National Gross Domestic Product by Income and by Expenditure Accounts

Status:
Active
Frequency:
Quarterly
Record number:
1901

The National Gross Domestic Product by Income and Expenditure Accounts (IEA) give a comprehensive statistical picture of Canadian economic developments. The GDP by Income and by Expenditure is the centre of macroeconomic analysis and policy-making in Canada.

Detailed information for fourth quarter 2013

Data release - February 28, 2014

Description

The National Gross Domestic Product by Income and by Expenditure Accounts are the centre of macroeconomic analysis and policy-making in Canada. It is used in a broad assortment of applications by a wide range of persons and groups in society. It is a means by which Canadians can view and assess the performance of the national economy. The accounts provide both a planning framework for governments and a report card on the results of the plans that governments carry out.

At the core of the Gross Domestic Product by Income and by Expenditure is the concept of Gross Domestic Product (GDP) and its components. It is a measure of aggregate economic activity that represents the unduplicated value of production in two ways: (i) incomes arising from production and (ii) final expenditures on production. The first is the sum of factor incomes generated by productive activity-that is, incomes representing the returns to the labour and capital employed. The second is the sum of all sales to final users (consumers, governments, business on capital account, exports less imports). The two measures of GDP may not be equal to each other, giving rise to a statistical discrepancy.

For a more complete, though brief, description, please refer to the document entitled "Overview of the National Income and Expenditure Accounts" available in the "Documentation" section located at the end of the detailed information for this program.

Statistical activity

The Canadian System of National Accounts (CSNA) provides a conceptually integrated framework of statistics for studying the state and behaviour of the Canadian economy. The accounts are centered on the measurement of activities associated with production of goods and services, the sales of goods and services in final markets, the supporting financial transactions, and the resulting wealth positions.

To produce financial statistics, the CSNA measures the economic dimensions of the public sector of Canada, including the financial inter-relationships among the thousands of entities that make up the three levels of government in Canada (federal, provincial and territorial, and local). In order to carry out this program, the CSNA maintains a universe of all public sector entities including their complex inter-relationships.

Collection period:
2 months after the reference quarter; 5 months after the reference year.

Subjects

  • Economic accounts
  • Gross domestic product
  • Income and expenditure accounts

Data sources and methodology

Target population

The Canadian economy (households, non-profit institutions serving households', governments, financial corporations, non-financial corporations, and non-residents).

Data sources

Data are extracted from administrative files and derived from other Statistics Canada surveys and/or other sources.

The IEA measure of macroeconomic activity on a quarterly basis, as represented by income and expenditure-based GDP, relies heavily on a wealth of information from various areas of Statistics Canada. A large amount of information from various survey divisions within the bureau, along with other data, is compiled, integrated and analysed as part of the complex process of arriving at GDP and its component categories and underlying sector accounts.

Major suppliers of data within Statistics Canada include: Agriculture Division, Investment, Science and Techology Division, Income Statistics Division, International Trade Division, Distributive Trades Division, Manufacturing and Energy Division, Industrial Organization and Finance Division, Labour Division, Prices Division, Public Sector Statistics Division, and Tax Data Division. Numerous external and administrative sources of data are also used.

Estimation

At the heart of the System of National Accounts is the concept of 'economic production'. Gross Domestic Product is designed explicitly to measure the value of the nation's total production of goods and services. But, in arriving at this total, the tables also provide a statistical picture of the structure and functioning of the economy - of the composition and use of the nation's production, and of the various types of income which are generated in the process. Going a stage further, the broad income and expenditure estimates are further broken down to show how the various sectors of the economy (households, non-profit institutions serving households, governments, financial corporations, non-financial corporations and non-residents) interact in their transactions with one another to produce this output. In other words, beginning from the basic concept of production, it is possible to build up a major system of statistics which traces the flow of all income and expenditure transactions underlying the production and the distribution of the nation's total output. In the present system, both the 'national' and 'domestic' concepts are in use. The Gross National Income measures the earnings of all Canadian factors of production regardless of where they are located. The Gross Domestic Product measures only the production originating within the geographic boundaries of Canada, whether the factors of production are owned by Canadians or non-residents.

