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Comprehensive updates to real GDP

Periodic improvements to economic statistics

The FRED Blog sometimes taps into ALFRED, the archive of historical versions (or vintages) of FRED data. Today’s post does just that to discuss how the Bureau of Economic Analysis (BEA) periodically updates its quarterly and annual gross domestic product (GDP) figures to produce more accurate and complete figures of overall economic activity.

The ALFRED graph above shows seven different vintages of real GDP for the second quarter* and third quarter of 1991. The vintage dates included in the series names are the dates when the BEA released a comprehensive update to the data series. While a data revision incorporates newly arrived source data to paint a more complete picture of current or very recent economic conditions, a comprehensive data update reflects changes in economic and statistical standards applied to the whole economic record.

Comprehensive updates typically take place every five years, give or take a year or two, depending on business cycle conditions. On those dates, the BEA also updates its GDP statistics by moving forward the reference year for its inflation adjustment and price measures. The legend on the left axis of the ALFRED graph lists the reference year for the seven comprehensive updates to the real GDP series available in our database: 1987, 1992, 1996, 2000, 2005, 2009, and 2012. As the general price level rises over time, each successive bar is taller than the previous one. However, absent substantial changes to the types of economic activity being measured, the compounded annual rates of growth of real GDP record very small differences (see example here).

At the time of this writing, the latest comprehensive update was released in July 2018. Although the date for the next hasn’t been announced yet, it could be completed as early as 2023. Whenever the BEA releases those updated data, FRED will make them available through its website and ALFRED will add another vintage to its series repository.

* Why did we include the second quarter of 1991 in the graph? FRED went live online on April 18, 1991, the second quarter of that year.

How this graph was created: Search ALFRED for “Real Gross Domestic Product.” By default, ALFRED shows a graph with two sets of bars: the most recent vintage and the prior vintage. Add additional vintages by using the “Add Line” tab and select the date of the desired vintage from the “or select a vintage” dropdown menu. Change the start date and the end date above the graph to customize the number of data points shown.

Suggested by Diego Mendez-Carbajo.

How important are fuel excise taxes?

As gas prices have soared, various polities have proposed the reduction or temporary elimination of excise taxes on fuel, to provide relief to households. There are various issues attached to this proposal, and we touch on a few in this post.

How much relief would this provide? To answer this question, we propose the FRED graph above, where we express the fuel excise taxes at the state and federal levels and express them as a percentage of disposable income. (That is, the income that household have for expenses after paying taxes.)

The first thing we see is that this percentage has been declining almost constantly, more than halving in about three decades of data. The second thing is that, as of 2020, about a quarter of a percent of disposable income is dedicated to fuel excise taxes. Is that a lot or not? We’ll let the reader make that judgement.

That said, prices do act as a signal of scarcity. If the recent surge in gas prices is a reflection of a mismatch between supply and demand, lowering the price to consumers is only going to aggravate that mismatch. Conversely, if the goal is to reduce fuel consumption for whatever reason, increasing its price is going to work better that reducing it.

How was this graph created: Search FRED for “federal diesel tax.” From the “Edit Graph” panel, use the “Customize data” field to search for and add the “federal gasoline tax,” “state fuel tax,” and disposable income series. (For the last, use the nominal not real measure.) Apply formula (a+b+c/1000)*100. (Use 100 here to get percentages and 1000 here to get the same units.)

Suggested by Christian Zimmermann.

Increased spending on internet services

Disruption and innovation in communication

The FRED Blog has looked into internet use rates around the world. Today, we bring the topic of internet services back to the United States by visualizing the fraction of personal consumption expenditures on communication services taken up by the internet between 1987 and 2021.

The FRED graph above shows the three categories of personal consumption expenditures on communication services currently reported by the U.S. Bureau of Economic Analysis:

  • Telecommunication services (in blue): spending on landline and cellular telephone services.
  • Postal and delivery services (in red): spending on first class U.S. postal service and other delivery services (not from the USPS)
  • Internet access services (in green): spending on internet services and electronic information providers.

The areas in the graph show the fraction of overall expenditures for each type of service. In 1929, telecommunication services represented 84% of all communication expenditures. By 2021, that share had shrunk to 64%, partly the result of the growing use of internet services. First accounted for in 1987, expenditures on internet services amounted to 30% of overall communication expenditures in 2021.

As a fraction of total personal expenditures, spending on communication services grew at a fairly steady pace between 1929 and 2000 (see graph here). Because consumer prices on communication services have declined since 1997 (see graph here), the reduced spending might not imply lesser use of communication services. Moreover, as high-speed internet services are increasingly delivered through wireless networks, cellular phone use and internet access are gradually blending.

Did you know that FRED launched a cellphone app 10 years ago? If you’re reading this FRED Blog post on your cellphone, you’re likely part of that trend blurring the line between telecommunications and internet services.

How this graph was created: Search for “Personal consumption expenditures: Telecommunication services.” From the “Edit Graph” panel, use the “Add Line” tab to search for and select “Personal consumption expenditures: Postal and delivery services” and “Personal consumption expenditures: Services: Internet access.” Next, from the “Format” panel, select “Graph type: Area” and “Stacking: Percent.”

Suggested by Diego Mendez-Carbajo.

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