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Blog Category: Bureau of Economic Analysis

Deputy Secretary Blank Advocates Public Service in Commencement Speech

Guest blog post by Commerce Deputy Secretary Rebecca M. Blank

This morning, I had the privilege of delivering the commencement address to graduate students at the University of Maryland, Baltimore County (UMBC) commencement ceremony.

I was also deeply honored to receive an honorary Doctor of Public Service degree during the ceremony for my work as a public servant, including the leadership I provided in my previous job at Commerce, overseeing the nation’s premier statistical agencies, the Census Bureau (during the 2010 Census) and the Bureau of Economic Analysis.

The commencement speech provided an opportunity to give advice to the graduate students and to encourage them to use their expertise and experience to find solutions to the pressing problems facing our world. UMBC is particularly well-known for its scientific training. Science, technology, engineering and math–STEM fields–are particularly important, and it is STEM-related research that will drive innovation in the years ahead. In fact, STEM jobs have grown three times faster than other jobs, indicating the need for more workers with these skills.

BEA in the 1940s

Graph of rise of GDP

Ed. Note: This post is part of a series following the release of the 1940 Census highlighting various Commerce agencies and their hard work on behalf of the American people during the 1940s through today.

As the U.S. population has changed dramatically since 1940, so too has the U.S. economy. Just a few years prior to the 1940 Census, in 1935, employees of the Department of Commerce and the National Bureau of Economic Research created what we call the National Income and Product Accounts (NIPA), a comprehensive set of economic accounts for the nation that provides unparalleled insight into the workings of our economy.
 
Let’s take a quick glance at the NIPAs and see how things have changed over the last 72 years. One commonly used measure of standards of living is GDP per capita—the total output of the nation divided by the population. Looking to national accounts table 7.1, we see that in 1940 U.S. GDP per capita was $8,824 in inflation-adjusted dollars. By 2011, it had increased nearly fivefold to $42,671. Over that period, the structure of the economy changed with services accounting for an ever increasing for spending. In 1940, consumer spending on services (everything from haircuts to heart surgery), according to NIPA table 1.1.10 accounted for 30 percent of GDP. By 2011, it was 47 percent—nearly half of economic activity.

Why Investing in R&D Matters

BEA logo

What do the electric light bulb, the internal combustion engine and the transistor have in common? They are all examples of how innovative ideas can bring rapid change and growth to our economy. Innovation has long been recognized as an important driver of economic growth.  New ideas can spark wave upon wave of new goods and services that literally transform the economy, making it more robust and vibrant.

What exactly is innovation? A precise explanation can be elusive, but common to every definition is the idea of realizing commercial value by creating something that did not previously exist. And, while economists agree that innovation is important for economic growth, actually measuring it is quite a challenge. Innovation is what’s known as an intangible asset. It’s hard to quantify. Understanding the role of intangible assets–and thus the role of innovative activity in general–is critical to understanding the modern economy.

Federal Government Help for Manufacturing Companies: How Commerce Contributes

US-Made Auto Parts

In last night's State of the Union address, President Obama laid out proposals for how to bring about a new era of American manufacturing, with more good jobs and more products stamped Made in the USA.  A few of the proposals are:

  • Reward companies for bringing jobs back to America.
  • Lower tax rates for companies that manufacture and create jobs in the United States.
  • Get tough on trade enforcement.
  • Create more jobs and make us more competitive by rebuilding America using half of the savings from ending foreign wars.

These proposals build upon the efforts already underway by the White House.

At the Department of Commerce, we support manufacturers in a multitude of ways:

Commerce's BEA Keeps its Finger on the Economy's Pulse

BEA logo

Throughout 2011, Commerce's Bureau of Economic Analysis, the agency charged with keeping a finger on the economy’s pulse, has been hard at work measuring an ever-changing economy. During the year the Bureau instituted new methodologies, new techniques, released new Web-based analytical tools, and made continual improvements to the national accounts to keep pace with the changing economy.  2011 proved to be a stronger year for the economy, for the performance of U.S. companies and the spending behavior of American consumers. Fortunately, there have been some improvements on all three fronts over the last year.  

BEA’s Four Big Numbers to highlight in 2011 are:

  • $15,180,900,000,000 (That’s $15 trillion). That’s the total size of the U.S. economy as of the 3rd quarter of 2011 on an annualized basis.
  • $1,977,400,000,000 (That’s $1.9 trillion).  That’s the value of corporate profits as of the 3rd quarter of 2011. Profits of corporations in the United States climbed to the highest level on record stretching back to 1947. 
  • 2.3 percent.  That’s the real growth rate of consumer spending in the 3rd quarter of 2011. Consumer spending, the goods and services which we all buy on a daily basis, accounts for roughly 70 percent of all economic activity in the United States. The growth rate is the fastest seen so far this year. Consumer spending on services–like haircuts, sports tickets and going out to bars and restaurants–grew by nearly 3 percent, the strongest pace since 2006. 
  • 15.6 percent growth in business investment in equipment and software. This rate of investment is at its strongest pace in a year, and this is crucial as these investments are critical in supporting economic recovery and driving growth.

Stolen Intellectual Property Harms American Businesses Says Acting Deputy Secretary Blank

Acting Deputy Secretary Blank joins Attorney General Holder and other Administration Officials at the kickoff event for the IP campaign “Counterfeits Hurt. You Have The Power to Stop Them.”

