Intermediate consumption (also called "intermediate expenditure") is an economic concept used

in national accounts, such as theUnited Nations System of National Accounts (UNSNA), the US National
Income and Product Accounts (NIPA) and the European System of Accounts (ESA).
Conceptually, the aggregate "intermediate consumption" is equal to the amount of the difference
between Gross Output (roughly, the total sales value) and Net output (gross value added or GDP). In the
US economy, total intermediate consumption represents about 45% ofGross Output. The services
component in intermediate consumption has grown strongly in the US, from about 30% in the 1980s to
more than 40% today.
Thus, intermediate consumption is an accounting flow which consists of the total monetary value of goods
and services consumed or used up as inputs in production by enterprises, including raw materials,
services and various other operating expenses.
Because this value must be subtracted from Gross Output to arrive at GDP, how it is exactly defined and
estimated will importantly affect the size of the GDP estimate.
Intermediate goods or services used in production can be either changed in form (e.g. bulk sugar) or
completely used up (e.g. electric power).
Intermediate consumption (unlike fixed assets) is not normally classified in national accounts by type of
good or service, because the accounts will show net output by sector of activity. However, sometimes
more detail is available in sectoral accounts of income & outlay (e.g. manufacturing), and from inputoutput tables showing the value of transactions between economic sectors.