Overview of the Bureau of Economic Analysis Regional

Overview of the Bureau of Economic Analysis Regional Accounts at the BEA Robert L. Brown Monitoring Mississippi: Data & Tools for Understanding Our State and Local Economies Jackson, Mississippi April 3, 2008

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 costeffective manner § The nation’s economic accountant: comprehensive double-entry accounts and economics www. bea. gov

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 www. bea. gov

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 www. bea. gov

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 www. bea. gov

GDP for Metropolitan Areas § Prototype estimates of GDP for metro areas § 2001 -2005 released in September 2007 § Update planned for Fall 2008 www. bea. gov

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 www. bea. gov

Relation of GDP by State to Personal Income (PI) GDP by State Accrual basis Disbursement basis Compensation by place of work PI 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) www. bea. gov

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 www. bea. gov

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 www. bea. gov

Personal income growth rates across 3111 counties, 2004 -05 www. bea. gov

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 www. bea. gov

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

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

Alternative Incomes www. bea. gov

Per Capita Income Change 2004 -05 (Dollars) www. bea. gov

Per Capita Income, 2005, dollars www. bea. gov

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 60% BLS 5% Other IRS Personal Income CMS 6% www. bea. gov SSA 6% 23%

Derivation of Personal Income Wage 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 www. bea. gov

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 www. bea. gov

Supplements to Wages & Salaries § 13% of personal income § Employer contributions to: § Pension & private insurance funds (9%) § Govt. social insurance funds (4%) www. bea. gov

Real Compensation & Wages per Worker, United States, 2000=1. 0 www. bea. gov

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 www. bea. gov

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 www. bea. gov

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 www. bea. gov

Adjustment for Residence § <0. 5% of personal income nationally § § § Mississippi: § Hinds, Ms § Harrison, Ms § Jackson, Ms § Rankin, Ms Louisiana § Orleans, La § St. Tammany, La 2. 9% -21. 3% -11. 8% 4. 7% 16. 4% -0. 1% -65. 0% 40. 0% Inter-county commuters § www. bea. gov Based on Census Journey to Work data & updated with IRS wages (place of residence)

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 www. bea. gov

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 www. bea. gov

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 www. bea. gov

Future Improvements: GDP Metro § Gross domestic product for metropolitan areas § Prototype estimates released in 2007 § FY 2008 budget initiative to make this permanent www. bea. gov

And Finally: Comprehensive Revision § Spring 2010—every 5 years § Definitional revisions § Statistical and methodological revisions § Presentational revisions www. bea. gov

Contact Information Robert L. Brown Chief, Regional Economic Measurement Division 202 -606 -9246 robert. brown@bea. gov www. bea. gov