Overview of the Bureau of Economic Analysis

Regional Accounts at the BEA

Robert L. BrownMonitoring Mississippi: Data & Tools for Understanding Our

State and Local EconomiesJackson, Mississippi

April 3, 2008

www.bea.gov

BEA Mission

To promote a better understanding of the U.S. economy by providing the most timely, relevant, and accurate economic accounts data in an objective and cost-effective manner The nation’s economic accountant:

comprehensive double-entry accounts and economics

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What Do We Produce?

National Economic Accounts Gross Domestic Product (GDP) Personal Income Price Measures

International Economic Accounts International transactions Direct investments Operations of US and foreign multinational

companies Industry Accounts

Input-output accounts GDP by industry Travel and tourism satellite account

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What do we produce?

Regional economic accounts Gross domestic product (GDP) by

state Prototype estimates of GDP for

metropolitan areas

Personal income for states and local areas

Regional economic multipliers—RIMS II

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Gross Domestic Product (GDP) by State

Most comprehensive measure of overall state economic activity

GDP by State is the sum of Compensation of employees Gross operating surplus Taxes on production and imports

1963-2006 estimates Available 6 months after end of year

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GDP for Metropolitan Areas

Prototype estimates of GDP for metro areas 2001-2005 released in September

2007 Update planned for Fall 2008

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Personal income

The most current, comprehensive and consistent measure available of household income

Comprehensive: measures income received by persons from production (returns to labor and capital) business and government transfers

Consistent across time and geography

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Relation of GDP by State to Personal Income (PI)

GDP by State

PI

Accrual basis

Disbursement basis

Compensation by place of work

Wages and salaries

Employer contributions for employee pension and insurance funds

Employer contributions for government social insurance

Proprietors’ income

Taxes on production and imports less subsidies

Corporate income

Rental income

Receipts on assets (dividends, interest)

Transfer receipts (Social Security benefits, Medicare, Medicaid)

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State personal income Quarterly estimates by place of

residence from 1948 3 months after the end of the quarter

Annual estimates by place of residence from 1929 Preliminary 3 months after end of year Detailed 9 months after the end of the year Includes per capita and disposable personal

income estimates Annual earnings, compensation, wages,

and employment by industry by place of work

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Local area personal income

Annual data from 1969 Metro area now released 9 months after end of year County compensation released 12 months after end

of year County PI released 16 months after end of year

Geographic availability: 3,111 counties 363 Metropolitan Areas 576 Micropolitan Areas 179 BEA Economic Areas

Industry detail by place of work Compensation by county and industry available 12

months after reference year Earnings and employment county available 16 month

after end of year

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Personal income growth rates across 3111 counties, 2004-05

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Uses of BEA’s regional personal income

By the US Govt, to distribute >$215 billion in federal funds to states

By the states, to develop state government revenue and expenditure estimates 21 states have tax or spending limits tied to

state personal income

By business, to determine areas for new business location and expansion decisions

Local areas for impact statements, income and employment dynamics analysis

www.bea.gov

Regional Input-Output Modeling System RIMS

Multipliers show impact of output change in any industries on 60 industry groups and the area total

Effects on output, employment, and labor earnings

Customized product produced for a fee

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www.bea.gov

What’s Behind the Regional Personal Income Statistics, And What Lies Ahead

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Key local area statistics

Total personal income All income received by residents

Per capita personal income Personal income divided by population Indicator of economic well-being Earnings by place of work and by industry Proxy for production Industrial structure

Dividends, interest, and rent Income from assets and housing

Transfer receipts Social Security, government-administered medical,

income maintenance

www.bea.gov

Per Capita Income (dollars), Mississippi, 2005

0

10,000

20,000

30,000

Adjusted GrossIncome (IRS)

Money Income(Census)

PersonalIncome (BEA)

Alternative Incomes

www.bea.gov

Mississippi

0

200

400

600

800

1,000

1,200

1,400

Adjusted GrossIncome (IRS)

Money Income(Census)

Personal Income(BEA)

Per Capita Income Change 2004-05

(Dollars)

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Adjusted Gross

Income (IRS)

