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D E C O M P O S I T I O N O F P R O D U C T I V I T Y A N D U N I T C O S T S
L . S l i f m a n a n d C . C o r r a d o *
B o a r d o f G o v e r n o r s o f t h e
F e d e r a l R e s e r v e S y s t e m
N o v e m b e r 1 8 , 1 9 9 6
* A s s o c i a t e D i r e c t o r , D i v i s i o n o f R e s e a r c h a n d S t a t i s t i c s , a n d C h i e f , I n d u s t r i a l O u t p u t
S e c t i o n , D i v i s i o n o f R e s e a r c h a n d S t a t i s t i c s . O t h e r F e d e r a l R e s e r v e s t a f f c o n t r i b u t o r s
t o t h i s r e p o r t w e r e M a r k D o m s , C h a r l e s F l e i s c h m a n , G l o r i a F e n n e l l , M a r c F u s a r o ,
F o n g K i a n g , E l i z a b e t h V r a n k o v i c h , a n d B e t h A n n e W i l s o n . T h e a u t h o r s t h a n k R o b e r t
P a r k e r a n d G e r a l d D o n a h o e o f t h e B u r e a u o f E c o n o m i c A n a l y s i s f o r p r o v i d i n g
u n p u b l i s h e d i n c o m e e s t i m a t e s , a n d A l a n G r e e n s p a n , A l i c e R i v l i n , D a v i d S t o c k t o n ,
P . A . T i n s l e y , a n d E l l e n D y k e s o f t h e F e d e r a l R e s e r v e B o a r d a s w e l l a s E d w i n D e a n
( B L S ) , M i c h a e l H a r p e r ( B L S ) , S t e v e n L a n d e f e l d ( B E A ) , a n d R o b e r t P a r k e r ( B E A ) f o r
h e l p f u l c o m m e n t s o n a n e a r l i e r d r a f t . T h i s p a p e r d o e s n o t n e c e s s a r i l y r e f l e c t t h e
v i e w s o r o p i n i o n s o f t h e B o a r d o f G o v e r n o r s o f t h e F e d e r a l R e s e r v e S y s t e m .
8/14/2019 US Federal Reserve: oss1
http://slidepdf.com/reader/full/us-federal-reserve-oss1 2/22
W i l l i a m G u l l i c k s o n , " M u l t i f a c t o r P r o d u c t i v i t y i n M a n u f a c t u r i n g I n d u s t r i e s , "
1
M o n t h l y L a b o r R e v i e w ( O c t o b e r 1 9 9 2 ) ; s e e e s p e c i a l l y p a g e 2 9 a n d c h a r t 2 .
D E C O M P O S I T I O N O F P R O D U C T I V I T Y A N D U N I T C O S T S
L . S l i f m a n a n d C . C o r r a d o
L a b o r p r o d u c t i v i t y ( o u t p u t p e r h o u r ) i n t h e p r i v a t e b u s i n e s s s e c t o r i s r e p o r t e d t o h a v e
b e e n r i s i n g a t a n a n n u a l r a t e o f a b o u t 1 - 1 / 4 p e r c e n t s i n c e 1 9 7 3 . A t t h e s a m e t i m e ,
o u t p u t p e r h o u r i n t h e n o n f i n a n c i a l c o r p o r a t e s e c t o r i s e s t i m a t e d t o h a v e b e e n
i n c r e a s i n g a t a 1 - 3 / 4 p e r c e n t a n n u a l r a t e . G i v e n t h a t t h e n o n f i n a n c i a l c o r p o r a t e s e c t o r
i s a b o u t t w o - t h i r d s o f t h e a g g r e g a t e , t h e s e s t a t i s t i c s i m p l y t h a t o u t p u t p e r h o u r
e l s e w h e r e i n p r i v a t e b u s i n e s s h a s n o t i n c r e a s e d , o n a v e r a g e , f o r m o r e t h a n t w o
d e c a d e s .
F o r t h e p a s t f i f t e e n y e a r s , p r o d u c t i v i t y g r o w t h i n m a n u f a c t u r i n g h a s b e e n r e l a t i v e l y
r o b u s t . A B L S s t u d y c o n c l u d e d t h a t a l l o f t h e g r o w t h i n p r i v a t e b u s i n e s s m u l t i f a c t o r
p r o d u c t i v i t y i n t h e 1 9 8 0 s c o u l d b e a t t r i b u t e d t o m a n u f a c t u r i n g . M o r e o v e r , t h e
1
p u b l i s h e d f i g u r e s f o r p r i v a t e b u s i n e s s a n d m a n u f a c t u r i n g l a b o r p r o d u c t i v i t y s u g g e s t
t h a t s i n c e t h e b e g i n n i n g o f t h e 1 9 9 0 s o u t p u t p e r h o u r i n t h e n o n m a n u f a c t u r i n g s e c t o r
o f t h e e c o n o m y h a s b e e n d i s a p p o i n t i n g .
B e c a u s e i t s e e m s u n l i k e l y t h a t m a j o r s e c t o r s o f t h e e c o n o m y h a v e , i n r e a l i t y , f a i l e d t o
b e c o m e m o r e e f f i c i e n t y e a r i n a n d y e a r o u t , i t w o u l d b e u s e f u l t o t r y t o i d e n t i f y a t a
m o r e d i s a g g r e g a t e d l e v e l t h o s e s e g m e n t s o f t h e e c o n o m y w i t h p e r s i s t e n t l y d i s m a l
m e a s u r e d p r o d u c t i v i t y p e r f o r m a n c e . M o r e o v e r , f o r p u r p o s e s o f c u r r e n t a n a l y s i s , o n e
w o u l d l i k e t o h a v e t h e d a t a a t a q u a r t e r l y f r e q u e n c y . T h i s p a p e r p r e s e n t s s u c h a
d i s a g g r e g a t i o n . T h e d e c o m p o s i t i o n s a r e b y l e g a l f o r m o f o r g a n i z a t i o n , w i t h g r o s s
i n d u s t r y b r e a k s w i t h i n t h e c o r p o r a t e s e c t o r , a n d b y d e t a i l e d i n d u s t r y . F o r e x p o s i t o r y
c o n v e n i e n c e , w e r e f e r t o t h e f o r m e r a s t h e " s e c t o r a l " d e c o m p o s i t i o n a n d t h e l a t t e r a s
t h e " i n d u s t r y " d e c o m p o s i t i o n . A n a c c o m p a n y i n g d a t a s e t c o n t a i n s t h e c o m p l e t e s e t o f
s e c t o r a l a n d i n d u s t r y e s t i m a t e s o f l a b o r p r o d u c t i v i t y a s w e l l a s a d e c o m p o s i t i o n o f
s e c t o r a l d a t a o n u n i t c o s t s a n d p r o f i t s .
D e c o m p o s i t i o n o f P r o d u c t i v i t y a n d U n i t C o s t s b y S e c t o r
T h e s e c t o r a l d e c o m p o s i t i o n d e v e l o p s p r o d u c t a n d i n c o m e a c c o u n t s f o r s u b s e c t o r s o f
t h e d o m e s t i c b u s i n e s s s e c t o r i n t h e n a t i o n a l i n c o m e a n d p r o d u c t a c c o u n t s ( N I P A s ) .
T h e b a s i c i d e a u n d e r l y i n g t h e d e c o m p o s i t i o n i s t h a t t h e C o m m e r c e D e p a r t m e n t ' s
B u r e a u o f E c o n o m i c A n a l y s i s ( B E A ) p u b l i s h e s q u a r t e r l y i n c o m e a n d p r o d u c t f o r t h e
d o m e s t i c b u s i n e s s s e c t o r a n d f o r m o s t o f t h e c o r p o r a t e b u s i n e s s s e c t o r . T h e B E A a l s o
p u b l i s h e s a n n u a l i n c o m e a n d p r o d u c t f o r f a r m s a n d o w n e r - o c c u p i e d h o u s i n g . A f t e r
m a k i n g a f e w i n t e r p o l a t i o n s ( a n d e x t r a p o l a t i o n s ) o f t h e s e a n n u a l d a t a , a s w e l l a s
c o n s t r u c t i n g a n i m p l i c i t d e f l a t o r f o r t h e o u t p u t o f f i n a n c i a l c o r p o r a t i o n s , o n e c a n
c a l c u l a t e a c o m p l e t e q u a r t e r l y i n c o m e a n d p r o d u c t a c c o u n t f o r t h e n o n f a r m b u s i n e s s
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http://slidepdf.com/reader/full/us-federal-reserve-oss1 3/22
- 2 -
T h e i n t e r p o l a t i o n s , e x t r a p o l a t i o n s , a n d d a t a c o n s t r u c t i o n s a r e b a s e d p r i m a r i l y o n
2
p u b l i s h e d q u a r t e r l y N I P A s e r i e s a n d a r e d e s c r i b e d i n A p p e n d i x 1 .
T h e s e r v i c e s i n d u s t r y s h a r e r e f l e c t s c a l c u l a t i o n s b a s e d o n u n p u b l i s h e d B E A d a t a
3
o n d o m e s t i c i n c o m e b y i n d u s t r y a n d l e g a l f o r m o f b u s i n e s s . S e e t a b l e 4 , l i n e 1 5 ,
c o l u m n 3 .
