the world         24.6   29.6    26.6    -122.6
    Transfer payments to persons          -1.1    1.2    21.6   1,170.4
        Of which:
            From government               -1.2    1.3    23.2   1,137.0
                Federal                   -0.1    0.6     9.2     832.6
                State and local           -1.2    0.6    14.0     304.4
                  Of which:
                    Medical care          -1.1    1.0    14.4     234.7

    Less: Personal contributions
        for social insurance               0.3    0.7    -1.0     372.3
Less: Personal tax and
    nontax payments                       -0.1   -1.8   -14.1   1,292.1
    Of which:
        State and local                   -0.1   -1.2   -14.9     281.2
Equals: Disposable personal income         9.4   89.2   -24.1   7,393.2

Less: Personal outlays                    -3.9  -44.7   -75.4   7,223.5
    Of which:
        Personal consumption
          expenditures                    -3.7  -44.7   -77.5   6,987.0

Equals: Personal saving                   13.1  133.8    51.3     169.7

           NIPA component                    Major source data
                                             incorporated (1)

          Gross domestic product

  Personal consumption expenditures

    Goods
      Of which:
        Motor vehicles and parts
          Of which:
            Other motor vehicles         Trucks: Revised Census Bureau
                                           annual survey of
                                           manufactures (ASM) product
                                           shipments data for 1999; new
                                           ASM data for 2000; revised
                                           BEA tabulations of exports
                                           and imports for 1999-2001;
                                           trade source data on unit
                                           sales, prices, and
                                           registrations by sector for
                                           new trucks for 2001.
        Goods other than motor
          vehicles and parts
          Of which:
            Furniture and
              household equipment        Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           sales data for 1999; new
                                           ARTS data for 2000; revised
                                           Census Bureau monthly sales
                                           data for 2001.
            Other durable goods          Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           sales data for 1999; new
                                           ARTS data for 2000; revised
                                           Census Bureau monthly sales
                                           data for 2001.
            Clothing and shoes           Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           sales data for 1999, new
                                           ARTS data for 2000; revised
                                           Census Bureau monthly sales
                                           data for 2001.
            Other nondurable goods       Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           sales data for 1999; new
                                           ARTS data for 2000; revised
                                           Census Bureau monthly sales
                                           data for 2001.

    Services
      Of which:
        Household operation
          Of which:
            Domestic service             Revised BLS data on
                                           employment, hours, and
                                           earnings for private
                                           households for 1999-2001.
        Transportation
          Of which:
                  User-operated
                    transportation
                    Of which:
                      Insurance          Revised trade source data on
                                           premiums and benefits for
                                           2000; new trade source data
                                           for 2001.
            Medical care
              Of which:
                Other professional
                  services               Revised Census Bureau service
                                           annual survey (SAS) data for
                                           1999 and 2000; new SAS data
                                           for 2001.
                Hospitals
                  Of which:
                    Nonprofit            FY 2000 trade source data on
                                           expenses for 1999 and 2000;
                                           new Census Bureau service
                                           annual survey data for 2001.
            Other services
              Of which:
                Personal care            Revised Census Bureau service
                                           annual survey (SAS) data for
                                           1999 and 2000; new SAS data
                                           for 2001.
                Personal business
                  Of which:
                    Brokerage charges
                      and investment
                      counseling         New Census Bureau service
                                           annual survey (SAS) data for
                                           1999-2001 on receipts of
                                           investment advisors; revised
                                           Federal Reserve Board (FRB)
                                           data on securities held by
                                           households for 1999 and
                                           2000; new FRB data for 2001;
                                           revised Securities and
                                           Exchange Commission data on
                                           income and expenses of
                                           registered broker-dealers
                                           for 2001; new NASDAQ
                                           National Market System
                                           dealers' and New York Stock
                                           Exchange specialists' spread
                                           data for 1999-2001.
                    Services furnished
                      without payment
                      by financial
                      intermediaries
                      except life
                      insurance
                      carriers           Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000;
                                           revised Federal Reserve
                                           Board (FRB) flow-of-funds
                                           accounts sector assets data
                                           for 1999 and 2000; new FRB
                                           data for 2001; new Federal
                                           Deposit Insurance
                                           Corporation data, Credit
                                           Union National Association
                                           data, Office of Thrift
                                           Supervision data, and trade
                                           source data on investment
                                           companies for 2001.
                Education and research
                  Of which:
                    Higher education     New Department of Education
                                           (EDUC) expense data for FY
                                           1998, FY 1999 and FY 2000;
                                           new EDUC enrollment data for
                                           2001; revised Census Bureau
                                           Government Finances
                                           tabulations for FY 1999 and
                                           FY 2000.
                    Nursery,
                      elementary,
                      and secondary
                      schools            Revised Department of
                                           Education (EDUC) expense
                                           data for FY 1999 and FY
                                           2000; new EDUC data for FY
                                           2001.

Gross private domestic Investment

    Fixed investment

      Nonresidential

        Structures
            Of which:
              Nonresidential
                buildings,
                excluding farm
                Of which:
                  Industrial             Revised Census Bureau value of
                                           construction put in place
                                           data for 1999-2001.
                  Commercial             Revised Census Bureau value of
                                           construction put in place
                                           data for 1999-2001.
              Mining exploration,
                shafts, and wells
                Of which:
                  Petroleum and
                    natural gas          Trade source data on drilling
                                           costs for 1999 and 2000;
                                           revised trade source data on
                                           footage drilled for
                                           1999-2001.