Money Income

(Census)

Personal Income

(BEA)Alabama 19,486 19,955 29,255Louisiana 17,223 18,853 24,781Mississippi 15,589 16,772 25,454Tennessee 20,695 20,836 31,001

Per Capita Income, 2005, dollars

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How We Produce the Estimates

Administrative record information Advantage--provides detailed information at

low cost Disadvantage--does not precisely match

what is being estimated—must make adjustments to compensate for differences

Some census data--quinquennial Agriculture and decennial Population and Housing

Very little from survey information

www.bea.gov

Sources of Data

Other

CMS SSA

IRS

BLS

PersonalIncome

60%

23%

6%6%

5%

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Derivation of Personal IncomeWage and salary disbursements+ Supplements to wages and salaries= Compensation+ Proprietors’ income= Earnings (place of work) — Contributions for govt. social

insurance+ Adjustment for residence= Net Earnings (place of

residence)+ Dividends, interest, and rent+ Personal current transfer receipts= Personal income

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Wage & Salary Disbursements

55% of personal income (2005) Based primarily on Quarterly Census of

Employment and Wages (QCEW) report Byproduct of Unemployment Insurance (UI)

program Excellent quality--Most workers are covered

by UI Other data sources used for 6% of

noncovered workers & under-reported wages & tips

Data are by place of work

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Supplements to Wages & Salaries

13% of personal income Employer contributions to:

Pension & private insurance funds (9%)

Govt. social insurance funds (4%)

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1.00

1.02

1.04

1.06

1.08

1.10

2000 2001 2002 2003 2004 2005 2006

Compensation

Wages

Real Compensation & Wages per Worker, United States, 2000=1.0

www.bea.gov

0.98

1.00

1.02

1.04

1.06

1.08

1.10

1.12

1.14

2000 2001 2002 2003 2004 2005 2006

Compensation

Wages

Real Compensation & Wages per Worker, Mississippi, 2000=1.0

www.bea.gov

Proprietors’ income

9.2% of personal income (farm 0.4%, nonfarm 8.8%)

Farm: Based on US Department of Agriculture

data Nonfarm:

Based on tabulations of IRS tax returns—Schedule C & partnership Form 1065

Adjusted for misreported income

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Contributions for Govt. Social Insurance

8% of personal income This is a deduction in the

derivation of personal income Mostly contributions for Social

Security & Medicare Contributions from Employers,

Employees, & the Self-Employed

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Adjustment for Residence

Place of work compensation and earnings Shows location of production Used as proxy for current production

Place of residence income Indicator of economic well-being Shows where income is available for

tax planning and for spending analyses

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Adjustment for Residence <0.5% of personal income nationally

Mississippi: 2.9% Hinds, Ms -21.3% Harrison, Ms -11.8% Jackson, Ms 4.7% Rankin, Ms 16.4%

Louisiana -0.1% Orleans, La -65.0% St. Tammany, La 40.0%

Inter-county commuters Based on Census Journey to Work data &

updated with IRS wages (place of residence)

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Dividends, Interest, & Rent

16% of personal income Nearly 1/2 of interest is received

by pension funds and life insurance carriers on behalf of persons

Local estimates based on tabulations of income tax returns and Census housing statistics

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Personal Current Transfer Receipts

15% of personal income Social Security accounts for 1/3 Includes in-kind transfers such as

Medicare & Medicaid—45% of transfers

Income maintenance, unemployment benefits, veterans’ benefits, etc.

Based on primary data tabulated by state or county

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Future Improvements: Personal Income

Accelerate the release of county estimates of personal income 10 months after end of year FY 2008 budget initiative to

investigate the feasibility of producing this

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Future Improvements: GDP Metro

Gross domestic product for metropolitan areas Prototype estimates released in 2007 FY 2008 budget initiative to make this

permanent

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And Finally: Comprehensive Revision

Spring 2010—every 5 years Definitional revisions Statistical and methodological

revisions Presentational revisions

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Contact Information

Robert L. BrownChief, Regional Economic Measurement

Division202-606-9246

robert.brown@bea.gov