N o t e t h a t t h e m a n u f a c t u r i n g s e c t o r a l r e a l p r o d u c t e s t i m a t e s p r e s e n t e d h e r e a r e
4
v a l u e - a d d e d m e a s u r e s a n d t h u s d i f f e r f r o m s e c t o r a l o u t p u t a s c a l c u l a t e d b y B L S . S e e
W i l l i a m G u l l i c k s o n , " M e a s u r e m e n t o f P r o d u c t i v i t y G r o w t h i n U . S . M a n u f a c t u r i n g , "
M o n t h l y L a b o r R e v i e w ( J u l y 1 9 9 5 ) , p p . 1 3 - 2 8 .
s e c t o r ( a s d e f i n e d b y B L S f o r o f f i c i a l p r o d u c t i v i t y e s t i m a t e s ) . A n i n c o m e a n d
2
p r o d u c t a c c o u n t f o r t h e n o n c o r p o r a t e s e c t o r c a n t h e n b e c a l c u l a t e d a s a r e s i d u a l . T h e
n o n f a r m , n o n f i n a n c i a l c o r p o r a t e s e c t o r i s f u r t h e r d i s a g g r e g a t e d i n t o m a n u f a c t u r i n g a n d
n o n m a n u f a c t u r i n g ; t h i s d i s a g g r e g a t i o n r e l i e s , i n p a r t , o n B E A ' s a n n u a l s e r i e s o n g r o s s
p r o d u c t o r i g i n a t i n g b y i n d u s t r y ( s e e b e l o w ) . A c o m p l e t e d e s c r i p t i o n o f a l l t h e s e r i e s
t h a t a r e p a r t o f t h e s e c t o r a l d e c o m p o s i t i o n a p p e a r s i n A p p e n d i x 1 .
W h a t D o e s t h e D e c o m p o s i t i o n C o m p r i s e ?
T h e s e c t o r a l d e c o m p o s i t i o n b r e a k s t h e n o n f a r m b u s i n e s s s e c t o r ( l e s s h o u s i n g ) i n t o t h e
f o l l o w i n g s e c t o r s : n o n f a r m c o r p o r a t e b u s i n e s s , f i n a n c i a l c o r p o r a t i o n s , n o n f a r m
n o n f i n a n c i a l c o r p o r a t i o n s , m a n u f a c t u r i n g c o r p o r a t i o n s , n o n m a n u f a c t u r i n g c o r p o r a t i o n s
( e x c l u d i n g f a r m a n d f i n a n c i a l c o r p o r a t i o n s ) , a n d n o n f a r m n o n c o r p o r a t i o n s . T h e
n o n f a r m n o n c o r p o r a t e s e c t o r c o n s i s t s p r i m a r i l y o f s o l e p r o p r i e t o r s h i p s a n d
p a r t n e r s h i p s , w i t h n e a r l y h a l f o f t h e s e c t o r ' s i n c o m e g e n e r a t e d b y b u s i n e s s e s i n t h e
s e r v i c e s i n d u s t r y . I n a d d i t i o n , n o m i n a l a n d r e a l p r o d u c t f o r t h e t o t a l n o n f a r m
3
b u s i n e s s s e c t o r a n d f o r t h e n o n f a r m n o n c o r p o r a t e b u s i n e s s s e c t o r a r e r e c a l c u l a t e d o n
a n " i n c o m e b a s i s " b y s u b t r a c t i n g t h e N I P A s t a t i s t i c a l d i s c r e p a n c y . B e c a u s e t h e
s t a t i s t i c a l d i s c r e p a n c y h a s s w u n g f r o m + $ 5 8 b i l l i o n i n 1 9 9 3 t o - $ 5 1 b i l l i o n i n
1 9 9 6 : Q 2 , t h e i n c o m e - b a s e d m e a s u r e s o f a c t i v i t y ( a n d , h e n c e , p r o d u c t i v i t y ) h a v e b e e n
g r o w i n g m o r e r a p i d l y t h a n t h e o u t p u t - b a s e d n u m b e r s i n r e c e n t q u a r t e r s .
E a c h s e c t o r i s d e c o m p o s e d i n t o t h e f o l l o w i n g p r o d u c t a n d i n c o m e c o m p o n e n t s :
n o m i n a l g r o s s p r o d u c t ; r e a l g r o s s p r o d u c t ; c o n s u m p t i o n o f f i x e d c a p i t a l ( w i t h c a p i t a l
c o n s u m p t i o n a d j u s t m e n t ) ; i n d i r e c t b u s i n e s s t a x e s , b u s i n e s s t r a n s f e r s , a n d n e t s u b s i d i e s ;
c o m p e n s a t i o n ; p r o f i t s ( w i t h i n v e n t o r y v a l u a t i o n a d j u s t m e n t a n d c a p i t a l c o n s u m p t i o n
a d j u s t m e n t ) ; n e t i n t e r e s t ; p r o p r i e t o r s ' i n c o m e ; a n d r e n t a l i n c o m e .
W h e n r e a l s e c t o r p r o d u c t i s d i v i d e d b y h o u r s w o r k e d , t h e r e s u l t i s l a b o r p r o d u c t i v i t y ,
o r o u t p u t p e r h o u r . W h e n n o m i n a l s e c t o r p r o d u c t a n d i t s i n c o m e c o m p o n e n t s a r e
4
d i v i d e d b y r e a l s e c t o r p r o d u c t , t h e r e s u l t i s a c o m p l e t e u n i t c o s t ( a n d p r o f i t )
a c c o u n t i n g t h a t a d d s u p t o t h e i m p l i c i t d e f l a t o r f o r t h e s e c t o r . T h e u n i t c o s t
d e c o m p o s i t i o n f o r e a c h s e c t o r i s p r e s e n t e d i n t h e a c c o m p a n y i n g d a t a s e t .
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F o r t h e m o s t p a r t , t h e f i g u r e s o n h o u r s w o r k e d a r e t h o s e u s e d i n t h e B L S
5
m e a s u r e s o f o u t p u t p e r h o u r f o r n o n f a r m b u s i n e s s , n o n f i n a n c i a l c o r p o r a t i o n s , a n d
m a n u f a c t u r i n g . S e e A p p e n d i x 1 f o r a c o m p l e t e d e s c r i p t i o n .
T h e d o m e s t i c i n c o m e o f a s e c t o r i s e q u a l t o t h e s e c t o r ' s g r o s s p r o d u c t o r i g i n a t i n g
6
m i n u s t h e c o n s u m p t i o n o f f i x e d c a p i t a l , i n d i r e c t b u s i n e s s t a x e s , a n d b u s i n e s s t r a n s f e r s ,
p l u s n e t s u b s i d i e s . S e e t a b l e A - 1 , l i n e 6 .
H i g h l i g h t s o f t h e S e c t o r a l D e c o m p o s i t i o n
T a b l e s 1 a n d 2 s u m m a r i z e t h e r e s u l t s o f t h e e x e r c i s e . T h e u p p e r p o r t i o n o f t a b l e 1
s h o w s t h e a n n u a l i z e d g r o w t h r a t e o f r e a l s e c t o r o u t p u t o v e r s e l e c t e d t i m e p e r i o d s a n d
t h e n e x t p o r t i o n s h o w s t h e c o r r e s p o n d i n g g r o w t h r a t e s o f h o u r s w o r k e d . T h e t h i r d
5
a n d f o u r t h s e c t i o n s s h o w l a b o r p r o d u c t i v i t y ( o u t p u t p e r h o u r ) a n d u n i t l a b o r c o s t s b y
s e c t o r . A s c a n b e s e e n i n l i n e 1 6 , t h e o f f i c i a l m e a s u r e o f l a b o r p r o d u c t i v i t y i n t h e
n o n f a r m b u s i n e s s s e c t o r s l o w e d f r o m a n a n n u a l g r o w t h r a t e o f 2 . 8 p e r c e n t i n t h e
1 9 6 0 s a n d e a r l y 1 9 7 0 s t o a 0 . 9 p e r c e n t r a t e d u r i n g t h e 1 9 9 0 s . E v e n w h e n m e a s u r e d
o n a n i n c o m e b a s i s ( l i n e 1 7 ) , t h e r e c e n t p e r f o r m a n c e ( 1 . 2 p e r c e n t p e r y e a r ) h a s b e e n
d i s a p p o i n t i n g c o m p a r e d w i t h t h a t i n t h e 1 9 6 0 s .
B y s e c t o r , t h e d e c o m p o s i t i o n s u g g e s t s t h a t t h e 1 9 7 0 s s l o w d o w n i n m e a s u r e d
p r o d u c t i v i t y g r o w t h w a s c o n c e n t r a t e d i n t h e c o r p o r a t e m a n u f a c t u r i n g a n d n o n f a r m
n o n c o r p o r a t e s e c t o r s ( l i n e s 2 1 a n d 2 3 ) . S u b s e q u e n t l y , o u t p u t p e r h o u r i n
m a n u f a c t u r i n g r e c o v e r e d . B u t t h e l e v e l o f o u t p u t i n t h e n o n c o r p o r a t e s e c t o r , a s
i m p l i e d b y t h i s d e c o m p o s i t i o n , h a s c o n t i n u e d t o f a l l . T a b l e 2 p r o v i d e s p e r s p e c t i v e o n
t h e r e l a t i v e s i z e o f e a c h s e c t o r ' s d o m e s t i c i n c o m e , r e a l o u t p u t , a n d h o u r s . A s m a y b e
s e e n , t h e n o n f a r m n o n c o r p o r a t e s e c t o r h a s a c c o u n t e d f o r j u s t u n d e r o n e - f o u r t h o f
n o n f a r m b u s i n e s s a c t i v i t y i n r e c e n t y e a r s .