        Equipment and software
          Of which:
            Information processing
              equipment and software
              Of which:
                Computers and
                  peripheral equipment   Revised Census-Bureau annual
                                           survey of manufactures (ASM)
                                           product shipments data for
                                           1999; new ASM data for 2000;
                                           revised Census Bureau
                                           monthly industry shipments
                                           data for 2001; revised BEA
                                           tabulations of exports and
                                           imports for 1999-2001.
                Software                 Revised Census Bureau service
                                           annual survey (SAS) industry
                                           receipts data for 1999 and
                                           2000; new SAS data for 2001;
                                           BLS employment data for 1999
                                           and 2000.
            Industrial equipment
              Of which:
                Special industry
                  machinery, nec         Revised Census Bureau annual
                                           survey of manufactures (ASM)
                                           product shipments data for
                                           1999; new ASM data for 2000;
                                           revised Census Bureau
                                           monthly industry shipments
                                           data for 2001; revised BEA
                                           tabulations of exports and
                                           imports for 1999-2001.
            Transportation equipment
              Of which:
                Trucks, buses,
                  and truck trailers     Revised Census Bureau annual
                                           survey of manufactures (ASM)
                                           product shipments data for
                                           1999; new ASM data for 2000;
                                           revised BEA tabulations of
                                           exports and imports for
                                           1999-2001; trade source data
                                           on unit sales, prices, and
                                           registrations by sector for
                                           new trucks for 2001.
                Autos                    Revised trade source data on
                                           optional equipment
                                           percentages for model year
                                           2001; revised price data for
                                           domestic autos for model
                                           year 2002.
                Aircraft                 Revised Census Bureau annual
                                           survey of manufactures (ASM)
                                           product shipments data for
                                           1999; new ASM data for 2000;
                                           revised BEA tabulations of
                                           exports and imports for
                                           1999-2001; Census Bureau
                                           current industrial reports
                                           data for complete civilian
                                           aircraft for 2001.

      Residential
          Structures
            Of which:
              Single-family
                structures               Revised Census Bureau value of
                                           construction put in place
                                           data for 1999-2001.
              Improvements               Revised Census Bureau value of
                                           construction put in place
                                           data for 2001.

    Change in private inventories
      Farm                               Revised USDA data for 1999 and
                                           2000; new USDA data for
                                           2001.
      Nonfarm
          Change in book value
              Of which:
                Manufacturing            Revised Census Bureau annual
                                           survey of manufactures (ASM)
                                           inventory book value data
                                           for 1999; new ASM data for
                                           2000; revised Census Bureau
                                           monthly inventory data for
                                           2001.
                Wholesale trade
                  Of which:
                    Merchant wholesale
                      trade              Revised Census Bureau annual
                                           wholesale trade survey
                                           (AWTS) inventory book value
                                           data for 1999; new AWTS data
                                           for 2000; revised Census
                                           Bureau monthly inventory
                                           data for 2001.
                Retail trade             Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           inventory book value data
                                           for 1999; new ARTS data for
                                           2000; revised BEA estimates
                                           based on inventory data from
                                           trade sources for 2001;
                                           revised Census Bureau
                                           monthly inventory data for
                                           2001.
                  Of which:
                    Motor vehicle
                      dealers            Revised Census Bureau annual
                                           retail trade survey (ARTS)
                                           inventory book value data
                                           for 1999; new ARTS data for
                                           2000; revised BEA estimates
                                           based on inventory data from
                                           trade sources for 2001.
                Other industries         Revised IRS tabulations of
                                           inventory book value data
                                           from corporate tax returns
                                           for 1999; new IRS
                                           tabulations of inventory
                                           book value data from sole
                                           proprietorship, partnership,
                                           and corporate tax returns
                                           for 2000; Census Bureau
                                           Quarterly Financial Report
                                           data for mining for 2001.
          Inventory valuation
            adjustment                   Revised Census Bureau annual
                                           survey of manufactures
                                           (ASM), annual wholesale
                                           trade survey (AWTS), and
                                           annual retail trade survey
                                           (ARTS) information on
                                           accounting methods used for
                                           inventory reporting for
                                           1999; new ASM, AWTS, and
                                           ARTS information for 2000;
                                           revised data on cost of
                                           inventories for 1999-2001;
                                           revised BEA unit labor cost
                                           indexes for 1999-2001.

Net exports of goods and services        Revised BEA international
                                           transactions accounts
                                           estimates for 1999-2001.

    Exports
        Goods
        Services
    Imports
        Goods
        Services

Government consumption expenditures
    and gross investment

    Federal consumption expenditures
      and gross investment
      Of which:
        Nondefense
          Consumption expenditures
            Of which:
              Services
                Of which:
                  Other services         Revised allocation of FY 2000
                                           Federal budget data for 1999
                                           and 2000; revised FY 2001
                                           Federal budget data for 2000
                                           and 2001; preliminary FY
                                           2002 Federal budget data for
                                           2001; National Science
                                           Foundation data on research
                                           and development expenditures
                                           for 2000 and 2001.

    State and local consumption
      expenditures
      and gross investment
      Consumption expenditures
        Of which:
          Services
            Of which:
              Compensation of
                general government
                employees, except
                own-account
                investment               Revised BLS tabulations of
                                           wages and salaries of
                                           employees covered by State
                                           unemployment insurance for
                                           1999 and 2000; new BLS
                                           tabulations of for 2001;
                                           revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999; new
                                           GF tabulations for FY 2000;
                                           revised GF tabulations of
                                           retirement plans for FY 1999
                                           and FY 2000; new GF
                                           tabulations of retirement
                                           plans for FY 2001; HHS
                                           medical expenditure panel
                                           survey data on health
                                           insurance for 1999; BLS data
                                           on employer costs for health
                                           insurance for 2001 and 2002.
              Other services             Revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999; new
                                           GF tabulations for FY 2000.

        Gross investment
          Of which:
            Structures                   Revised Census Bureau value of
                                           construction put in place
                                           data for 1999-2001.

