This section presents data on gross domestic product (GDP), gross national product (GNP), national and personal income, saving and investment, money income, poverty, and national and personal wealth. The data on income and expenditures measure two aspects of the U.S. economy. One aspect relates to the national income and product accounts (NIPAs), a summation reflecting the entire complex of the nation’s economic income and output and the interaction of its major components; the other relates to the distribution of money income to families and individuals or consumer income.

The primary source for data on GDP, GNP, national and personal income, gross saving and investment, and fixed reproducible tangible wealth is the Survey of Current Business, published monthly by the Bureau of Economic Analysis (BEA). A comprehensive revision to the NIPAs was released beginning in October 1999. Discussions of the revision appeared in the August, September, October, December 1999, and the April 2000 issues of the Survey of Current Business. Summary historical estimates appeared in the August 2000 issue of the Survey of Current Business. Detailed historical data will appear in forthcoming National Income and Product Accounts of the United States, 1929-97 report.

Sources of income distribution data are the decennial censuses of population and the Current Population Survey (CPS), bothproducts of the U.S. Census Bureau (see text, Section 1 and new Section 31). Annual data on income of families, individuals, and households are presented in Current Population Reports, Consumer Income, P60 Series, in print, and many data series found on the census Web site at <http://www.census.gov/hhes/www/income.html>. Data from the 2000 census may be found in Tables 680-682, 692, and 697-699.

Data on individuals’ saving and assets are published by the Board of Governors of the Federal Reserve System in the quarterly Flow of Funds Accounts. The Board also periodically conducts the Survey of Consumer Finances, which presents financial information on family assets and networth. Detailed information on personal wealth is published periodically by the Internal Revenue Service (IRS) in SOIBulletin.

National income and product-Grossdomestic product is the total output of goods and services produced by labor and property located in the United States, valued at market prices. GDP can be viewed in terms of the expenditure categories that comprise its major components-purchases of goods and services by consumers and government, gross private domestic investment, and net exports of goods and services. The goods and services included are largely those bought for final use (excluding illegal transactions) in the market economy. A number of inclusions, however, represent imputed values, the most important of which is rental value of owner-occupied housing. GDP, in this broad context, measures the output attributable to the factors of production located in the United States. Gross state product (GSP) is the gross market value of the goods and services attributable to labor and property located in a state. It is the state counterpart of the nation’s gross domestic product.

In January 1996, BEA replaced its fixed weightedindex as the featured measureof real GDP with an index based on chaintype annual weights. Changes in this measure of real output and prices are calculated as the average of changes based on weights for the current and preceding years. (Components of real output are weighted by price, and components of prices are weighted by output.) These annual changes are ‘‘chained’’ (multiplied) together to form a time series that allows for the effects of changes in relative prices and changes in the composition of output over time. Quarterly and monthly changes are also based on annual weights. The new output indexes are expressed as 1996=100, and for recent years, in 1996 dollars; the new price indexes are based to 1996=100.

Chained (1996) dollar estimates of most components of GDP are not published for periods prior to 1987, because during periods far from the base period, the levels of the components may provide misleading information about their contributions to an aggregate. Values are published in index form (1996=100) for 1929 to the present to allow users to calculate the percent changes for all components, changes that are accurate for all periods. In addition, the Bureau of Economic Analysis publishes estimates of the contribution of major components to the percent change in GDP for all periods.

Gross national product measures the output attributable to all labor and property supplied by United States residents. GNP differs from ‘‘national income’’ mainly in that GNP includes allowances for depreciation and for indirect business taxes (sales and property taxes); see Table 665.

In December 1991, the Bureau of Economic Analysis began featuring gross domestic product rather than gross national product as the primary measure of U.S. production. GDP is now the standard measure of growth because it is the appropriate measure for much of the short-term monitoring and analysis of the economy. In addition, the use of GDP facilitates comparisons of economic activity in the United States with that in other countries.

National income is the aggregate of labor and property earnings that arises in the current production of goods and services. It is the sum of employee compensation, proprietors’ income, rental income of persons, corporate profits, and net interest. It measures the total factor costs of the goods and services produced by the economy. Income is measured before deduction of taxes.

Capital consumption adjustment forcorporations and for nonfarm sole proprietorships and partnerships is the difference between capital consumption based on income tax returns and capital consumption measured using empirical evidence on prices of used equipment and structures in resale markets, which have shown that depreciation for most types of assets approximates a geometric pattern. The tax return data are valued at historical costs and reflect changes over time in service lives and depreciation patterns as permitted by tax regulations. Inventoryvaluation adjustment represents the difference between the book value of inventories used up in production and the cost of replacing them.

Personal income is the current income received by persons from all sources minus their personal contributions for social insurance. Classified as ‘‘persons’’ are individuals (including owners of unincorporated firms), nonprofit institutions that primarily serve individuals, private trust funds, and private noninsured welfare funds. Personal income includes transfers (payments not resulting from current production) from government and business such as social security benefits, public assistance, etc., but excludes transfers among persons. Also included are certain nonmonetary types of income-chiefly, estimated net rental value to owner-occupants of their homes and the value of services furnished without payment by financial intermediaries. Capital gains (net losses) are excluded.

