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Impact of Covid-19 on BEA’s Economic Accounts
Erich H. Strassner, Benjamin A. Mandel and Mark S. LudwickAdvisory Committee Meeting
May 15, 2020
Snapshot: What We’ll Cover
• Overview of first quarter GDPo A look at the datao Measurement challenges and solutions
• Pandemic response: new recovery lawso Classification of new programso Brief overview of NIPA Impacts
• Communications strategy
2
Gross Domestic Product
3Real (inflation-adjusted) estimates seasonally adjusted at annual rates
-10
-8
-6
-4
-2
0
2
4
6
8
2000
Q1
2000
Q3
2001
Q1
2001
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2003
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Perc
ent c
hang
e fr
om p
rece
ding
per
iod
Recession Real GDP, Percent Change
-8.4
-2.68
0.30
-3.10
-1.30-1.98
-2.72
2.55
0.55
-4.8
-0.27
-4.99
-1.17
0.74
-0.53-1.02
2.32
0.13
-10
-8
-6
-4
-2
0
2
4GDP Goods Services Nonres. Inv. Res. Inv. CIPI Exports Imports Gov
2008Q4 2020Q1
Contributions to Percent Change in Real GDP
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GDP Goods Services Nonres. Inv.
Res. Inv. CIPI Exports Imports Gov
Perc
ent c
hang
e fr
om p
rece
ding
per
iod
-8
-6
-4
-2
0
2
4
6
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
02468
101214
Jan-
00
Jul-0
0
Jan-
01
Jul-0
1
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Current Dollar DPI, Personal Outlays, and Saving
5Estimates are seasonally adjusted at monthly rates
Perc
ent c
hang
e fr
om p
rece
ding
per
iod
Saving Rate
Disposable Income
Perc
ent o
f disp
osab
le
pers
onal
inco
me
Personal Outlays
Real Consumer Spending on Goods and Services
6Real (inflation-adjusted) estimates seasonally adjusted at monthly rates
-12
-10
-8
-6
-4
-2
0
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l-00
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Recession Goods Services
Perc
ent c
hang
e fr
om p
rece
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per
iod
Measurement Challenges and Solutions Q1 2020
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• Partnered with Census and BLS to understand quality and coverage of routine source data
• Identified and vetted alternative data sources and methods, and assessed closures to account for rapid shift in activity in March
• Monitored and evaluated government responses to ensure accurate and reliable treatment in the accounts
Pandemic Response: New Recovery Laws
$8.3 Billion: Coronavirus Preparedness and Response Supplemental Appropriations Act (CPRSA)
5/14/2020
8
April 24
March 27
March 18
March 6
$484 Billion: Paycheck Protection Program and Health Care Enhancement Act
$1.8 Trillion: The Coronavirus Aid, Relief and Economic Security Act (CARES)
$192 Billion: The Families First Coronavirus Response Act (FFRCA)
Recording New Recovery Laws in the NIPAs
• Legislation Assessmento CBO and Congress’ Joint Committee on Taxation (JCT) analysiso News reports
• Classification Assessmento Based on BEA NIPA methodologies and international guidelines (SNA) (see
ISWGNA’s COVID-19: How to Record Government Support to Employers, Self-employed and Households)
o BEA published COVID-19 Pandemic: Federal Recovery Legislation and the NIPAs to communicate the likely classification of the major provisions
• Measurement Assessmento Source Data Monthly Treasury Statement provides outlays and receipts by program Agency reports or other sources as available If no direct data are available, develop estimation assumptions and methods
o Timing (accrual vs cash/disbursement) Determine if adjustments are needed to record transactions in the correct time
period
5/14/2020
9
https://statswiki.unece.org/download/attachments/278038679/Recording%20of%20government%20support%20to%20employers%20and%20self-employed.pdf?version=2&modificationDate=1587380197615&api=v2https://www.bea.gov/system/files/2020-05/COVID-19%20Pandemic-Federal%20Recovery%20Legislation%20and%20the%20NIPAs.pdf
Example: Paycheck Protection Program (PPP)
• Loan or transfer payment?o While structured as a loan, the intent of the program is to provide grants to
businesses that use the funds for payroll and other specified expenses.o A portion of loans that are not forgiven should be treated as regular loans.
• Subsidy or Social Benefit?o BEA classifies the forgivable portion of these loan disbursements as subsidies.o Recognizes employers benefit by retaining the employer-employee relationship
and by being positioned to re-open faster.• Measurement
o Subsidy amount should include only the portion of loans that will not be repaid, but this won’t be known in the short-term.
o The subsidy payments are intended to pay payroll for eight weeks after the loan is disbursed, so timing adjustments may need to be made to align operating surplus, subsidies, and compensation.
o These subsidies need to be allocated to proprietors, corporations, and non-profits as well as by industry.
5/14/2020
10
See FAQ: How does the Paycheck Protection Program of 2020 impact the national income and product accounts (NIPAs)?
Classification of PPP
https://www.bea.gov/index.php/help/faq/1408
Recovery Laws’ Impacts on Federal NIPA Transactions
5/14/2020
11
Transfers to State and Local Governments: Grants to S&L
Transfers to Businesses: Subsidies
Transfers to People & Non-Profits: Social Benefits
Federal Government Purchases: Consumption & Investment
• Increased spending to replenish the Strategic National Stockpile
• Increased VA Hospital funding• Increased R&D funding
• Economic impact payments • Increased and expanded
unemployment benefits• Expanded SNAP benefits• Non-profit support: community health
centers, etc.
• Paycheck Protection Program• Tax credits to fund emergency sick and
family leave• Employee retention tax credit• Support for hospitals
• Increased Federal Matching Assistance Percentage (FMAP)
• Support for hospitals and community health centers
• Several other grants programs
Outreach & Communication: bea.gov/recovery
12
Notes & Technical Information
Paper, Blogs, Articles
FAQs
Impact of Covid-19 on BEA’s Economic AccountsSnapshot: What We’ll Cover Gross Domestic ProductContributions to Percent Change in Real GDPCurrent Dollar DPI, Personal Outlays, and SavingReal Consumer Spending on Goods and Services Measurement Challenges and Solutions Q1 2020Pandemic Response: New Recovery LawsRecording New Recovery Laws in the NIPAsExample: Paycheck Protection Program (PPP)Recovery Laws’ Impacts on Federal NIPA TransactionsOutreach & Communication: bea.gov/recovery
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