Gross domestic product

Plus: Net receipts of income             Revised BEA international
                                           transactions accounts
                                           estimates for 1999-2001.
  Income receipts from the
    rest of the world
  Less: Income payments to the
    rest of the world

Equals: Gross national product

Less: Statistical discrepancy (2)

Equals: Gross national income

Compensation of employees

  Wage and salary accruals
    Of which:
      Wage and salary disbursements
        Government
          Federal                        Revised Office of Personnel
                                           Management (OPM) data for
                                           1999 and 2000; new OPM data
                                           for 2001; new FY 2002
                                           Federal budget data for
                                           2001.
          State and local                Revised BLS tabulations of
                                           wages and salaries of
                                           employees covered by State
                                           unemployment insurance for
                                           1999 and 2000; new BLS
                                           tabulations for 2001.
        Private                          Revised BLS tabulations of
                                           wages and salaries of
                                           employees covered by State
                                           unemployment insurance for
                                           1999 and 2000; new BLS
                                           tabulations for 2001;
                                           revised USDA data on farm
                                           wages for 1999 and 2000; new
                                           USDA data for 2001; new BEA
                                           international transactions
                                           accounts data on
                                           rest-of-the-world wage and
                                           salary accruals for
                                           1999-2001.

  Supplements to wages and salaries
    Employer contributions for
      social insurance
      Federal social
        insurance funds                  Revised BLS tabulations of
                                           employer contributions to
                                           the unemployment trust fund
                                           for 2000; new BLS
                                           tabulations for 2001;
                                           revised Social Security
                                           Administration (SSA) data on
                                           taxable wages for 1999 and
                                           2000; new SSA data for 2001.
      State and local social
        insurance funds                  Revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999; new
                                           GF tabulations for FY 2000.

    Other labor income
      Of which:
        Private pension and profit-
          sharing plans                  Pension Benefit Guaranty
                                           Corporation tabulations of
                                           assets and liabilities for
                                           2000 and 2001.
        Publicly administered
          government
          retirement plans               Revised Census Bureau
                                           Government Finances
                                           tabulations for FY 1999 and
                                           FY 2000; new GF tabulations
                                           for 2001.
        Group health and life
          insurance                      HHS medical expenditure panel
                                           survey data on health
                                           insurance for 1999; BLS data
                                           on employer costs for health
                                           insurance for 2001 and 2002;
                                           revised BLS tabulations of
                                           wages and salaries of
                                           employees covered by State
                                           unemployment insurance for
                                           2000; new BLS tabulations
                                           for 2001: trade source data
                                           on life insurance for 1999
                                           and 2000; BLS data on
                                           employer costs for life
                                           insurance for 2001.

Proprietors' income
  with IVA and CCAdj
    Farm
        Of which:
            Proprietors' income
              with IVA                   Revised USDA data for 1999 and
                                           2000; new USDA data for
                                           2001.

    Nonfarm
        Of which:
            Proprietors' income          New IRS tabulations of sole
                                           proprietorship and
                                           partnership tax return data
                                           for 2000.
            CCAdj                        Capital consumption
                                           allowances: New IRS
                                           tabulations of sole
                                           proprietorship and
                                           partnership tax return data
                                           for 2000. Consumption of
                                           fixed capital: Revised BEA
                                           fixed investment  and price
                                           estimates for 1999-2001.

Rental income of persons with CCAdj
    Rental income of persons             Revised Federal Reserve Board
                                           flow-of-funds accounts
                                           residential mortgage
                                           liabilities data for 1999-
                                           2001; revised USDA data on
                                           rent on farms owned by non-
                                           operator landlords for 1999
                                           and 2000; new USDA data for
                                           2001; new trade source data
                                           on property insurance for
                                           2000; new Census Bureau
                                           Census of Population and
                                           Housing data on owner- and
                                           tenant-occupied units for
                                           2000; new Census Bureau
                                           current population survey
                                           data on owner- and tenant-
                                           occupied units for 2001;
                                           revised IRS tabulations of
                                           individual tax return data
                                           for 1999; new IRS data for
                                           2000; revised BEA fixed
                                           investment and price
                                           estimates for 1999-2001.
    CCAdj                                Revised BEA fixed investment
                                           and price estimates for
                                           1999-2001.

Corporate profits with IVA and CCAdj
    Profits before tax                   Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000;
                                           regulatory agency and public
                                           financial reports profits
                                           data for 2001.
        Of which:
            Domestic
                Mining
                Construction
                Manufacturing
                Communications
                Electric, gas, and
                  sanitary services
                Retail trade
                Finance, insurance,
                  and real estate
                  Financial
                  Other
                Services
            Rest of the world            Revised BEA international
                                           transactions accounts
                                           estimates for 1999-2001.
                Receipts from the
                  rest of the world
                Less: Payments to the
                  rest of the world
   IVA
   CCAdj                                 Capital consumption
                                           allowances: Revised IRS
                                           tabulations of corporate tax
                                           return data for 1999; new
                                           IRS tabulations for 2000.
                                           Consumption of fixed
                                           capital: Revised BEA fixed
                                           investment and price
                                           estimates for 1999-2001.

Net Interest (3)
    Monetary interest paid
        Of which:
            Domestic business            Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000; new
                                           IRS tabulations of sole
                                           proprietorship and
                                           partnership tax return data
                                           for 2000; revised Federal
                                           Reserve Board (FRB) flow-of-
                                           funds accounts residential
                                           mortgage liabilities data
                                           for 1999 and 2000; new FRB
                                           flow-of-funds accounts
                                           residential mortgage
                                           liabilities data for 2001
                                           and nonfinancial corporate
                                           liabilities data for 2000
                                           and 2001; revised USDA data
                                           on interest paid by farmers
                                           for 1999 and 2000; new USDA
                                           data for 2001; new Federal
                                           Deposit Insurance
                                           Corporation data, Credit
                                           Union National Association
                                           data, Office of Thrift
                                           Supervision data, and trade
                                           source data on investment
                                           companies for 2001.