Disposable personal income is personal income less personal tax and nontax payments. It is the income available to persons for spending or saving. Personal tax and nontax payments are tax payments (net of refunds) by persons (except personal contributions for social insurance) that are not chargeable to business expense and certain personal payments to general government that are treated like taxes. Personal taxes include income, estate and gift, and personal property taxes and motor vehicle licenses. Nontax payments include passport fees, fines and forfeitures, and donations.

Consumer Expenditure Survey-TheConsumer Expenditure Survey program was begun in late 1979. The principal objective of the survey is to collect current consumer expenditure data, which provide a continuous flow of data on the buying habits of American consumers. The data are necessary for future revisions of the Consumer Price Index.

The survey conducted by the Census Bureau for the Bureau of Labor Statistics consists of two components: (1) An interview panel survey in which the expenditures of consumer units are obtained in five interviews conducted every 3 months, and (2) a diary or recordkeeping survey completed by participating households for two consecutive 1-week periods.

Each component of the survey queries an independent sample of consumer units representative of the U.S. total population.

Over 52 weeks of the year, 5,000 consumer units are sampled for the diary survey. Each consumer unit keeps a diary for two 1-week periods yielding approximately 10,000 diaries a year. The interview sample is selected on a rotating panel basis, targeted at 5,000 consumer units per quarter. Data are collected in 88 urban and 16 rural areas of the country that are representative of the U.S. total population. The survey includes students in student housing. Data from the two surveys are combined; integration is necessary to permit analysis of total family expenditures because neither the diary nor quarterly interview survey was designed to collect a complete account of consumer spending.

Distribution of money income to families and individuals-Moneyincome statistics are based on data collected in various field surveys of income conducted since 1936. Since 1947, the Census Bureau has collected the data on an annual basis and published them in Current Population Reports, P60 Series. In each of the surveys, field representatives interview samples of the population with respect to income received during the previous year. Money income as defined by the Census Bureau differs from the BEA concept of ‘‘personal income.’’

Data on consumer income collected in the CPS by the Census Bureau cover money income received (exclusive of certain money receipts such as capital gains) before payments for personal income taxes, social security, union dues, medicare deductions, etc. Therefore, money income does not reflect the fact that some families receive part of their income in the form of noncash benefits (see Section 12) such as food stamps, health benefits, and subsidized housing; that some farm families receive noncash benefits in the form of rent-free housing and goods produced and consumed on the farm; or that noncash benefits are also received by some nonfarm residents which often tak  the form of the use of business transportation and facilities, full or partial payments by business for retirement programs, medical and educational expenses, etc. These elements should be considered when comparing income levels. For data on noncash benefits, see Section 12. None of the aggregate income concepts (GDP, national income, or personal income) is exactly comparable with money income, although personal income is the closest.

In October 1983, the Census Bureau began to collect data under the new Survey of Income and Program Participation (SIPP). The information supplied by this survey is expected to provide better measures of the status and changes in income distribution and poverty of households and persons in the United States. The data collected in SIPP will be used to study federal and state aid programs (such as food stamps, welfare, medicaid, and subsidized housing), to estimate program costs and coverage, and to assess the effects of proposed changes in program eligibility rules or benefit levels. The core questions are repeated at each interview and cover labor force activity, the types and amounts of income received, and participation status in various programs. The core also contains questions covering attendance in postsecondary schools and private health insurance coverage. Various supplements or topical modules covering areas such as educational attainment, assets and liabilities, and pension plan coverage are periodically included.

Poverty-Families and unrelated individuals are classified as being above or below the poverty level using the poverty index originated at the Social Security Administration in 1964 and revised by Federal Interagency Committees in 1969 and 1980.

The poverty index is based solely on money income and does not reflect the fact that many low-income persons receive noncash benefits such as food stamps, medicaid, and public housing. The index is based on the Department of Agriculture’s 1961 Economy Food Plan and reflects the different consumption requirements of families based on their size and composition. The poverty thresholds are updated every year to reflect changes in the Consumer Price Index. The following technical changes to the thresholds were made in 1981: (1) distinctions based on sex of householder have been eliminated, (2) separate thresholds for farm families have been dropped, and (3) the matrix has been expanded to families of nine or more persons from the old cutoff of seven or more persons. These changes have been incorporated in the calculation of poverty data beginning with 1981. Besides the Census Bureau Web site at <http://www.census.gov/hhes/www/poverty.html>, information on povertyguidelines and research may be found at the U.S. Department of Human Services Web site at <http://aspe.hhs.gov/poverty/poverty.shtml>.

In the recent past, the Census Bureau has published a number of technical papers that presented experimental poverty estimates based on income definitions that counted the value of selected government noncash benefits. The Census Bureau has also published annual reports on aftertax income. The annual income and poverty reports (P60 Series) have brought together the benefit and tax data that previouslyappeared in the separate reports. These reports have shown the distribution of income among households and the prevalence of poverty under the official definition of money income and under definitions that add or subtract income components. In addition, in July 1999, the Census Bureau released a report (P60- 205) that showed the effect of using experimental poverty following the recommendations of a National Academy of Sciences panel on redefining our nation’s poverty measure.

Statistical reliability-For a discussion of statistical collection and estimation, sampling procedures, and measures of statistical reliability pertaining to Census Bureau data, see Appendix III.