Section 14 Income, Expenditures, and Wealth This section presents data on gross domestic product (GDP), gross national In Brief product (GNP), national and personal Gross domestic product, in chained income, saving and investment, money (1992) dollars reached a record income, poverty, and national and personal $6.7 trillion in 1995. wealth. The data on income and expendi- tures measure two aspects of the U.S. Gross state product reached economy. One aspect relates to the $6 trillion in 1992. national income and product accounts Median household income (NIPA’s), a summation reflecting the entire in 1994: $32,264 complex of the Nation’s economic income Poverty status of persons in 1994: and output and the interaction of its major Number below poverty level: components; the other relates to the dis- 38.1 million tribution of money income to families and Percent below poverty level: 14.5 individuals, or consumer income. National income and product— The primary source for data on GDP, GNP, Gross domestic product is the total output national and personal income, gross sav- of goods and services produced by labor ing and investment, and fixed reproducible and property located in the United States, tangible wealth is the Survey of Current valued at market prices. GDP can be Business, published monthly by the viewed in terms of expenditure categories Bureau of Economic Analysis (BEA). A that comprise purchases of goods and comprehensive revision to the NIPA’s was services by consumers and government, completed in January 1996. Discussions gross private domestic investment, and net of the revision appeared in the July, exports of goods and services. The goods September, and October 1995 and the and services included are largely those January/February 1996 issues of the Sur- bought for final use (excluding illegal trans- vey of Current Business. Summary histori- actions) in the market economy. A number cal estimates appeared in the January/ of inclusions, however, represent imputed February 1996 issue of the Survey of values, the most important of which is rent- Current Business. Detailed historical data al value of owner-occupied housing. GDP, will appear in the National Income and in this broad context, measures the output Product Accounts of the United States, attributable to the factors of production volume 2, 1959-92 to be published in late located in the United States. Gross State 1996, and volume 1, 1929-58 to be pub- product (GSP) is the gross market value lished in early 1997. of the goods and services attributable to labor and property located in a State. It is Sources of income distribution data are the the State counterpart of the Nation’s gross decennial censuses of population and the domestic product. Current Population Survey (CPS), both products of the Bureau of the Census (see As part of the comprehensive revision re- text, section 1). Annual data on income of leased in January 1996, BEA replaced its families, individuals, and households are fixed-weighted (1987 dollars) index as the presented in Current Population Reports- featured measure of real GDP with an in- Consumer Income, P60 series. dex based on chain-type annual weights. Changes in the new featured measures of Data on individuals’ saving and assets are real output and prices are calculated as published by the Board of Governors of the average of changes based on weights the Federal Reserve System in the quar- for the current and preceding years. terly Flow of Funds Accounts; and detailed (Components of real output are weighted information on personal wealth is pub- by price and prices of components are lished periodically by the Internal Revenue weighted by output.) These annual Service (IRS) in SOI Bulletin. changes are “chained” (multiplied) together 440 Income, Expenditures, and Wealth to form a time series that allows for the unincorporated firms), nonprofit institutions effects of changes in relative prices and that primarily serve individuals, private trust changes in the composition of output over funds, and private noninsured welfare time. Quarterly and monthly changes are funds. Personal income includes transfers also based on annual weights. The new (payments not resulting from current pro- output indexes are expressed in 1992 dol- duction) from government and business lars and the new price indexes are based such as Social Security benefits, public to 1992 = 100. assistance, etc., but excludes transfers among persons. Also included are certain Gross national product measures the out- nonmonetary types of income—chiefly put attributable to all labor and property estimated net rental value to owner- supplied by United States residents. GNP occupants of their homes and the value differs from “national income” mainly in that of services furnished without payment by GNP includes allowances for depreciation financial intermediaries. and for indirect business taxes (sales and property taxes); see table 691. Disposable personal income is personal income less personal tax and nontax pay- In December 1991, the Bureau of Eco- ments. It is the income available to per- nomic Analysis began featuring gross sons for spending or saving. Personal tax domestic product rather than gross nation- and nontax payments are tax payments al product as the primary measure of U.S. (net of refunds) by persons (except per- production. GDP is now the standard mea- sonal contributions for social insurance) sure of growth because it is the appropri- that are not chargeable to business ex- ate measure for much of the short-term pense, and certain personal payments to monitoring and analysis of the economy. In general government that are treated like addition, the use of GDP facilitates com- taxes. Personal taxes include income, parisons of economic activity in the United estate and gift, and personal property States with that in other countries. taxes and motor vehicle licenses. Nontax National income is the aggregate of payments include passport fees, fines and labor and property earnings which arises forfeitures, and donations. in the current production of goods and Consumer Expenditure Survey—The services. It is the sum of employee com- Consumer Expenditure Survey program pensation, proprietors’ income, rental was begun in late 1979. The principal ob- income of persons, corporate profits, jective of the survey is to collect current and net interest. It measures the total consumer expenditure data which provide factor costs of the goods and services a continuous flow of data on the buying produced by the economy. Income is habits of American consumers. The data measured before deduction of taxes. are necessary for future revisions of the Capital consumption adjustment for corpo- Consumer Price Index. rations, and for nonfarm sole proprietor- The survey conducted by the Bureau of ships and partnerships is the difference the Census for the Bureau of Labor Statis- between capital consumption based on tics, consists of two components: (1) An income tax returns and capital consump- interview panel survey in which the expen- tion measured at straight-line depreciation, ditures of consumer units are obtained in consistent service lives, and replacement five interviews conducted every 3 months; cost. The tax return data are valued at his- and (2) a diary or recordkeeping survey torical costs and reflect changes over time completed by participating households for in service lives and depreciation patterns two consecutive 1-week periods. as permitted by tax regulations. Inventory Each component of the survey queries an valuation adjustment represents the differ- independent sample of consumer units ence between the book value of invento- representative of the U.S. total population. ries used up in production and the cost of Over 52 weeks of the year, 5,000 consum- replacing them. er units are sampled for the diary survey. Personal income is the current income Each consumer unit keeps a diary for two received by persons from all sources 1-week periods yielding approximately minus their personal contributions for 10,000 diaries a year. The interview social insurance. Classified as “persons” sample is selected on a rotating panel are individuals (including owners of basis, targeted at 5,000 consumer units Income, Expenditures, and Wealth 441 per quarter. Data are collected in 88 urban taxes, Social Security, union dues, Medi- and 16 rural areas of the country that are care deductions, etc. Therefore, money representative of the U.S. total population. income does not reflect the fact that some The survey includes students in student families receive part of their income in the housing. Data from the two surveys are form of noncash benefits (see section 12) combined; integration is necessary to per- such as food stamps, health benefits, and mit analysis of total family expenditures subsidized housing; that some farm fami- because neither the diary nor quarterly in- lies receive noncash benefits in the form of terview survey was designed to collect a rent-free housing and goods produced and complete account of consumer spending. consumed on the farm; or that noncash benefits are also received by some non- The Diary survey is designed to obtain farm residents which often take the form expenditures on small, frequently pur- of the use of business transportation and chased items which are normally difficult facilities, full or partial payments by busi- for respondents to recall. Detailed records ness for retirement programs, medical of expenses are kept for food and bever- ages, both at home and in eating places, and educational expenses, etc. These tobacco, housekeeping supplies, nonpre- elements should be considered when scription drugs, and personal care prod- comparing income levels. For data on non- ucts and services. cash benefits, see section 12. None of the aggregate income concepts (GDP, national The Interview survey is designed to obtain income, or personal income) is exactly data on the types of expenditures which comparable with money income, although respondents can be expected to recall for personal income is the closest.