              Of which:
                Financial
                  corporations
                Nonfinancial
                  corporations
                Sole proprietorships
                  and partnerships
    Monetary interest received
        Of which:
            Domestic business            Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000; new
                                           IRS tabulations of sole
                                           proprietorship partnership
                                           tax return data for 2000;
                                           new Federal Reserve Board
                                           flow-of-funds accounts
                                           nonfinancial corporate
                                           assets data for 2000 and
                                           2001; new Federal Deposit
                                           Insurance Corporation data,
                                           Credit Union National
                                           Association data, Office of
                                           Thrift Supervision data, and
                                           trade source data on
                                           investment companies for
                                           2001.
                Of which:
                  Financial
                    corporations
                  Nonfinancial
                    corporations
            Persons
            Rest of the world            Revised BEA international
                                           transactions accounts
                                           estimates for 1999-2001.
                From business
                From Federal
                  Government
    Imputed interest paid
        (by domestic financial
        corporate business)
        Of which:
            Life insurance carriers      Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000; new
                                           trade source data on life
                                           insurance for 2000; new
                                           Federal Reserve Board
                                           flow-of-funds accounts life
                                           insurance companies' assets
                                           data for 2000 and 2001.
    Imputed interest received            Revised Federal Reserve Board
                                           (FRB) flew-of-funds accounts
                                           sector assets data for 1999
                                           and 2000; new FRB data for
                                           2001; new Federal Deposit
                                           Insurance Corporation data
                                           for 2001.
        Of which:
            Domestic business
            Persons
                From banks,
                  credit agencies,
                  and investment
                  companies
                From life insurance
                  carriers
            Rest of the world

Consumption of fixed capital
    Of which:
        Private                          Revised BEA fixed investment
                                           and price estimates for
                                           1999-2001.
            Corporate
            Noncorporate

            Capital consumption
              allowances
                Corporate                Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000;
                                           revised BEA fixed investment
                                           estimates for 1999-2001.
                Noncorporate             New IRS tabulations of sole
                                           proprietorship and
                                           partnership tax return data
                                           for 2000; revised BEA fixed
                                           investment estimates for
                                           1999-2001.

            Less: CCAdj                  CCAdj is calculated as
                                           consumption of fixed capital
                                           less capital consumption
                                           allowances.
                Corporate
                Noncorporate
                    Of which:
                      Nonfarm
                        proprietors'
                        income

Nonfactor income
    Of which:
        Indirect business tax
          and nontax liability
            Of which:
                State and local          Revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999 and
                                           FY 2000; new GF tabulations
                                           for FY 2001; revised Census
                                           Bureau quarterly tax revenue
                                           data for 1999 and 2000; new
                                           tax revenue data for 2001.
        Less: Subsidies less current
          surplus of government
          enterprises
                Federal                  Revised allocations of FY 2000
                                           Federal budget data for 1999
                                           and 2000; revised FY 2001
                                           Federal budget data for 2000
                                           and 2001; preliminary FY
                                           2002 Federal budget data for
                                           2001; new FY 2000 and FY
                                           2001 Postal Service
                                           financial data for 2000 and
                                           2001. For consumption of
                                           government enterprise fixed
                                           capital: Perpetual-inventory
                                           calculations at current cost
                                           based on gross investment
                                           and on investment prices for
                                           1999-2001. See also entries
                                           for gross investment.
                State and local          Revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999; new
                                           GF tabulations for FY 2000.
                                           New California Department of
                                           Finance data on electricity
                                           purchases for 2001. For
                                           consumption of enterprise
                                           fixed capital: Perpetual-
                                           inventory calculations at
                                           current cost, based on gross
                                           investment and on investment
                                           prices for 1999-2001. See
                                           also entries for gross
                                           investment.

Addenda:
Gross domestic income

National income                          See entries under "gross
                                           national income."

Gross saving

Personal income                          See entries under "gross
                                           national income" and
                                           additional sources below.

    Wage and salary disbursements
    Other labor income
    Proprietors' income
      with IVA and CCAdj
    Rental income of persons
      with CCAdj
    Personal dividend income             Revised IRS tabulations of
                                           corporate tax return data
                                           for 1999; new IRS
                                           tabulations for 2000;
                                           regulatory agency and
                                           public financial statements
                                           data on dividends for 2001.
    Personal interest income             See entries under "net
                                           interest."
        Of which:
            Net interest                 See entries under "net
                                           interest."
                Domestic business
                Rest of the world
    Transfer payments to persons
        Of which:
            From government
                Federal                  Revised FY 2001 Federal budget
                                           data for 2000 and 2001;
                                           preliminary FY 2002 Federal
                                           budget data for 2001; new
                                           Department of Labor data on
                                           unemployment benefits
                                           for 2001.
                State and local
                  Of which:
                    Medical care         Revised Centers for Medicare
                                           and Medicaid Services (CMS)
                                           tabulations of medicaid for
                                           1999 and 2000; new CMS
                                           tabulations for 2001.
    Less: Personal contributions
        for social insurance
Less: Personal tax and
    nontax payments
    Of which:
        State and local                  Revised Census Bureau
                                           Government Finances (GF)
                                           tabulations for FY 1999 and
                                           FY 2000; new GF tabulations
                                           for FY 2001; revised Census
                                           Bureau quarterly tax revenue
                                           data for 1999 and 2000; new
                                           tax revenue data for 2001.
Equals: Disposable personal income

Less: Personal outlays
    Of which:
        Personal consumption
          expenditures                   See entries under "personal
                                           consumption expenditures."

Equals: Personal saving

(1.) In these descriptions, "new" indicates this is the first
time that data from the specific source are being incorporated
into the component estimate for the given year, and "revised"
indicates that data from the specific source were incorporated
previously and now revised data from that source are being
incorporated.

(2.) The statistical discrepancy is gross national product
(GNP) less gross national income (GNI); it is also the
difference between gross domestic product (GDP) and gross
domestic income (GDI), which is GNI less net income receipts
from the rest of the world. The statistical discrepancy
arises because the product-side measures of GNP and GDP are
estimated independently from the income-side measures of GNI
and GDI.