A c c o m p a n y i n g t h e l a c k l u s t e r b e h a v i o r o f p r o d u c t i v i t y i n t h e n o n f a r m n o n c o r p o r a t e
s e c t o r h a s b e e n r a p i d g r o w t h i n u n i t l a b o r c o s t s c o m p a r e d w i t h t h o s e i n t h e c o r p o r a t e
s e c t o r ( t a b l e 1 , l i n e 3 1 v s . l i n e 2 6 ) . A t t h e s a m e t i m e , a s s h o w n i n c h a r t 1 , t h e r e t u r n
t o t h e o w n e r s o f n o n f a r m n o n c o r p o r a t e b u s i n e s s e s ( t h a t i s , p r o p r i e t o r s ' i n c o m e p l u s
r e n t a l i n c o m e ) a s a s h a r e o f e i t h e r n o m i n a l g r o s s s e c t o r p r o d u c t o r d o m e s t i c i n c o m e
h a s b e e n w e l l m a i n t a i n e d i n r e c e n t y e a r s . C o n s e q u e n t l y , a s i l l u s t r a t e d b y c h a r t 2 ,
6
s i n c e 1 9 7 6 t h e i m p l i c i t d e f l a t o r f o r t h e n o n f a r m n o n c o r p o r a t e s e c t o r h a s b e e n r i s i n g
m u c h f a s t e r t h a n t h e d e f l a t o r f o r t h e n o n f a r m c o r p o r a t e s e c t o r - - 6 . 7 p e r c e n t ( a n n u a l
r a t e ) v s . 4 p e r c e n t ( a n n u a l r a t e ) .
A C a v e a t
A c r i t i c a l c o m p o n e n t o f t h i s d e c o m p o s i t i o n i s B E A ' s e s t i m a t e o f r e a l n o n f i n a n c i a l
c o r p o r a t e o u t p u t . T o c a l c u l a t e r e a l n o n f i n a n c i a l c o r p o r a t e o u t p u t , B E A d e f l a t e s
c u r r e n t - d o l l a r n o n f i n a n c i a l c o r p o r a t e p r o d u c t u s i n g t h e i m p l i c i t d e f l a t o r f o r g o o d s a n d
s t r u c t u r e s , w h i c h m a y n o t a c c u r a t e l y r e p r e s e n t c o r p o r a t e p r o d u c t p r i c e s . F o r e x a m p l e ,
c o r p o r a t e p r o d u c t i n c l u d e s a l m o s t a l l o f t h e o u t p u t f o r s e r v i c e s , s u c h a s p u r c h a s e d
8/14/2019 US Federal Reserve: oss1
http://slidepdf.com/reader/full/us-federal-reserve-oss1 5/22
- 4 -
T h i s d e c o m p o s i t i o n i s s i m i l a r t o a n a l y s e s o f o u t p u t p e r h o u r b y m a j o r i n d u s t r y
7
p r e s e n t e d i n t h e 1 9 8 8 E c o n o m i c R e p o r t o f t h e P r e s i d e n t , p a g e 7 3 , a n d i n Z v i G r i l i c h e s '
i n t r o d u c t i o n t o t h e c o n f e r e n c e v o l u m e O u t p u t M e a s u r e m e n t i n t h e S e r v i c e S e c t o r s ,
U n i v e r s i t y o f C h i c a g o P r e s s , 1 9 9 2 , p a g e 5 . I n a d d i t i o n t o u p d a t i n g t h e s e e a r l i e r
s t u d i e s , t h i s r e p o r t p r e s e n t s p r o d u c t i v i t y e s t i m a t e s a t a m o r e d i s a g g r e g a t e d l e v e l .
S e e t h e A u g u s t 1 9 9 6 e d i t i o n o f t h e S u r v e y o f C u r r e n t B u s i n e s s f o r a c o m p l e t e
8
d e s c r i p t i o n o f g r o s s p r o d u c t b y i n d u s t r y a n d B E A ' s r e c o m m e n d a t i o n s f o r l i n k i n g t h e
d a t a a c r o s s t h e 1 9 8 7 S I C c h a n g e .
U n l i k e t h e o f f i c i a l B L S p r o d u c t i v i t y s e r i e s , t h e c o n s t r u c t e d a g g r e g a t e i n c l u d e s
9
o u t p u t a n d h o u r s f r o m n o n p r o f i t i n s t i t u t i o n s a n d p a i d p r i v a t e h o u s e h o l d w o r k e r s . I n
a d d i t i o n , t h e c o n s t r u c t e d s e r i e s e x c l u d e s t h e e n t i r e g o v e r n m e n t , a n d a g r i c u l t u r e ,
f o r e s t r y , a n d f i s h i n g i n d u s t r i e s r a t h e r t h a n j u s t e x c l u d i n g f a r m o u t p u t a n d h o u r s .
i n t e r c i t y t r a n s p o r t a t i o n , h o u s e h o l d u t i l i t i e s , a n d m o t i o n p i c t u r e s , a s w e l l a s a p o r t i o n o f
l e g a l s e r v i c e s . H o w e v e r , t h e q u a n t i t y w e i g h t s f o r t h e p r i c e s o f t h e s e a n d o t h e r
o b v i o u s l y e x c l u d e d c a t e g o r i e s a r e r e l a t i v e l y s m a l l f o r t h e n o n f i n a n c i a l c o r p o r a t e s e c t o r
a s a w h o l e ( s e e t a b l e 4 , c o l u m n 2 ) .
I n f a c t , a s s h o w n o n c h a r t 3 , a n o n f i n a n c i a l c o r p o r a t e o u t p u t p r i c e i n d e x c o n s t r u c t e d t o
r e f l e c t t h e t w o - d i g i t i n d u s t r y c o m p o s i t i o n o f n o n f i n a n c i a l c o r p o r a t e p r o d u c t d o e s n o t
s h o w a l o n g - t e r m t r e n d t h a t i s s i g n i f i c a n t l y d i f f e r e n t f r o m B E A s p u b l i s h e d d e f l a t o r .
T h e b r o a d t r e n d s i m p l i e d b y t h e p r o d u c t i v i t y a n d u n i t c o s t d e c o m p o s i t i o n s , w h i c h a r e
b a s e d o n t h e p u b l i s h e d e s t i m a t e s o f r e a l n o n f i n a n c i a l c o r p o r a t e p r o d u c t , w o u l d b e l i t t l e
c h a n g e d i f c u r r e n t - d o l l a r n o n f i n a n c i a l c o r p o r a t e p r o d u c t w e r e d e f l a t e d w i t h t h e
c o n s t r u c t e d p r i c e i n d e x . H o w e v e r , t h e c h a r t d o e s s h o w t h e t w o d e f l a t o r s b e g i n n i n g t o
d i v e r g e i n t h e 1 9 9 0 s , s u g g e s t i n g t h a t i n r e c e n t y e a r s t h e u s e o f o f f i c i a l s t a t i s t i c s f o r t h e
d e c o m p o s i t i o n h a s c a u s e d a m i s a l l o c a t i o n o f a s m a l l p o r t i o n o f r e a l p r o d u c t f r o m t h e
n o n c o r p o r a t e s e c t o r t o t h e n o n m a n u f a c t u r i n g c o r p o r a t e s e c t o r .
D e c o m p o s i t i o n o f P r o d u c t i v i t y b y I n d u s t r y
T h e i n d u s t r y d e c o m p o s i t i o n r e l i e s o n o n e - a n d t w o - d i g i t S I C i n d u s t r y o u t p u t ,
e m p l o y m e n t , a n d h o u r s d a t a t h a t a r e a v a i l a b l e a s p a r t o f B E A ' s g r o s s p r o d u c t b y
i n d u s t r y d a t a s e t . A n i m p o r t a n t c a v e a t a s s o c i a t e d w i t h u s i n g t h e s e d a t a f o r l o n g e r - r u n
7
h i s t o r i c a l c o m p a r i s o n s i s t h a t t h e S I C s y s t e m w a s c h a n g e d i n 1 9 8 7 . B E A ' s
r e c o m m e n d a t i o n s h a v e b e e n f o l l o w e d i n c o m b i n i n g c e r t a i n t w o - d i g i t i n d u s t r i e s t o
c r e a t e r e a s o n a b l y c o n t i n u o u s t i m e s e r i e s . I n a n y e v e n t , w i t h t h e s e d a t a , o u t p u t p e r
8
h o u r m e a s u r e s w e r e c a l c u l a t e d f o r d e t a i l e d i n d u s t r i e s a n d a g g r e g a t e d t o a m e a s u r e f o r
t h e n o n f a r m b u s i n e s s s e c t o r l e s s h o u s i n g .