This afternoon, Acting Deputy Secretary Rebecca Blank participated in an event at the White House to announce the Administration’s progress in cracking down on intellectual property (IP) theft crimes and the launch of a public education campaign intended to increase Americans’ knowledge of the threat these crimes pose to economic prosperity and public safety.  The campaign is entitled “Counterfeits Hurt. You Have The Power to Stop Them.

Counterfeit goods not only can cause harm to the safety of our families, but they also cause harm to our economy and to American businesses.  That’s because the success of the U.S. economy relies heavily on intellectual property; virtually every industry either produces IP or uses it. IP theft costs domestic industries an estimated $200 to $250 billion a year.  This robs American workers of hundreds of thousands of jobs.

Only when American ideas and American inventions are protected, so that innovators receive the rewards from their creativity, can American business prosper and the American economy continues to   grow. It’s also important to remember protecting intellectual property has a multiplier effect, helping create jobs not only within the original firm that owns the IP but also within all the firms that it buys from and sells to.

The American Jobs Act: Personal Income and Tax Cuts

The American Jobs Act Cover

Today the Bureau of Economic Analysis released personal income and outlays for September 2011. Personal income increased $17.3 billion, or 0.1 percent, and disposable personal income increased $12.9 billion, or 0.1 percent. That number is helped by the tax cuts in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 that cut social security withholding by 2 percentage points and that resulted in about $1000 per family per year in increased income.

Knowing that increasing personal income is vital to improving our economy, the President has proposed increasing this tax cut in his American Jobs Act. Under his proposal, the payroll tax cut would be extended to firms by cutting in half their payroll tax on the first $5 million in payroll. Next year, instead of paying 6.2 percent on their payroll expenses, firms would pay only 3.1 percent. The President’s plan would provide tax cuts for all firms, with focused relief on the 98% with less than $5 million in payroll.

For example, a construction firm with 50 workers earning an average of $50,000 a year – for a total payroll of $2.5 million – would receive a payroll tax cut of 3.1% of its total payroll, or about $80,000. The firm’s workers would receive an average tax cut of about $1,500 a year from the employee side payroll tax cut in the President’s plan.

Learn more about the President’s proposed American Jobs Act on the White House website.

Commerce Employees Saving Taxpayer Money

The BEA team with Secretary John Bryson and Acting Deputy Secretary Rebecca Blank

Secretary Bryson and Acting Deputy Secretary Blank have recognized three Commerce teams that are improving customer service and saving taxpayer money.  Teams from the Bureau of Economic Analysis (BEA), Census Bureau, and Department of Commerce Human Resources offices have received the Performance Excellence Award.

The Performance Excellence Award is distributed to teams that support the Secretary’s vision of an evolving department and continuously improve service delivery to the American public. Bryson hopes to establish the department as a role model for other federal agencies. In an effort to go the extra mile, process improvement teams are examining the department’s infrastructure to identify and remove inefficiencies.  As a result, processes are streamlined to enhance the administration and delivery of services to customers. Although the sector is very diverse, it is definitely possible to improve service delivery through department-wide collaboration.

Today, Bryson recognized three teams that have developed new processes to accelerate reduced costs and improve programs within their purview.

How You Can Analyze Federal Programs Using BEA Statistics: A Look at Unemployment Insurance Benefits Payments

Bureau of Economic Analysis logo

The national income and product accounts, produced by the Bureau of Economic Analysis (BEA), provide a consistent and comprehensive picture of the nation’s economy; as a result, they provide a useful tool for analyzing the economic effects of recent federal legislation designed to stabilize and stimulate the economy.   For example, it’s logical that reduced income tax rates and expanded tax credits lowered personal current tax receipts, but by how much? It makes sense that a reduction in the social security tax rate lowered contributions for government social insurance, but how do you put that reduction in context?  Or by how much did federal assistance to states increase over previous periods?  BEA’s national accounts can help you find the facts and answer these sorts of questions.

Here’s an easy and interesting example:   What government program explains the increase in government social benefits over the course of the recent recession? 

Data from the BEA show that total government social benefits, as a share of personal income, increased from 14.2 percent in the first quarter of 2008 to 18.3 percent in the fourth quarter of 2010. That’s a notable increase, but what’s behind those numbers?

BEA Computes that Rural America Personal Income Did Better than Urban America in 2009

Image of combine in a field (Photo: U.S. Census Bureau)

Guest blog post by Steve Landefeld, Director of Commerce's Bureau of Economic Analysis.

Off the top of your head, it probably seems obvious that the economies of America’s major cities differ structurally and behaviorally from our nation’s nonmetropolitan and rural areas, right? You are correct, indeed! But the really interesting question is, What can you learn about this from the Commerce Department’s Bureau of Economic Analysis?  BEA measures our regional economies in several ways, including GDP by State, GDP by Metropolitan Area, State Personal Income, Metropolitan Area Personal Income and County Personal Income (AKA: Local Area Personal Income).

To understand the differences between the big, metropolitan areas and the rural parts of the country, your best bet is to turn to BEA’s Local Area Personal Income which details earnings in all 3,143 counties in the U.S.

Technically speaking, nonmetropolitan counties are those that are not part of a metropolitan statistical area, or MSA, as defined by the Office of Management and Budget.  Population in these counties is generally less than 50,000 people. There are 2,032 nonmetropolitan counties in the U.S., almost twice the number of metropolitan counties.  Of course, not all nonmetropolitan areas are rural, nor are all rural areas excluded from official designated metropolitan areas.  Another important consideration is commuting patterns, certainly plenty of Americans live in areas which may be rural, but drive into MSAs to work which intertwines these economies. (What, you thought we’d make it that easy?)