(3.) Net interest is the sum of monetary interest paid by
domestic business and by the rest of the world and imputed
interest paid by domestic financial corporate business, less
monetary interest received by domestic business and by the
rest of the world and imputed interest received by domestic
business and by the rest of the world.

BEA     Bureau of Economic Analysis
BLS     Bureau of Labor Statistics
CCAdj   Capital consumption adjustment
DOL     Department of Labor
FY      Fiscal year
HHS     Department of Health and Human Services
IRS     Internal Revenue Service
IVA     Inventory valuation adjustment
USDA    U.S. Department of Agriculture
Table 7. Discontinuities in NIPA Foreign Transactions, 1998-99
[Billion of dollars]
                                             1998

                                    Pub-    Discon-     Ad-
                                   lished   tinuity   justed
                                              (1)

Net exports of goods and
  services                          -151.8      -0.1   -151.9
  Exports                            964.9       0.0    964.9
    Goods                            681.3       0.0    681.3
    Services                         283.6       0.0    283.6
  Imports                          1,116.7       0.1  1,116.8
    Goods                            930.0       0.0    930.0
    Services                         186.7       0.1    186.8

Net receipts of income                -3.5      13.8     10.3
  Receipts                           286.1       0.1    286.2
    Corporate profits                145.3       0.0    145.3
    Interest                         138.9       0.1    138.9
    Compensation of employees          1.9       0.0      1.9
  Payments                           289.6     -13.7    275.9
    Corporate profits                 43.1       0.9     44.0
    Interest                         239.6     -14.7    224.9
    Compensation of employees          6.9       0.1      7.0

Transfer payments to rest of the
  world (net)                         44.5       0.1     44.6

Addenda:
  GDP                              8,781.5      -0.1  8,781.4
  GNP                              8,778.1      13.7  8,791.8

                                    1999       Change from
                                               1998 to 1999

                                     Re-      Pub-      Ad-
                                    vised    lished   justed

Net exports of goods and
  services                          -249.9     -98.1    -98.0
  Exports                            989.3      24.4     24.4
    Goods                            697.3      16.0     16.0
    Services                         292.0       8.4      8.4
  Imports                          1,239.2     122.5    122.4
    Goods                          1,045.3     115.3    115.3
    Services                         193.9       7.2      7.1

Net receipts of income                22.8      26.3     12.5
  Receipts                           316.9      30.8     30.7
    Corporate profits                175.5      30.1     30.1
    Interest                       1,392.0       0.3      0.2
    Compensation of employees          2.2       0.3      0.3
  Payments                           294.1       4.5     18.2
    Corporate profits                 55.3      12.2     11.3
    Interest                         230.9      -8.7      6.0
    Compensation of employees          8.0       1.0      1.0

Transfer payments to rest of the
  world (net)                         48.9       4.4      4.3

Addenda:
  GDP                              8,781.5       0.0      0.1
  GNP                              8,778.1       0.0    -13.7

(1.) Equals the revisions to the U.S. international transactions
accounts that have not been carried back in the NIPA's at this time.
Table 8. Revisions to Percent Change in GDP Price Indexes
[Percent change from preceding year]

                                                       1999

                                         Previ-
                                         ously
                                  1998   published   Revised  Revision

Gross domestic product            1.2          1.4     1.4     0.0

Personal consumption
 expenditures                     1.1          1.6     1.6     0.0
  Durable goods                  -2.4         -2.5    -2.5     0.0
  Nondurable goods                0.0          2.3     2.3     0.0
  Services                        2.3          2.2     2.2     0.0

Gross private domestic
 fixed investment                -0.9         -0.1    -0.2    -0.1
  Nonresidential                 -2.1         -1.4    -1.5    -0.1
    Structures                    3.3          2.5     1.8    -0.7
    Equipment and software       -3.9         -2.6    -2.5     0.1
  Residential                     2.8          3.8     3.8     0.0

Change in private inventories     ...          ...     ...     ...

Net exports of goods              ...          ...     ...     ...
 and services
  Exports                        -2.2         -0.6    -0.8    -0.2
    Goods                        -3.1         -1.4    -1.3     0.1
    Services                      0.0          1.2     0.4    -0.8
  Imports                        -5.4          0.6     0.1    -0.5
    Goods                        -6.0          0.2     0.2     0.0
    Services                     -2.3          2.7    -0.4    -3.1

Government consumption
 expenditures and
 gross investment                 1.5          2.8     2.7    -0.1
  Federal                         1.0          2.4     2.4     0.0
    National defense              0.8          2.3     2.2    -0.1
    Nondefense                    1.3          2.5     2.8     0.3
  State and local                 1.7          2.9     2.9     0.0

Addendum:
  Gross domestic purchases        0.8          1.5     1.5     0.0

                                              2000

                                  Previ-
                                   ously
                                 published     Revised   Revision

  Gross domestic product               2.3        2.1     -0.2

Personal consumption
 expenditures                          2.7        2.5     -0.2
  Durable goods                       -1.6       -1.7     -0.1
  Nondurable goods                     3.7        3.8      0.1
  Services                             3.1        2.8     -0.3

Gross private domestic
 fixed investment                      1.2        1.1     -0.1
  Nonresidential                       0.1        0.1      0.0
    Structures                         4.1        4.0     -0.1
    Equipment and software            -1.1       -1.2     -0.1
  Residential                          4.5        4.4     -0.1

Change in private inventories          ...        ...     ...