The National Income and Expenditure Accounts measure the unduplicated value of production in two separate ways. The first simply sums all of the factor incomes (compensation of employees, gross operating surplus, gross mixed income and taxes) generated by this productive activity - incomes representing the returns to the labour and capital employed. The second approach sums all sales which firms have made to final users - to households, to non-profit institutions serving households' , to governments, to business on capital account, or in export markets. This approach also provides an unduplicated value of total production. Imports, have to be deducted from this summation since they are implicitly included in these final sales and should not be counted as a part of Canadian production - they represent part of the production of non-residents. Sales from one firm to another (intermediate production) are not counted since to do so would involve double counting, all intermediate production being embodied in final output sold to users. This 'sales to final users' (or 'sum of expenditures') approach yields the same value of production as the 'sum of incomes' approach. After the initial estimates income and expenditure - side GDP are produced, the discrepancy is assessed.

Real GDP is only calculated in terms of expenditure. This is why only the components that are part of the GDP by expenditures are calculated in real terms. A measure of Real Gross Domestic Income is also produced. This measure represents the purchasing power of the income generated in the process of producing goods and services.

Quality evaluation

Data are analysed for time series consistency, links to current economic events, issues arising from the source data, and with respect with coherence. As well, the discrepancy between the estimates of income and expenditure-side GDP is assessed.

It is not possible to produce an equivalent to the income or expenditure accounts except at the aggregate level. At the level of GDP, the unduplicated value of production can also be measured by taking the gross value of production of each firm and subtracting each firm's intermediate inputs in the form of its purchases from other firms (including imports) to yield the `net value added' to production by the firm. Estimates of this type are produced in the annual Input-Output tables, as well as in the monthly industry-based estimates of GDP. Real GDP estimates can then be compared with the results of the monthly GDP by Industry program. Annually, the income and expenditure data are benchmarked to the Input-Output Accounts.

Certain components of income and expenditure-based GDP can be obtained in survey divisions, but typically the data are not directly comparable.

Disclosure control

Statistics Canada is prohibited by law from releasing any information it collects which could identify any person, business, or organization, unless consent has been given by the respondent or as permitted by the Statistics Act. Various confidentiality rules are applied to all data that are released or published to prevent the publication or disclosure of any information deemed confidential. If necessary, data are suppressed to prevent direct or residual disclosure of identifiable data.

Revisions and seasonal adjustment

Revisions - Data are released within 60 days after the reference period. Estimates for each quarter are revised when those for subsequent quarters of the same year are published. At the time of the first quarter of each year, revisions are generally made back three years. They are not normally revised again except when historical revisions are carried out. Statistical revisions are carried out in order to incorporate the most recent information from quarterly and annual surveys, taxation statistics, public accounts, censuses, etc., as well as from the annual benchmarking process of the Input-Output Accounts.

Seasonal adjustment - Almost all series of the quarterly IEA are seasonally-adjusted. Seasonal adjustment is generally made at the lowest level of aggregation, and seasonally-adjusted aggregates are obtained by summation. Statistics Canada's X-12 ARIMA is used to seasonally adjust series.

Data accuracy

The accounts are designed as a double-entry system in which the income- and expenditure-based GDP totals should, in principle, be identical. In fact, a difference virtually always arises between them due to errors in the source data, imperfect estimation techniques, differing seasonal adjustment methods and discrepancies in the time at which the incomes and expenditures are recorded.

The size of the discrepancy, which stems from the estimation procedure, is one gauge of the system's overall reliability. However, it is a partial and quite insufficient gauge. Another quality measure is how well real expenditure-side GDP compares to the real GDP by Industry measure.

No direct measures of the margin of error in the estimates can be calculated. The quality of the estimates can be inferred from analysis of revisions and from a subjective assessment of the data sources and methodology used in the preparation of the estimates.

Documentation