9
H i g h l i g h t s o f t h e I n d u s t r y D e c o m p o s i t i o n
T a b l e 3 s u m m a r i z e s t h e r e s u l t s o f t h i s e x e r c i s e . A s c a n b e s e e n b y c o m p a r i n g l i n e s 1
a n d 2 , g r o w t h r a t e s o f t h e c o n s t r u c t e d a g g r e g a t e a n d t h e o f f i c i a l s e r i e s a r e q u i t e c l o s e ,
8/14/2019 US Federal Reserve: oss1
http://slidepdf.com/reader/full/us-federal-reserve-oss1 6/22
- 5 -
e v e n t h o u g h 2 5 p e r c e n t o f s e r v i c e s i n d u s t r y d o m e s t i c i n c o m e i s n o t i n t h e b u s i n e s s
s e c t o r ( t a b l e 5 , c o l u m n 3 , l i n e 1 5 ) . W i t h i n t h e i n d u s t r y d e c o m p o s i t i o n , t h e r e s u l t s a r e
s i m i l a r t o t h o s e i n t h e s e c t o r a l d e c o m p o s i t i o n - - t h a t i s , t h e l e v e l o f m e a s u r e d o u t p u t p e r
h o u r i n t h e s e r v i c e s i n d u s t r y ( l i n e 1 6 ) h a s b e e n f a l l i n g c o n t i n u o u s l y f o r t h e p a s t t w o
d e c a d e s . L i n e s 1 7 t o 2 8 p r o v i d e a d d i t i o n a l d e t a i l a n d s u g g e s t t h a t t h e d i s a p p o i n t i n g
r e p o r t e d p r o d u c t i v i t y p e r f o r m a n c e h a s b e e n w i d e s p r e a d a c r o s s n e a r l y a l l t w o - d i g i t
s e r v i c e s i n d u s t r i e s .
Q u e s t i o n s R a i s e d b y t h e D e c o m p o s i t i o n
A s i n d i c a t e d a b o v e , t h e d a t a s e t s h o w s t h a t t h e p r o f i t a b i l i t y o f n o n c o r p o r a t e b u s i n e s s e s ,
( p r o x i e d b y p r o p r i e t o r s ' i n c o m e p l u s r e n t a l i n c o m e a s a s h a r e o f s e c t o r o u t p u t ) h a s
b e e n w e l l m a i n t a i n e d i n t h e f a c e o f d e c l i n i n g p r o d u c t i v i t y o v e r t h e p a s t t w o d e c a d e s .
O n e q u e s t i o n r a i s e d b y t h e d e c o m p o s i t i o n , t h e n , i s , D o e s s u c h a c o n f l u e n c e o f e v e n t s
m a k e e c o n o m i c s e n s e ? I t s e e m s u n l i k e l y t h a t f i r m s w i t h d e c l i n i n g l o n g - t e r m
p r o d u c t i v i t y w o u l d b e a b l e t o a v o i d b a n k r u p t c y l e t a l o n e m a i n t a i n t h e r a t e o f r e t u r n t o
t h e o w n e r s . I n t h e o r y , s o m e f i r m s c o u l d h a v e l o w o r d e c l i n i n g m e a s u r e d o u t p u t p e r
h o u r a n d s t i l l b e p r o f i t a b l e , b u t i t i s h a r d t o i m a g i n e t h i s o c c u r r i n g o n a w i d e s p r e a d
b a s i s . T o b e s u r e , t h e n o n c o r p o r a t e s e c t o r i s n o t s t a g n a n t ; i t r e f l e c t s m a n y s t a r t - u p
b u s i n e s s e s , t h e m o s t s u c c e s s f u l o f w h i c h e v e n t u a l l y i n c o r p o r a t e . B u t t h e c o n f l u e n c e o f
e v e n t s a s d e s c r i b e d b y t h i s d a t a s e t r e q u i r e s t h e s e c t o r t o h a v e p e r s i s t e n t l y h a r b o r e d t h e
e c o n o m y ' s l e a s t e f f i c i e n t b u s i n e s s e s s i n c e t h e m i d - 1 9 7 0 s , w h i c h s e e m s i n c o n s i s t e n t
w i t h t h e s e c t o r ' s c o n t i n u e d p r o f i t a b i l i t y .
I n a n a c c o u n t i n g s e n s e , t h e s e a p p a r e n t l y i n c o m p a t i b l e p r o d u c t i v i t y a n d p r o f i t a b i l i t y
t r e n d s c a n b e r e c o n c i l e d b y r e l a t i v e l y r a p i d i n c r e a s e s i n t h e p r i c e s o f t h e n o n c o r p o r a t e
s e c t o r ' s o u t p u t . I s t h e r e a n e c o n o m i c e x p l a n a t i o n f o r t h e r a p i d r i s e o v e r t w o d e c a d e s
i n t h e r e l a t i v e p r i c e o f o u t p u t f r o m t h e n o n c o r p o r a t e s e c t o r ? F a c t o r s s u c h a s
w i d e s p r e a d p r i c e i n e l a s t i c d e m a n d , b a r r i e r s t o e n t r y , i n c l u d i n g n o n t r a n s f e r a b l e
i n t e l l e c t u a l p r o p e r t y r i g h t s , a n d s o f o r t h c o u l d p o s s i b l y e x p l a i n s u c h t r e n d s . B u t i t i s
h a r d t o i m a g i n e t h e p r e s e n c e o f t h e s e f a c t o r s o n a w i d e e n o u g h s c a l e t o a c c o u n t f o r a
s i g n i f i c a n t p o r t i o n o f t h e p r o d u c t i v i t y s l o w d o w n i n t h e n o n c o r p o r a t e s e c t o r .
A l t e r n a t i v e l y , t h e s e c t o r ' s m e a s u r e d t r e n d s i n p r o d u c t i v i t y , p r o f i t a b i l i t y , a n d p r i c e s m a y
n o t r e f l e c t a c t u a l e c o n o m i c d e v e l o p m e n t s . T h u s , a n o t h e r q u e s t i o n r a i s e d b y t h e
d e c o m p o s i t i o n i s , D o t h e s e i n c o n s i s t e n t t r e n d s s i g n i f y p r o b l e m s w i t h o u r e c o n o m i c
s t a t i s t i c s ?
O n e p o s s i b l e m e a s u r e m e n t p r o b l e m i s t h a t n o m i n a l o u t p u t c o u l d b e u n d e r s t a t e d . I n
p a r t i c u l a r , t h e i n v o i c e s f o r s o m e o u t p u t m a y n o t b e c a p t u r e d b y t h e C o m m e r c e
D e p a r t m e n t ' s s t a t i s t i c a l n e t s . B u t i s t h e p r o b l e m , i f i t e x i s t s , g e t t i n g w o r s e ? T h e $ 1 0 0
b i l l i o n s w i n g i n t h e s t a t i s t i c a l d i s c r e p a n c y s i n c e 1 9 9 3 d o e s r a i s e t h e p o s s i b i l i t y t h a t
n o m i n a l o u t p u t g r o w t h h a s b e e n u n d e r s t a t e d i n r e c e n t y e a r s . N e v e r t h e l e s s , t h e
i n c o m e - b a s e d m e a s u r e s o f o u t p u t p e r h o u r p r e s e n t e d o n l i n e s 1 7 a n d 2 3 o f t a b l e 1
s u g g e s t s t h a t m i s m e a s u r e m e n t o f n o m i n a l o u t p u t i s u n l i k e l y t o a c c o u n t f o r m u c h o f
8/14/2019 US Federal Reserve: oss1
http://slidepdf.com/reader/full/us-federal-reserve-oss1 7/22
- 6 -
S e e , f o r e x a m p l e , t h e f o l l o w i n g s t u d i e s : D a v i d E . L e b o w , J o h n M . R o b e r t s , a n d
1 0
D a v i d J . S t o c k t o n , " M o n e t a r y P o l i c y a n d t h e P r i c e L e v e l , " F e d e r a l R e s e r v e B o a r d ,
A u g u s t 1 9 9 4 . J . P e t e r s o n , " I s t h e G r o w t h o f t h e C P I a B i a s e d M e a s u r e o f C h a n g e s i n
t h e C o s t o f L i v i n g ? " , C o n g r e s s i o n a l B u d g e t O f f i c e , 1 9 9 4 . A d v i s o r y C o m m i s s i o n t o
S t u d y t h e C o n s u m e r P r i c e I n d e x , " T o w a r d a M o r e A c c u r a t e M e a s u r e o f t h e C o s t o f
L i v i n g : I n t e r i m R e p o r t t o t h e S e n a t e F i n a n c e C o m m i t t e e , " S e p t e m b e r 1 5 , 1 9 9 5 .
M a t h e w S h a p i r o a n d D a v i d W . W i l c o x , " M i s m e a s u r e m e n t i n t h e C o n s u m e r P r i c e
I n d e x : A n E v a l u a t i o n , " N B E R W o r k i n g P a p e r 5 5 9 0 , M a y 1 9 9 6 .