Net exports of goods
 and services                          ...        ...     ...
  Exports                              1.8        1.4     -0.4
    Goods                              1.1        1.2      0.1
    Services                           3.4        2.1     -1.3
  Imports                              4.3        4.5      0.2
    Goods                              4.8        4.8      0.0
    Services                           1.7        3.3      1.6

Government consumption
 expenditures and
 gross investment                      3.9        3.9      0.0
  Federal                              2.9        3.0      0.1
    National defense                   2.8        3.0      0.2
    Nondefense                         3.0        3.1      0.1
  State and local                      4.4        4.3     -0.1

Addendum:
  Gross domestic purchases             2.6        2.5     -0.1

                                               2001

                                  Previ-
                                   ously
                                 published     Revised   Revision

  Gross domestic product               2.2        2.4      0.2

Personal consumption
 expenditures                          1.9        2.0      0.1
  Durable goods                       -1.8       -1.9     -0.1
  Nondurable goods                     1.5        1.5      0.0
  Services                             2.8        3.1      0.3

Gross private domestic
 fixed investment                      0.5        1.2      0.7
  Nonresidential                      -0.5        0.2      0.7
    Structures                         4.5        5.0      0.5
    Equipment and software            -2.2       -1.5      0.7
  Residential                          3.4        4.1      0.7

Change in private inventories          ...        ...      ...

Net exports of goods
 and services                          ...        ...      ...
  Exports                             -0.2       -0.8     -0.6
    Goods                             -0.7       -0.7      0.0
    Services                           0.8       -1.0     -1.8
  Imports                             -3.3       -2.9      0.4
    Goods                             -3.1       -2.9      0.2
    Services                          -4.5       -2.9      1.6

Government consumption
 expenditures and
 gross investment                      2.0        2.4      0.4
  Federal                              1.6        1.7      0.1
    National defense                   1.6        1.6      0.0
    Nondefense                         1.7        1.9      0.2
  State and local                      2.2        2.7      0.5

Addendum:
  Gross domestic purchases             1.7        1.9      0.2

Acknowledgments

Brent R. Moulton, Associate Director for National Income, Expenditures, and Wealth Accounts, supervised the preparation of this year's annual revision of the national income and product accounts. Carol E. Moylan, Chief of the National Income and Wealth Division, and Brooks B. Robinson, Chief of the Government Division, directed major parts of the revision. David F. Sullivan--assisted by Arnold J. Katz, Janet H. Kmitch, Stephanie H. McCulla, Karin E. Moses, Ann M. Weidman, and Ernest D. Wilcox--coordinated and conducted the estimation and review process.

Eugene P. Seskin and Stephanie H. McCulla wrote the article. Duane G. Hackmann, Nicole Mayerhauser, and Teresa L. Weadock prepared analyses and other review materials for both the article and the news release. Mary Carol Barron, Michael J. Boehm, James J. Raley III, John Sporing, Jr., Mary D. Young, and Alexander J. Yuskavage developed and operated the computer systems that were used to compile, check, analyze, and report the final estimates. Wanda Y. Chambers prepared review materials for selected Federal Government estimates.

Other BEA staff who made significant contributions to the revision are listed below.

Personal consumption expenditures: Clinton P. McCully. Goods: M. Greg Key, Harvey L. Davis, Jr., Everette P. Johnson, Ralph W. Morris. Services: Michael Armah, Waqaas Fahmawi, Robert N. Ganz III, Jerome T. Grzeskiewicz, Jr., Farah Naz.

Investment and Foreign transactions: Paul R. Lally. Inventories and structures: Jennifer A. Ribarsky, Debra M. Blagburn, Velma P. Henry, Christopher Lucas, Tony Troy. Foreign transactions, equipment, software, and prices: David B. Wasshausen, Randal T. Matsunaga, Nadia EP. Sadee, Todd P. Siebeneck, Linden L. Webber.

Federal Government: Pamela A. Kelly, W. Robert Armstrong, Peter G. Beall, Maryan M. Chirayath, Christopher G. Falcone, Doris N. Johnson, Raymen G. LaBella, Andrea L. Meacham, Claire G. Pitzer, Michelle D. Robinson, Jay M. Rogers, Mary L. Roy, Shelly Smith, Benyam Tsehaye, Andrew E. Vargo, Ann M. Weidman.

State and local government: Bruce E. Baker, Steven J. Andrews, Benjamin D. Cowan, Eric C. Erickson, Janet H. Kmitch, Michael A. Mascaro, Donald L. Peters.

Chain-type quantity and price measures: Michael J. Boehm, Karl V. Rohrer.

Personal income: Kurt Kunze, Thae S. Park, Toui C. Pomsouvan.

Employee compensation: Kurt Kunze, Kathryn M. Collins, M. Terri Davenport, Mollie B. Knight, James E. Rankin, Ernest D. Wilcox.

Business income: Kenneth A. Petrick, Willie J. Abney, Scott Okrent, Jerry L. Stone, Garth K. Trinkl.

Property income: George M. Smith. Farm output and income: Bonnie A. Retus. Interest income: Shaunda M. Villones. Rental income of persons and housing output: Denise A. McBride.

Consumption of fixed capital: Paul R. Lally. Private: Michael D. Glenn, Leonard J. Loebach, Dennis R. Weikel. Government: D. Timothy Dobbs, Jennifer A. Bennett, Charles S. Robinson.

NIPA information: Marilyn E. Baker, Virginia H. Mannering, Teresa L. Weadock.

Secretarial and program assistance: Adrienne M. Burch, Esther M. Carter, Katherine Dent, Angela P. Pointer.

(1.) For information about the structure, definitions, presentation, and methodologies that underlie the NIPA's, go to BEA's Web site at <www.bea.gov>, click on "Methodologies" and under "National programs," see "An Updated Guide to the NIPA's."

(2.) For an analysis of the reliability of the estimates of real GDP, see Dennis J. Fixler and Bruce T. Grimm, "Reliability of GDP and Related NIPA Estimates," SURVEY 82 (January 2002): 9-27.

(3.) For the GDP components for which chained-dollar estimates are prepared by extrapolation or by direct valuation, the current-dollar and chained-dollar estimates are based on independent source data; consequently, the corresponding revisions are unrelated. For a list of these components, see table 2 in "Updated Summary NIPA Methodologies," SURVEY 81 (October 2001): 18-41; an updated version of table 2 will be published in the October 2002 SURVEY.

