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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 .



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



- 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

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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 .



- 3 -

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

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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



- 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 ,



- 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



- 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



- 7 -

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 ?



- 8 -

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



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


15. Nonfarm noncorporate 0.2 -1.1 0.5 1.5 0.9

LABOR PRODUCTIVITY


17. Income-based 1.7 2.8 0.9 1.2 1.2


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


23. Nonfarm noncorporate 1.2 4.8 -1.9 -0.5 -0.5

UNIT LABOR COSTS


25. Income-based 4.2 3.1 8.3 4.0 2.5


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



- 9 -

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



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



REAL OUTPUT1



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



HOURS



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


1. Figures for real output shares begin in 1961 and are relative to the income-based measure of total nonfarmbusiness output.



- 1 0 -

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.



- 1 1 -

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.



- 1 2 -

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.



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

- 1 3 -

Chart 1



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

- 1 4 -

Chart 2



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



- 1 6 -

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).



- 1 7 -

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 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 9: J6-J7-J8-J10-J11



Line 12: BLS. Hours of all persons in the business sector.



- 1 8 -

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.



- 1 9 -

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 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 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.]



- 2 0 -

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


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 11: NIPA 8.19, line 94, interpolated to a quarterly frequency using

rental income of persons (NIPA 1.14, line 17).


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


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).




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

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