S e v e n t e e n i n d u s t r i e s w e r e a d j u s t e d . F o u r o f t h e s e i n d u s t r i e s w e r e i n t h e
1 1
t r a n s p o r t a t i o n s e c t o r : l o c a l a n d i n t e r u r b a n p a s s e n g e r t r a n s i t ; t r u c k i n g a n d w a r e h o u s i n g ;
w a t e r t r a n s p o r t a t i o n ; a n d t r a n s p o r t a t i o n s e r v i c e s . T w o o f t h e a d j u s t e d i n d u s t r i e s w e r e
i n f i n a n c e , i n s u r a n c e , a n d r e a l e s t a t e : i n s u r a n c e c a r r i e r s ; a n d i n s u r a n c e a g e n t s , b r o k e r s ,
a n d s e r v i c e s . T h e r e m a i n i n g e l e v e n a d j u s t e d w e r e i n t h e s e r v i c e s i n d u s t r y : h o t e l s a n d
o t h e r l o d g i n g p l a c e s ; p e r s o n a l b u s i n e s s s e r v i c e s ; b u s i n e s s s e r v i c e s ; a u t o r e p a i r s e r v i c e s
a n d p a r k i n g ; m i s c e l l a n e o u s r e p a i r s e r v i c e s ; m o t i o n p i c t u r e s ; a m u s e m e n t a n d r e c r e a t i o n
s e r v i c e s ; h e a l t h s e r v i c e s ; l e g a l s e r v i c e s ; e d u c a t i o n s e r v i c e s ; a n d s o c i a l s e r v i c e s .
t h e d r e a r y p e r f o r m a n c e o f p r o d u c t i v i t y a s i n d i c a t e d b y p u b l i s h e d s t a t i s t i c s o v e r t h e
p a s t t w o d e c a d e s .
A m o r e l i k e l y s t a t i s t i c a l e x p l a n a t i o n f o r t h e i m p l a u s i b l e p r o d u c t i v i t y , p r o f i t a b i l i t y , a n d
p r i c e t r e n d s i n t h e n o n c o r p o r a t e s e c t o r i s t h a t t h e y r e f l e c t p r o b l e m s i n m e a s u r i n g
p r i c e s . I n d e e d , t h e d e c o m p o s i t i o n o f n a t i o n a l a c c o u n t s d a t a p r e s e n t e d h e r e c a n b e
v i e w e d a s p r o v i d i n g a m a c r o e c o n o m i c p e r s p e c t i v e o n t h e p r o b l e m s o f p r i c e
m e a s u r e m e n t t h a t m a n y o t h e r r e s e a r c h e r s h a v e n o t e d f r o m a m i c r o s t a t i s t i c a l
p e r s p e c t i v e . I t s u g g e s t s t h a t a c t u a l i n f l a t i o n i n t h e e c o n o m y i s l e s s t h a n t h a t s h o w n
1 0
b y t h e p u b l i s h e d d a t a , a n d , a c c o r d i n g l y , a c t u a l g r o w t h o f o u t p u t a n d p r o d u c t i v i t y i s
f a s t e r .
W h a t i s t h e p o s s i b l e m a g n i t u d e o f t h e o v e r s t a t e m e n t o f i n f l a t i o n t h a t e m e r g e s f r o m
t h i s d a t a s e t ? A s a b e n c h m a r k t h o u g h t e x p e r i m e n t f o r m a k i n g a j u d g m e n t o n t h i s
i s s u e , o n e c o u l d a s s u m e t h a t i n s t e a d o f f a l l i n g f o r t h e p a s t t w o d e c a d e s , p r o d u c t i v i t y i n
a l l d e c l i n i n g t w o - d i g i t s e r v i c e - p r o d u c i n g i n d u s t r i e s h a s b e e n f l a t . S u c h a c a l c u l a t i o n
s u g g e s t s t h a t o v e r t h e p a s t t w o d e c a d e s a g g r e g a t e p r o d u c t i v i t y g r o w t h w o u l d h a v e
b e e n n e a r l y h a l f a p e r c e n t a g e p o i n t f a s t e r p e r y e a r t h a n i n d i c a t e d b y t h e p u b l i s h e d d a t a
a n d , t h a t f o r a g i v e n n o m i n a l o u t p u t , i n f l a t i o n w o u l d h a v e b e e n l o w e r b y t h e s a m e
a m o u n t . T h i s b e n c h m a r k f i g u r e , w h i c h i s d e r i v e d i n d e p e n d e n t l y , i s w i t h i n t h e r a n g e
1 1
o f e s t i m a t e s o f C P I b i a s e s a r i s i n g f r o m t h e s l o w i n t r o d u c t i o n o f n e w p r o d u c t s a n d
d e f i c i e n c i e s o f q u a l i t y a d j u s t m e n t t h a t h a v e b e e n n o t e d b y m a n y r e s e a r c h e r s ( s e e
f o o t n o t e 1 0 ) . O f c o u r s e , o n e c o u l d a r g u e t h a t e v e n t h e a s s u m p t i o n o f n o p r o d u c t i v i t y
g r o w t h f o r t h e s e i n d u s t r i e s i s u n r e a l i s t i c . O b v i o u s l y , i f o n e w e r e t o a s s u m e t h a t
p r o d u c t i v i t y i n t h e s e i n d u s t r i e s h a s a c t u a l l y b e e n i m p r o v i n g , a g g r e g a t e o u t p u t p e r h o u r
w o u l d r i s e e v e n f a s t e r a n d p r i c e i n f l a t i o n w o u l d b e s t i l l l o w e r .
A C o n c l u d i n g T h o u g h t
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S e e , f o r e x a m p l e , Z v i G r i l i c h e s , " P r o d u c t i v i t y , R & D a n d t h e D a t a C o n s t r a i n t , "
1 2
A m e r i c a n E c o n o m i c R e v i e w ( M a r c h 1 9 9 4 ) , p p . 1 - 2 3 a n d t h e r e f e r e n c e s t h e r e i n .
P a u l D a v i d , " T h e D y n a m o a n d t h e C o m p u t e r : A n H i s t o r i c a l P e r s p e c t i v e o n t h e
1 3
M o d e r n P r o d u c t i v i t y P a r a d o x , " A m e r i c a n E c o n o m i c R e v i e w : P a p e r s a n d P r o c e e d i n g s
( M a y 1 9 9 0 ) , a n d N a t h a n R o s e n b e r g , " U n c e r t a i n t y a n d T e c h n o l o g i c a l C h a n g e , "
u n p u b l i s h e d p a p e r p r e p a r e d f o r a c o n f e r e n c e s p o n s o r e d b y t h e F e d e r a l R e s e r v e B a n k
o f B o s t o n , J u n e 5 - 7 , 1 9 9 6 .
M a n y o b s e r v e r s h a v e q u e s t i o n e d h o w t h e i n f l u e n c e o f r e l e n t l e s s t e c h n o l o g i c a l p r o g r e s s
a p p e a r s s o p r o m i n e n t l y i n s t a t i s t i c s o n m a n u f a c t u r i n g , b u t n o t i n t h o s e f o r s e r v i c e s .
S o m e h a v e l o n g q u e s t i o n e d t h e a c c u r a c y o f t h e s t a t i s t i c s t h e m s e l v e s . O t h e r s s u g g e s t
1 2
t h a t t h e g a i n s f r o m n e w t e c h n o l o g i e s t a k e a l o n g t i m e t o d i f f u s e a n d t h a t t h e
p r o d u c t i v i t y b o o s t f r o m i n f o r m a t i o n t e c h n o l o g y h a s y e t t o c o m e . Y e t o t h e r s l o o k
1 3
m o r e c l o s e l y a t s t r u c t u r a l d e v e l o p m e n t s s u c h a s " d o w n s i z i n g " a n d " o u t s o u r c i n g " a n d
s u g g e s t t h a t t h e s e n e e d n o t s t i m u l a t e a g g r e g a t e g r o w t h o r e f f i c i e n c y ; i n s t e a d , s u c h
d e v e l o p m e n t s c o u l d j u s t r e f l e c t a r e a l l o c a t i o n o f r e s o u r c e s w i t h i n t h e e c o n o m y .
C l e a r l y , t h e b a s i c t r e n d t o w a r d a u t o m a t i o n i n m a n u f a c t u r i n g a n d d i s t r i b u t i o n w i l l
r e s u l t i n a p r o d u c t i v i t y g a i n i n t h e a g g r e g a t e e c o n o m y o n l y i f t h e l a i d - o f f w o r k e r s f i n d
n e w j o b s i n w h i c h t h e y a r e a s p r o d u c t i v e a s t h e y w e r e i n t h e i r o l d j o b s . I f h u m a n
c a p i t a l i s l o s t w h e n p r o d u c t i o n w o r k e r s m o v e f r o m o n e i n d u s t r y t o a n o t h e r f o l l o w i n g
f i r m d o w n s i z i n g , a g g r e g a t e l a b o r p r o d u c t i v i t y w i l l n o t n e c e s s a r i l y i n c r e a s e .