(4.) The SAS data are on a North American Industry Classification System basis; for details, see the section "Changes in Methodology."

(5.) This PCE category consists of imputed payments by persons to depository institutions--that is, commercial banks, mutual savings banks, savings and loan associations, credit unions, and regulated investment companies--to purchase checking, bookkeeping, and investment services for which they do not pay an explicit service charge. For additional information, go to BEA's Web site at <www.bea.gov>, click on "Methodologies," and under "National programs," see "MP6: Personal Consumption Expenditures," 11-12.

(6.) The Census Bureau data on the value of construction put in place are the major source data for the estimates of both nonresidential and residential structures. The revised estimates of structures are based on the "best period-to-period change" rather than on the "best level" of the appropriate Census Bureau series; see the box "Incorporating Source Data on the Basis of `Best Change'" in Eugene P. Seskin and David F. Sullivan, "Annual Revision of the National Income and Product Accounts," SURVEY 80 (August 2000): 16.

(7.) See footnote 6.

(8.) Change in private inventories is calculated by adjusting inventories reported by businesses on a non-LIFO (last-in-first-out) book-value basis to a current-period replacement-cost basis; this revaluation eliminates gains or losses that result from holding inventories when prices change. The inventory valuation adjustment, which is calculated as the change in private inventories less the change in book values, reflects inventory price changes for firms that value inventory withdrawals at acquisition (historical) cost.

(9.) The inventory valuation adjustment is not needed for farm inventories, because they are measured on the basis of current market price.

(10.) See Christopher L. Bach, "Annual Revision of the U.S. International Accounts, 1993-2001," SURVEY 82 (July 2002): 33-40.

(11.) See Bach, "Annual Revision," 33-40.

(12.) For a further discussion, see the box "The Statistical Discrepancy" in Robert P. Parker and Eugene P. Seskin, "Annual Revision of the National Income and Product Accounts," SURVEY 77 (August 1997): 19.

(13.) The incorporation of the more comprehensive quarterly UI data into the NIPA estimates of wages and salaries was previewed in the box "BEA Estimates of Wages and Salaries for 2001," SURVEY 82 (May 2002): 7.

(14.) This act did not affect the estimates of proprietors' income with CCAdj, because these estimates do not depend on the depreciation accounting practices used for Federal income tax purposes; instead, this measure of proprietors' income is based on an estimate of the value of fixed capital actually used up in the production process. For additional information about the provisions of the act, see the box in the "Business Situation," SURVEY 82 (April 2002): 6.

(15.) Net interest is calculated as the sum of monetary interest paid by domestic business and by the rest of the world and imputed interest paid by domestic financial corporate business, less monetary interest received by domestic business and by the rest of the world and imputed interest received by domestic business and by the rest of the world.

(16.) For 2001, the revision cannot be attributed to the same level of component detail as that for 2000, because for 2001, the previously published estimates were prepared at a less detailed level.

(17.) The implicit prices are computed by dividing the current-dollar estimates by the chained-dollar estimates that are derived from the quantity data used in quantity extrapolation and direct valuation. Thus, differences between the current-dollar revisions and the chained-dollar revisions to these components are reflected as revisions to their implicit prices.

(18.) These changes update the methodological information in the two tables that were published in "Updated Summary NIPA Methodologies," 18-40; updated tables will be published in the October 2002 SURVEY.

(19.) Affected aggregates include gross domestic income, the statistical discrepancy, gross national income, national income, personal income, disposable personal income, personal saving, gross (national) saving, compensation, and gross product of corporate business. Other components that are closely linked to wages and salaries, such as personal tax payments, may also be revised. The revision schedule will be contingent on the availability of source data and may be adjusted for annual and comprehensive revisions.

GDP and its components will continue to be revised only for the current quarter. In order to avoid introducing small revisions to GDP and its components for the prior quarter, the revision schedule for wages and salaries of government and nonprofit institutions will not be changed. Wages and salaries of these organizations affect the level of GDP because their output is measured by costs, and compensation of employees is a component of their costs.

(20.) A market maker buys and sells securities; the spread is the difference between the price paid for a security and the price charged.

(21.) Since the 1999 comprehensive NIPA revision, estimates for years other than the most recent year have been based on the BLS output index, the same index that BLS uses to measure the output of this industry in its estimates of productivity by industry. For further information, see Brent R. Moulton and Eugene P. Seskin, "A Preview of the 1999 Comprehensive Revisions of the National Income and Product Accounts: Statistical Changes," SURVEY 79 (October 1999): 13.

Data Availability.

The estimates in the NIPA tables that follow this article and the estimates for earlier periods (for most tables, beginning with 1929 for annual estimates and with 1946 for quarterly estimates) are available on BEA's Web site at <www.bea.gov>. Later this year, the NIPA estimates will be available on a CD-ROM; its availability will be announced in the SURVEY OF CURRENT BUSINESS and on BEA's Web site.

Publication of the revised estimates and of related estimates will continue in subsequent issues of the SURVEY. The September SURVEY will present table 5.16, which shows changes in the net stock of produced assets; reconciliation table 8.28, which shows the relationship between personal income in the NIPA's and adjusted gross income from the Internal Revenue Service; and new estimates of fixed assets and consumer durable goods for 2001 and revised estimates for 1999 and 2000.

The October SURVEY will present "Updated Summary NIPA Methodologies," which lists the principal source data and estimating methods used in preparing the current-dollar and real estimates of GDP; tables 3.15-3.17 (government spending by function), tables 3.18-3.20 (government sector reconciliation tables), and tables 9.1-9.6 (seasonally unadjusted estimates); revised real inventories, sales, and inventory-sales ratios for manufacturing and trade for 1998:I-2002:I; and revised estimates of State personal income that incorporate the results of this annual revision of the NIPA's.

The November SURVEY will present revised and updated estimates of GDP by industry.

Revisions to Wages and Salaries and to Profits.

