WHY IT MATTERS

The implications of these differences in estimates is illustrated in Table 7-1, which summarizes the various data sources used by BEA in constructing one of its sets of accounts. Gross domestic product (GDP) is mainly estimated using data collected by the Census Bureau, while gross domestic income (GDI) is mainly estimated using data collected by BLS, the Census Bureau, and the Statistics of Income (SOI, part of the Internal Revenue Service, IRS). In concept, GDP should equal GDI because all final expenditures should end up as income to households, business, or government. However, because of the differences in the source data used in estimating GDP and GDI, often they are not equal, and the result is the statistical discrepancy.

Such discrepancies between GDP and GDI can have large impacts on fiscal and monetary policy. During the latter half of the 1990s, a large and persistent discrepancy arose, with real GDI growing 0.6 percent faster than real GDP (1995-2000). This was important for budget planning because real trend GDP growth is used as the baseline for estimating near-term trend growth in 5-year budget forecasts made by the Office of Management and Budget (OMB) and the Congressional Budget Office. To illus-

TABLE 7-1 BEA Summary Account 1—Primary Data Sources (billions of dollars)

 

Primary Data Source

2004

Income side

 

 

Labor compensation

BLS

$6,693.4

Corporate profits & gov’t enterprises

Census Bureau, SOI

973.6

Proprietors’ income and rental income

Census Bureau, SOI

1023.8

Interest on assets, taxes, & misc. payments

SOI, FRB

1,531.3

Depreciation

Census Bureau

1,435.3

GROSS DOMESTIC INCOME

 

$11,657.5

Statistical discrepancy

 

76.8

GROSS DOMESTIC PRODUCT

 

$11,734.3

Expenditure side

 

 

Personal consumption expenditures

Census Bureau

$8,214.3

Gross private domestic investment

Census Bureau

1,928.1

Gov’t consumption exp. & gross invest.

Gov’t, Census Bureau

2,215.9

Net exports of goods and services

Census Bureau, BEA

–624.0

GROSS DOMESTIC PRODUCT

 

$11,734.3



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