Priorities for the Industry Accounts FY2008 and Beyond Erich H. Strassner Industry Accounts Users’ Conference October 26, 2007

2 Overview  Comprehensive Revision  Research to enhance relevance of Industry Accounts’ estimates  Historical time series of Benchmark use tables  Research to prepare constant-price I-O tables  Work to further BEA’s integration efforts  BEA’s Annual Feedback Loop  Flexible Annual Revisions

3 Priorities for Comprehensive Revision  Late 2009 or early 2010  Incorporate revised 2002 benchmark I-O and 2009 NIPA comprehensive revision  AIAs linked to multiple benchmark I-O accounts for first time

4 Priorities for Comprehensive Revision  The 2002 benchmark I-O accounts provide an opportunity to incorporate a second set of comprehensive data  Interpolate between 1997 and 2002 benchmark I-O accounts  minimize the revision in annual growth rates as part of controlling to the five-year growth  Use tables will be developed based on the interpolated make table results

5 Illustrative Example of Interpolation

6 Illustrative Example of Interpolation

7 Priorities for Comprehensive Revision  Begin incorporating annual expense data from Census Bureau surveys  Improved nominal and real value added through incorporation of two sets of “reconciled” benchmark-year value added

8 Historical Benchmark Use Tables  Feasibility study to prepare time series of benchmark-year use tables  study will incorporate the major comprehensive revision changes (e.g., capitalized software) into prior benchmarks  Study will develop plan and timeline for developing more robust and greater detailed estimates

9 Constant-Price I-O Tables  Multi-year project  Time series is important for BEA’s effort:  To improve existing methodologies  To provide new analytical tool for examining economy from industry perspective  Could help BEA understand differences in two alternative ways to measuring real GDP

10 BEA Annual Feedback Loop

11 Gains from feedback look promising …  PCE for Shoes  Nominal growth for would be revised down from 4.2 percent to 3.0 percent  Due to changes in the sales-mix by kind of store  PCE for Televisions  Nominal level for 2002 would be increased by $3 billion (about 20 percent)  Due to strong import growth

12 Flexible Annual Revisions  Improve the process for incorporating revisions into both the national and industry accounts  Approved changes are incorporated into both the national and industry accounts on a flow basis rather than waiting five years

13 Flexible Annual Revisions  Scheduled to begin in 2010 after the comprehensive revisions of the NIPAs and AIAs  New procedures are now being put in place in order to smooth the transition to flexible annual revisions

14 Conclusion  Important research and production work over the next several years  Comprehensive revision to AIAs  Historical time series of benchmark estimates  Constant-price I-O tables  Important process-oriented efforts toward further BEA integration  BEA annual “feedback” loop  Flexible annual revisions