In this year's annual revision, the estimate of wage and salary accruals for 2001 was revised down $147.6 billion; the change from 2000 to 2001 was revised down to an increase of 2.4 percent from the previously published increase of 5.4 percent. The estimate of corporate profits from current production for 2000 was revised down $88.3 billion; the change from 1999 was revised down to a decrease of 2.2 percent from the previously published increase of 6.2 percent. For 2001, corporate profits was revised down $35.5 billion; the change from 2000 was revised up to a decrease of 7.2 percent from the previously published decrease of 12.5 percent.

BEA's estimates of wages and salaries and profits are critically important in guiding monetary policy and in projecting Federal budgets and Social Security trust fund balances. In order to provide more timely information, BEA has changed its revision schedule to allow earlier incorporation of comprehensive data on wages and salaries (see the section "Changes in Methodology"). This change will reduce future annual revisions to wages and salaries and thus provide more timely and reliable information to budget forecasters and other data users who rely on the wage and salary estimates. BEA will also be researching ways to improve the extrapolation of corporate profits.

The large revisions to the estimates of wages and salaries and corporate profits reflect the incorporation of newly available source data that are more complete, more reliable, and otherwise more appropriate than those that were previously incorporated. This box briefly discusses the differences between the source data used for initial estimates and the more complete data that were used for the revised estimates and that led to this year's large revisions.

Wages and salaries. Wage and salary accruals is defined as monetary remuneration of employees--including commissions, tips, bonuses, gains from exercising nonqualified stock options, and receipts in kind that represent income.

The Bureau of Labor Statistics (BLS) tabulates wages and salaries of workers covered by the State unemployment insurance (UI) program and by the Unemployment Compensation for Federal Employees program. These source data cover most wages and salaries, and BEA adjusts the data for misreporting on employment tax returns and for undercoverage of selected industries and types of employees (see NIPA table 8.27).

Because the UI-based data are available with a lag of 5 to 6 months, the current estimates of wages and salaries are extrapolated using data from the BLS monthly current employment statistics payroll survey of nonfarm employment, hours, and earnings. However, these data are less comprehensive because they cover hours and earnings only for production workers (or for nonsupervisory workers in service industries) and because they do not include commissions, tips, bonuses, or gains from exercising nonqualified stock options. Thus, the monthly survey misses a substantial portion of the wage and salary compensation of high-wage workers. This, in turn, can lead to large revisions to wages and salaries (see the table on page 37 of the May 2002 SURVEY).

In 5 of the 13 annual and comprehensive NIPA revisions from 1990 to 2002, the annual growth rate of wages and salaries was revised by more than 1.0 percentage point (in absolute value). The revision of -3.0 percentage points in this year's annual revision is the largest such revision; the next largest was -2.5 percentage points in the July 1990 annual revision.

BEA has decided to change its revision policy and speed up the incorporation of the seasonally adjusted comprehensive UI data. Henceforth, the release of the "final" quarterly GDP estimate will include revised estimates of wages and salaries for the prior quarter (see the "Changes in Methodology" section).

Profits. Corporate profits is defined as receipts arising from current production less associated expenses. Most businesses prepare profits information on two bases--financial accounting and tax accounting--that may use different definitions of some receipts and expenses.

BEA uses the tax-accounting measures as the primary source of information on corporate profits because they are based on well-specified accounting definitions, whereas financial-accounting measures allow more flexibility in the way they are applied by corporations. In addition, the tax-accounting measures are more comprehensive, covering all incorporated businesses--both publicly traded and privately held--and all industries, while financial-accounting tabulations cover only a subset of the corporate universe. However, because financial-accounting measures are available on a more timely, quarterly basis than annual tax return data, they are used to extrapolate the tax-return-based estimates to current periods. (1)

Annual estimates of corporate profits are primarily based on IRS tabulations of data from corporate tax returns. The tabulations provide estimates of universe totals by industry for many of the items on the corporate income tax return, including receipt and expense items, tax liabilities, and balance sheet items. These totals are the starting point for preparing the NIPA estimates. However, preliminary IRS tabulations become available about 2 years after the reference year, and the final tabulations are available with a 3-year lag. For example, in this annual revision, final IRS tabulations replace the estimates for 1999, preliminary IRS tabulations replace the estimates for 2000, and new BEA extrapolations replace the estimates for 2001. The extrapolations use industry indicators based on corporate financial reports (such as the Census Bureau Quarterly Financial Report), on reports filed with Government agencies that regulate certain industries, on BEA's tabulations of income from shareholder reports, on information related to corporate income (such as sales), and on judgment.

Quarterly estimates are obtained by interpolating and, for the most recent quarters, by extrapolating indicators based on financial-accounting measures that are similar to those used for the annual indicators; however, the amount of industry detail is somewhat less.

Because the tax-based source data used for the annual estimates differ from the financial-accounting based source data for the quarterly estimates, the extrapolation may misstate the growth in profits. For example, under financial accounting, corporations do not usually record the most common type of employee stock options (nonqualified options) as expenses, whereas, under tax-accounting rules, these options are deducted from profits when exercised. Thus, financial profits would not usually decline when nonqualified options are exercised, whereas tax-based profits would decline.

Despite this important difference, for 9 of the 12 annual or comprehensive revisions between 1991 and 2002, corporate profits were revised up when the tax-based data were incorporated into the estimates. For the 2002 annual revision, the large downward revisions to profits for 1999 and 2000 may reflect the fact that the employee stock options that many high-tech companies, such as Internet firms, began providing in the mid-1990s became fully vested, and the employees started to exercise their options.

Unfortunately, quarterly information on the value of exercised nonqualified options is not available on which to base an adjustment to the extrapolator. BEA is working with the IRS to obtain additional annual information from administrative records that would allow BEA to adjust the extrapolated values of corporate profits.

(1.) The financial-accounting measures are adjusted to remove items such as capital gains and losses, foreign-source income, dividend income, and nonrecurring items, because these items are not considered a part of domestic current production.