H o w e v e r , m a n y o f t h e c h a n g e s i n m a n u f a c t u r i n g o v e r t h e 1 9 8 0 s o c c u r r e d a s p a r t o f
c o r p o r a t e r e s t r u c t u r i n g t h a t o u t s o u r c e d a n c i l l a r y , l a b o r - i n t e n s i v e , s e r v i c e a c t i v i t i e s o f
t h e b a s i c e n t e r p r i s e s . A r e l a t e d d e v e l o p m e n t i s t h e i n c r e a s e d t e n d e n c y i n t h e 1 9 9 0 s
f o r m a n u f a c t u r e r s t o p u r c h a s e t h e s e r v i c e s o f t e m p o r a r y w o r k e r s a s l a b o r o n
p r o d u c t i o n l i n e s . W h e n a m a n u f a c t u r i n g o r r e l a t e d e n t e r p r i s e d e c i d e s t o u s e t e m p o r a r y
w o r k e r s o r t o c l o s e d o w n a n a n c i l l a r y a c t i v i t y ( f o r e x a m p l e , a w a r e h o u s i n g u n i t , a
l e g a l s e r v i c e s d e p a r t m e n t , o r a r e s e a r c h a n d d e v e l o p m e n t l a b o r a t o r y ) a n d p u r c h a s e t h e
s e r v i c e o n t h e m a r k e t i n s t e a d , v a l u e a d d e d i n m a n u f a c t u r i n g i s r e d u c e d a n d v a l u e
a d d e d e l s e w h e r e i n i n d u s t r y i s i n c r e a s e d . T h e s e c h a n g e s r e f l e c t a n a l t e r a t i o n i n t h e
o r g a n i z a t i o n o f p r o d u c t i o n t o m e e t a g i v e n p a t t e r n o f f i n a l d e m a n d a n d d o n o t
n e c e s s a r i l y r e s u l t i n a n i m m e d i a t e i n c r e a s e i n a g g r e g a t e p r o d u c t i v e e f f i c i e n c y . O v e r
t i m e , h o w e v e r , c o n t r a c t i n g o u t a n c i l l a r y a c t i v i t i e s m e a n s r e p l a c i n g o w n - a c c o u n t
p r o d u c t i o n b y s p e c i a l i s t p r o d u c t i o n , w h i c h s h o u l d e v e n t u a l l y l e a d t o a n i n c r e a s e i n
p r o d u c t i v e e f f i c i e n c y f o r t h e e c o n o m y a s a w h o l e . A f i n a l q u e s t i o n , t h e n , i s H o w l o n g
d o e s i t t a k e f o r t h e s e e f f i c i e n c y g a i n s t o o c c u r , a n d w h e n t h e y d o t a k e p l a c e , w i l l o u r
e c o n o m i c s t a t i s t i c s c a p t u r e t h e m ?
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Table 1
Sectoral Labor Productivity and Costs(Percent change at an annual rate over period indicated)
60:Q2 to
96:Q2
60:Q2 to
73:Q4
73:Q4 to
80:Q1
80:Q1 to
90:Q2
90:Q2 to
96:Q2
REAL OUTPUT
1. Nonfarm business sector 3.3 4.5 3.0 2.9 2.1
2. Income-based 3.3 4.4 2.6 3.0 2.3
3. Nonfarm corporate 3.9 4.7 3.8 3.5 2.9
4. Financial 3.5 3.2 7.4 1.7 3.2
5. Nonfinancial 3.9 4.8 3.6 3.7 2.8
6. Manufacturing 2.9 4.2 1.9 2.5 1.8
7. Nonmanufacturing 4.6 5.4 4.8 4.3 3.3
8. Nonfarm noncorporate 1.4 3.6 -1.5 1.0 0.4
HOURS WORKED
9. Nonfarm business sector 1.6 1.6 1.8 1.7 1.1
10. Nonfarm corporate 2.2 2.9 2.2 1.8 1.2
11. Financial 2.5 3.2 3.2 2.2 0.4
12. Nonfinancial 2.2 2.9 2.1 1.8 1.3
13. Manufacturing 0.3 1.4 -0.1 -0.5 -0.4
14. Nonmanufacturing 3.6 4.5 3.8 3.1 2.0
15. Nonfarm noncorporate 0.2 -1.1 0.5 1.5 0.9
LABOR PRODUCTIVITY
16. Nonfarm business sector 1.7 2.8 1.2 1.1 0.9
17. Income-based 1.7 2.8 0.9 1.2 1.2
18. Nonfarm corporate 1.7 1.8 1.6 1.7 1.6
19. Financial 1.0 -0.0 4.1 -0.5 2.820. Nonfinancial 1.7 1.9 1.5 1.8 1.5
21. Manufacturing 2.6 2.8 2.0 3.1 2.3
22. Nonmanufacturing 1.0 0.9 1.0 1.2 1.2
23. Nonfarm noncorporate 1.2 4.8 -1.9 -0.5 -0.5
UNIT LABOR COSTS
24. Nonfarm business sector 4.2 3.1 8.0 4.2 2.7
25. Income-based 4.2 3.1 8.3 4.0 2.5
26. Nonfarm corporate 3.8 3.3 7.3 3.5 1.9
27. Financial 5.7 5.6 4.5 8.0 3.3
28. Nonfinancial 3.7 3.2 7.5 3.2 1.8
29. Manufacturing 3.1 2.4 7.8 2.2 1.630. Nonmanufacturing 4.2 4.1 7.4 3.8 1.9
31. Nonfarm noncorporate 4.8 1.0 11.0 6.2 5.0
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Table 2
Sectoral Income, Real Output and Hours(Average percentage of total nonfarm business over period indicated)
1960 to
1995
1960 to
1973
1974 to
1979
1979 to
1990
1990 to
1995
DOMESTIC INCOME
1. Nonfarm business sector 100.0 100.0 100.0 100.0 100.0
2. Nonfarm corporate 76.7 74.8 77.8 78.2 77.4
3. Financial 5.5 4.3 4.9 6.0 7.9
4. Nonfinancial 71.2 70.5 73.0 72.2 69.5
5. Manufacturing 29.9 34.6 31.4 26.6 23.0
6. Nonmanufacturing 41.4 35.9 41.6 45.6 46.5
7. Nonfarm noncorporate 23.3 25.2 22.2 21.8 22.6
REAL OUTPUT1
8. Nonfarm business sector 100.0 100.0 100.0 100.0 100.0
9. Nonfarm corporate 73.2 69.0 71.6 76.2 78.4
10. Financial 7.5 6.8 7.6 8.2 7.6
11. Nonfinancial 65.6 62.0 64.1 68.1 70.8
12. Manufacturing 24.4 26.1 24.4 23.6 22.4
13. Nonmanufacturing 41.1 35.6 39.7 44.6 48.4
14. Nonfarm noncorporate 28.4 34.3 30.3 24.1 21.6
HOURS
15. Nonfarm business sector 100.0 100.0 100.0 100.0 100.0
16. Nonfarm corporate 72.7 67.9 74.5 76.2 76.3
17. Financial 4.4 3.8 4.5 5.0 4.9
18. Nonfinancial 68.3 64.1 70.0 71.2 71.4
19. Manufacturing 28.2 32.7 29.5 25.1 21.720. Nonmanufacturing 40.1 31.4 40.5 46.1 49.8
21. Nonfarm noncorporate 27.3 32.1 25.5 23.8 23.7
1. Figures for real output shares begin in 1961 and are relative to the income-based measure of total nonfarmbusiness output.
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Table 3
Real Gross Product Originating per Hour, 1977-94(Percent change at an annual rate over period indicated)
Industry
1977 to
1994
1980 to
1990
1990 to
1994
1 Nonfarm business sector, excluding housing (BLS) 0.95 1.14 1.12
2 Nonagricultural private industries (exc. housing) 0.89 1.17 1.03
3 Mining 2.62 5.00 4.58
4 Construction -1.02 -0.68 0.77
5 Manufacturing 2.45 3.22 2.15
6 Durables 2.80 3.56 3.07
7 Nondurables 1.99 2.73 0.96
8 Transportation and utilities 1.51 1.29 2.58
9 Transportation 0.58 -0.05 2.34
10 Communications 4.53 4.02 5.20
11 Public utilities 0.65 1.21 2.80
12 Trade 2.06 2.49 2.37
13 Wholesale trade 3.30 3.34 5.42
14 Retail trade 1.29 2.04 0.60
15 Finance, ins., real estate (exc. housing) 0.16 0.10 0.88
16 Services -0.56 -0.50 -1.11
17 Hotels and lodging -1.53 -1.46 0.40
18 Personal services -0.87 -0.53 -0.71
19 Business and other services -0.42 -0.21 -1.12
20 Auto repair -1.26 -1.04 -1.87
21 Miscellaneous services -0.20 -1.22 -3.4722 Motion pictures 1.65 1.68 -1.05
23 Amusement services 0.98 2.64 -4.75
24 Health services -1.84 -1.82 -2.50
25 Legal services -2.77 -2.58 -3.61
26 Education services 0.01 -0.53 0.23
27 Membership orgs. and social services -0.18 -0.14 0.45
28 Private households 2.16 3.70 2.07
Notes: Hours of all persons in these calculations differ from hours of all persons as defined by the BLS because thecalculations presented here include nonprofit institutions and private households. These calculations assume that self-
employed workers in each industry work the same number of hours annually as full-time wage and salary employees.
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Table 4
Distribution of Domestic Income across Private Nonagricultural Industries,by Legal Form of Organization, 19941
TOTAL Corporations
Sole
Proprietorshipsand Partnerships
Households
and NonprofitInstitutions
1. Total 100.00 100.00 100.00 100.00
2. Mining 1.01 1.13 0.98 0.00
3. Construction 5.98 5.69 10.68 0.00
4. Manufacturing 23.78 30.43 5.26 0.23
5. Durables 13.76 17.73 2.49 0.02
6. Nondurables 10.02 12.69 2.77 0.20
7. Transportation and utilities 10.37 11.83 7.06 3.83
8. Transportation 4.59 5.04 3.24 3.22
9. Communications 2.97 3.45 2.21 0.28
10. Public utilities 2.80 3.35 1.60 0.32
11. Trade 18.44 21.48 14.09 0.17
12. Wholesale trade 7.59 9.36 3.36 0.08
13. Retail trade 10.84 12.12 10.73 0.09
14. Finance, insurance, and real estate 11.06 10.00 15.69 11.80
15. Services 29.36 19.44 46.25 83.97
16. Hotels and lodging 1.03 0.94 1.98 0.08
17. Personal services 0.98 0.65 3.07 0.00
18. Motion pictures 0.54 10.42 1.41 0.00
19. Amusement 1.02 0.78 1.72 1.81
20. Business and other 9.37 9.15 14.12 2.58
21. Auto repair 0.92 0.73 2.35 0.00
22. Miscellaneous repair 0.39 0.34 0.87 0.00
23. Health services 9.39 4.69 11.17 46.51
24. Legal services 2.20 1.09 8.66 0.10
25. Education services 1.20 0.12 0.20 12.34
26. Social services 2.06 0.53 0.71 17.59
27. Private households 0.26 0.00 0.00 2.95
1. These data are derived from unpublished BEA estimates.
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Table 5
Distribution of Domestic Income within Private Nonagricultural Industries,by Legal Form of Organization, 19941
Corporations
Sole Proprietorships
and Partnerships
Households and
Nonprofit Institutions
1. TOTAL 75.57 15.10 9.33
2. Mining 84.50 15.50 0.00
3. Construction 71.65 28.35 0.00
4. Manufacturing 96.40 3.52 0.08
5. Durables 97.10 2.88 0.02
6. Nondurables 95.43 4.39 0.18
7. Transportation and utilities 85.95 10.82 3.24
8. Transportation 82.62 11.22 6.16
9. Communications 87.34 11.82 0.8410. Public utilities 89.93 9.08 0.99
11. Trade 87.78 12.14 0.08
12. Wholesale trade 92.88 7.03 0.10
13. Retail trade 84.21 15.72 0.07
14. Finance, insurance, and real estate2 41.91 13.86 5.76
15. Services 49.88 25.03 25.10
16. Hotels and lodging 68.72 30.62 0.66
17. Personal services 50.24 49.76 0.00
18. Motion picturest 58.72 41.28 0.00
19. Amusement 57.81 26.66 15.53
20. Business and other 73.63 23.95 2.42
21. Auto repair 59.49 40.51 0.00
22. Miscellaneous repair 64.67 35.33 0.00
23. Health services 37.63 18.90 43.47
24. Legal services 37.12 62.48 0.40
25. Education services 7.21 2.63 90.16
26. Social services 19.49 5.45 75.06
27. Private households 0.00 0.00 100.00
1. These data are derived from unpublished BEA estimates.2. Finance, insurance, and real estate add to less than 100 because of the omission of owner-occupied housing.
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1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 0.45
0.47
0.49
0.51
0.53
0.55
Nonfarm Noncorporate Sector
11-18-96
Return to Owners as a Share of Domestic Income
Percent
Note: Return to owners equals proprietors’ income plus rental income.
1960 1964 1968 1972 1976 1980 1984 1988 1992 19960.36
0.38
0.4
0.42
0.44
0.46
Return to Owners as a Share of Gross Sector Product
Percent
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Chart 1
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1961 1966 1971 1976 1981 1986 1991 19960
100
200
300
400
500
600
700
Implicit Deflators
11-5-96
1961 = 100
Nonfarm Noncorporate Sector
Nonfarm Corporate Sector
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Chart 2
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1977 1980 1983 1986 1989 1992 19950.9
1
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
2
2.1
Nonfinancial Corporations
11-13-96
Price Indexes1977 = 1.00
Note: BEA’s published deflator for nonfinancial corporations is based on
Constructed
Published
the implicit deflator for goods
and structures. The constructed price measure is a Fisher index that weights two-digit GPO industrydeflators by the corporate GPO for each industry.
- 1 5 -
Chart 3
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Appendix 1
Detailed Description of the Sectoral Decomposition
Table A-1 presents the 1996:Q2 levels of the data used in the sectoral decomposition.
Columns A through I contain the series of primary interest; columns J through Qcontain the sectors needed to construct the series in the first nine columns. A
description of the source data, accounting identity, or interpolation/exrapolation
procedure used to construct each cell is given below.
Column A Nonfarm Business Less Housing, Product-based
Lines 1-11: Column J-Column O-Column P-Column Q. That is, the domestic
business sector less the farm sector, owner-occupied housing, and
the rental value of buildings and equipment owned by nonprofit
institutions. The domestic business sector excludes output
originating in private households, nonprofit institutions, and general
government from total GDP.Line 12: BLS. Hours of all persons in the nonfarm business sector.
Column B Nonfarm Business Less Housing, Income-based
Line 1: A1 - NIPA statistical discrepancy for gross domestic product
(NIPA 1.9, line 15).
Line 2: B1/(A1/A2)
Line 3: A3
Line 4: A4-(NIPA 1.9, line 15)
Line 5: A5-(NIPA 1.9, line 15)
Lines 6-12: A6 through A12
Column C Nonfarm Corporate Business
Lines 1-12: Column E+Column D
Column D Financial Corporations
Lines 1-12: Column K-Column L
Column E Nonfarm Nonfinancial Corporations
Lines 1-12: Column L-Column N
Column F Manufacturing CorporationsLine 1: F4+F3
Line 2: F1/(manufacturing deflator). The manufacturing deflator is the
implicit gross product originating (GPO) deflator interpolated and
extrapolated to the quarterly frequency using a deflator for nonfarm
goods (calculated using NIPAs 1.3 and 1.4, lines 4 and 5, and
NIPAs 1.7 and 1.8, line 6).
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Line 3: NIPA 6.22C, line 11, interpolated and extrapolated by the capital
consumption allowance for nonfinancial corporations.
Line 4: F5+F6
Line 5: M5*(F6/M6). This assumes that indirect business taxes, etc., for
manufacturing corporations are proportional to their income relative
to the income of all manufacturing business (column M).Line 6: F7+F8+F9
Line 7: M7*0.98
Line 8: M8
Line 9: M9*0.97 (This ratio is based on unpublished BEA data by legal
form of business.)
Lines 10-11: Not applicable
Line 12: BLS. Hours of all employees in manufacturing*0.98 The 0.98
estimate for the corporate share of manufacturing hours is based on
data provided by BEA for the distribution of labor compensation by
legal form of organization and industry.
Column G Nonfarm Nonmanufacturing Corporations
Lines 1-12: Column E-column F. Note, line 2 is adjusted to take account of the
residual that emerges from chain weight aggregation.
Column H Nonfarm Noncorporate Business
Lines 1-12: Column A-column D-column E. Note, line 2 is adjusted to take
account of the residual that emerges from chain weight aggregation.
Column I Nonfarm Noncorporate Business, Income-based
Lines 1-12: Column B-column D-column E. Note, line 2 is adjusted to take
account of the residual that emerges from chain weight aggregation.
Column J Domestic Business
Line 1: NIPA 1.7, line 2.
Line 2: NIPA 1.8, line 2.
Line 3: NIPA 1.9, line 6+line 11.
Line 4: J1-J3.
Line 5: NIPA 3.1, line 4+NIPA 1.9, line 14+NIPA 1.9, line 15-NIPA 3.2,
line 25
Line 6: J4-J5.
Line 7: NIPA 1.14, line 2 - NIPA 3.7B, line 38 - NIPA 1.7, line 7 - NIPA
1.15, line 49. (The last item, rest of world compensation, is linearlyinterpolated to the quarterly frequency.)
Line 8: NIPA 1.16, line 9.
Line 9: J6-J7-J8-J10-J11
Line 10: NIPA 1.14, line 9.
Line 11: NIPA 1.14, line 17.
Line 12: BLS. Hours of all persons in the business sector.
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Column K Corporations
Line 1: NIPA 1.16, line 1
Line 2: NIPA 1.16, line 36+(NIPA 1.16, line 18/financial deflator). The
financial deflator is the implicit GPO deflator for banking, credit
agencies other than banks, insurance carriers, and security and
commodity brokers interpolated and extrapolated by the quarterlydeflator for personal consumption expenditures on brokerage and
bank service charges, services furnished without payment by
financial intermediaries, and the expense of handling life insurance
(NIPA 2.4, lines 61-64).
Lines 3-9: NIPA 1.16, lines 2, 3, 4, 5, 6, 9, and 17.
Lines 10-11: Not applicable.
Line 12: L12 + (financial hours). The financial hours are calculated from
BLS data on hours paid in the finance, insurance and real estate
industry, excluding hours in SIC 64, 65, and 67, reduced by
6 percent to adjust for hours worked vs. hours paid. (This series is
similar to BEA's annual series on employee hours for SICs 60, 61,and 63.)
Column L Nonfinancial Corporations
Lines 1-9: NIPA 1.16, lines 19, 36, 20-24, 27, and 35.
Lines 10-11 Not applicable.
Line 12: BLS. Hours of all employees in the nonfinancial corporate sector.
Column M Manufacturing
Line 1: M3+M4
Line 2: M1/(manufacturing deflator) (see F2).
Line 3: NIPA 6.13C, line 7 + NIPA 6.22C, line 11, interpolated andextrapolated by the capital consumption allowance for nonfinancial
corporations.
Line 4: M5+M6
Line 5: GPO data. Indirect business taxes are interpolated and extrapolated
by manufacturing shipments; business transfers and subsidies are
interpolated to the quarterly frequency using a cubic spline.
Line 6: M7+M8+M9+M10
Line 7: NIPA 2.1, line 5 + (NIPA 6.2C, line 13 - NIPA 6.3C, line 13),
interpolated and extrapolated by NIPA 1.16, line 26 (supplements
for all nonfinancial corporations).
Line 8: NIPA 6.16C, line 14 (adjusted to be consistent with latest GPOfigures).
Line 9: NIPA 6.15C, line 6, interpolated and extrapolated by NIPA 1.16,
line 35.
Line 10: NIPA 6.12C, line 5, interpolated and extrapolated by manufacturing
shipments.
Line 11: Not applicable.
Line 12: BLS. Hours of all persons in manufacturing.
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Column N Farm Corporations
Line 1: N3+N4
Line 2: N1/(O1/O2)
Line 3: Flow of funds table F.104, line 4.
Line 4: N5+N6.Line 5: O5*(N6/O6) This assumes that indirect business taxes and subsidies
for farm corporations are proportional to their income relative to the
income of all farm business(column O).
Line 6: N7+N8+N9
Line 7: O7* (the corporate share of farm sector compensation obtained from
unpublished BEA annual data interpolated to the quarterly
frequency).
Line 8: O8
Line 9: O9* (the corporate share of farm sector net interest obtained from
unpublished BEA annual data interpolated to the quarterly
frequency).Lines 10-11: Not applicable.
Line 12: O12* (the corporate share of farm sector compensation (see N7)).
Column O Farm Business
Line 1: NIPA 1.7, line 6.
Line 2: NIPA 1.8, line 6
Line 3: Flow of funds table F.104, line 3.
Line 4: O1-O3.
Line 5: NIPA 8.8, line 17-NIPA 8.8, line 18. Note: both series are
interpolated to a quarterly frequency using a cubic spline.
Line 6: O4-O5.Line 7: NIPA 8.8, line 20, interpolated to a quarterly pattern using the
sector's total domestic income less net interest and proprietors'
income (O6-O9-O10).
Line 8: O6-O7-O9-O10.
Line 9: NIPA 8.8, line 26, interpolated to a quarterly frequency using a
cubic spline.
Line 10: NIPA 1.14, line 10.
Line 11: Not applicable.
Line 12: J12-A12. (BLS hours of all persons for the business less nonfarm
business sectors)
Column P Owner-occupied Housing
Line 1: NIPA 8.19, line 89, interpolated to a quarterly frequency using PCE
space rent for owner-occupied nonfarm dwellings (NIPA 2.4,
line 24). [Data beginning in 1995Q4 are the unpublished BEA
estimates supplied to BLS.]
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Line 2: P1 deflated by the implicit deflator for nonfarm housing product
(NIPA 1.7, line 5/NIPA 1.8, line 5). [Data beginning in 1995Q4 are
the unpublished BEA estimates supplied to BLS.]
Line 3: NIPA 8.19, line 90, interpolated to a quarterly frequency using the
consumption of fixed capital for the noncorporate sector (NIPA 1.9,
line 6-NIPA 1.14, line 33).Line 4: P1-P3.
Line 5: P4-P6.
Line 6: P9+P11
Lines 7-8: Not applicable.
Line 9: NIPA 8.19, line 93, interpolated to a quarterly frequency using net
interest for the noncorporate sector (NIPA 1.9, line 19-NIPA 1.16,
line 17).
Line 10: Not applicable.
Line 11: NIPA 8.19, line 94, interpolated to a quarterly frequency using
rental income of persons (NIPA 1.14, line 17).
Line 12: Not applicable.
Column Q Building and Equipment Serving Nonprofit Institutions
Line 1: NIPA 8.19, line 102, interpolated to a quarterly frequency using
nonfarm business output less housing (NIPA 1.7, line 4). Note: this
is the convention used by BLS.
Line 2: Q1 deflated by the implicit deflator for nonfarm business output less
housing (NIPA 1.7, line 4/NIPA 1.8, line 4).
Line 3: NIPA 8.19, 103, interpolated to a quarterly frequency using the
consumption of fixed capital for the noncorporate sector (NIPA 1.9,
line 6-NIPA 1.14, line 33).
Line 4: Q1-Q3.Line 5: Q6-Q4.
Line 6: Q9
Lines 7-8: Not applicable.
Line 9: NIPA 8.19, line 105, interpolated to a quarterly frequency using net
interest for the noncorporate sector (NIPA 1.9, line 19-NIPA 1.16,
line 17).
Lines 10-12: Not applicable.
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0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 00 0 0 0 0 0 0 00 0 0 0 0 0 0 00 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 11 1 1 1 1 1 1 11 1 1 1 1 1 1 11 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 00 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 11 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1 1
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
0 0 0 0 0 0 0 0 0 0 0
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
1 1 1 1 1 1 1 1 1 1 1
- 2 1 -
Table A-1
Sectoral Decomposition of Gross Product and Income -- 1996:Q2
Nonfarm
Bus. less
housing,product
based
Nonfarm
Bus. less
housing,income
based
Nonfarm
corporate
business
Financial
Corps.
Nonfarm
Non-
financialcorps.
Mfg.
corps.
Nonfarm
Non-
manufac-turing
corps.
Nonfarm
Non-
corporate,product
based
Nonfa
Non
corporincom
base
A B C D E F G H I
1 Gross product: nominal 5714.4 5771.9 4552.5 484.0 4068.5 1242.2 2826.3 1161.9 121
2 Gross product: $92 5256.9 5309.8 4247.7 427.4 3819.9 1187.8 2631.9 1016.9 106
3 Cons. of fixed cap 601.8 601.8 468.8 31.1 437.7 152.6 285.1 132.9 13
4 Net dom. product 5112.6 5170.1 4083.7 452.9 3630.8 1089.6 2541.2 1029.0 108
5 IBT+Bus. trans.-subs. 429.0 486.5 450.3 47.3 403.0 62.8 340.3 -21.3 3
6 Domestic income 4683.6 4683.6 3633,3 405.5 3227.8 1026.8 2201.0 1050.2 105
7 Compensation 3320.9 3320.9 2938.2 241.9 2696.3 830.6 1865.7 382.8 38
8 Profits w/IVA&CCA 574.7 574.7 574.7 143.5 431.2 161.5 269.7
9 Net interest 253.6 253.6 120.4 20.1 100.3 34.8 65.5 133.2 13
10 Prop. income 469.4 469.4 469.4 46
11 Rental income 65.0 65.0 65.0 6
12 Hours of persons 173.8 173.8 133.5 8.1 125.3 35.4 89.9 40.4 4
Domestic
business
Corp-
orate
(Total)
Non-
financial
corps.
(Total)
Mfg.
(Total)
Farm
corps.
Farm
(Total)
Owner-
occupied
housing
Rental
value of
buildings
and
equip. ofnon-
profits
J K L M N O P Q
1 Gross product: nominal 6334.6 4565.6 4081.6 1298.3 13.1 97.6 476.5 46.2
2 Gross product: $92 5807.3 4258.4 3831.0 1241.4 11.1 82.8 425.1 42.5
3 Cons. of fixed cap 726.4 471.0 439.9 159.7 2.2 23.5 78.0 23.2
4 Net dom. product 5608.2 4094.6 3641.7 1138.6 10.9 74.1 398.5 23.0
5 IBT+Bus. trans.-subs. 552.8 450.3 403.0 65.6 -0.0 -0.1 114.4 9.4
6 Domestic income 5055.4 3644.3 3238.8 1073.0 11.0 74.2 284.1 13.5
7 Compensation 3336.9 2945.3 2703.4 847.5 7.1 16.0
8 Profits w/IVA&CCA 577.3 577.3 433.8 161.5 2.6 2.6
9 Net interest 501.5 121.6 101.5 35.9 1.2 9.9 224.5 13.5
10 Prop. income 515.2 28.2 45.8
11 Rental income 124.5 59.5
12 Hours of persons 178.6 135.6 127.4 37.1 2.1 4.7