Archive for August, 2012

Learn More About the Ocean and Great Lakes Economy on BEA’s New Web Portal

How many jobs are created from the construction of a new bridge or an increase in tourism?

The Bureau of Economic Analysis’ (BEA) new Web portal on the ocean and Great Lakes economy shows how the Bureau’s Regional Input-Output Modeling System (RIMS II) can be used to provide answers to such questions. The new Web site stems from a joint project with the Commerce Department’s National Oceanic and Atmospheric Administration.

RIMS II, a regional economic model, is used by investors, planners, and elected officials to objectively assess the returns to projects ranging from a new sports stadium to a new bridge. The returns include the short- and long-term increases in jobs and spending associated with the projects.

The idea behind the results of RIMS II is that an initial change in economic activity leads to additional changes in economic activity in other parts of an economy—for example, building a new bridge leads to increased production of concrete and steel. The increased production of concrete and steel leads to more mining. Workers benefiting from these increases may also enjoy bigger paychecks, so they may then spend more by eating out at nicer restaurants or splurging more on entertainment.

Planners and policymakers use RIMS II to compare the regional impacts that are likely to occur from proposed projects. That helps them make decisions related to the allocation of resources. That’s why RIMS II appears on the new Web site, which showcases BEA’s regional information on the ocean and Great Lakes economy. Findings based on the model are typically reported in “economic impact studies,” which are cited to support major spending decisions by both the public and private sectors.

The new Web portal highlights the wide range of questions that can be answered with the help of RIMS II. Here are a few of them:

  • How many jobs are supported by the fish processing industry in Bellingham, WA?
  • How much will workers’ earnings increase if an additional 500,000 tourists visited Myrtle Beach, SC, because of a developmental project to beautify its beaches?
  • How much will workers’ earnings increase solely from the new spending of these tourists at local retail stores?
  • How much will workers’ earnings increase if a new $2.5 million bridge was built to improve access to a public beach in St. Augustine, FL?

The examples also provide tips on how RIMS II can most effectively be used. The bridge example shows how the model can account for the specific details related to a particular construction project. Because the proposed bridge will be built out of precast concrete parts, the labor costs are relatively low for the cost of the project. By using the “bill-of-goods” method, the resulting estimate reflects the smaller impact the project will have on workers’ earnings across the region.

You can find the answers to the questions posed above by visiting the new portal for the ocean and Great Lakes economy. Additional information for RIMS II is also available on the BEA Web site.

Real Consumer Spending Picks Up in July

Personal income increased 0.3 percent in July, the same increase as in June. Wages and salaries, the largest component of personal income, increased 0.2 percent in July after increasing 0.4 percent in June.

Current-dollar disposable personal income (DPI), after-tax income, increased 0.3 percent in July, the same increase as in June.

Real DPI, income adjusted for taxes and inflation, increased 0.3 percent in July after increasing 0.2 percent in June.

Real consumer spending, spending adjusted for price changes, increased 0.4 percent in July after decreasing 0.1 percent in June. Spending on durable goods increased 1.1 percent after increasing 0.4 percent, while spending on nondurable goods rose 0.5 percent after decreasing 0.5 percent.

PCE prices remained flat in July after increasing 0.1 percent in June. Excluding food and energy, the PCE price index also remained flat after increasing 0.2 percent.

Personal saving rate
Personal saving as a percent of DPI was 4.2 percent in July, compared with 4.3 percent in June.

To learn more about personal income and outlays, read the full report.

GDP Growth Slows in Second Quarter

Real gross domestic product (GDP) increased 1.7 percent in the second quarter of 2012 after increasing 2.0 percent in the first quarter, according to estimates released today by the Bureau of Economic Analysis. The second-quarter growth rate was revised up 0.2 percentage point from the advance estimate released in July.

Real GDP second-quarter highlights
• Exports picked up, mainly driven by upturns in industrial supplies and materials and in foods, feeds, and beverages.
• Consumer spending slowed, primarily due to a decline in spending for autos. A pickup in spending for services largely reflected a turnaround in utilities.
• Business investment decelerated; lower spending for power and communication structures was the largest contributor to the slowdown. In contrast, industrial equipment picked up after a first-quarter decline.
• Federal government spending, state and local government spending, and inventory investment decreased less than in the first quarter.

Revisions to GDP

The 0.2-percentage point upward revision to real GDP growth in the second quarter of 2012 reflected a large downward revision to imports and upward revisions to consumer spending, to exports, and to state and local government spending. In contrast, inventory investment was revised down, mainly in wholesale trade industries; business investment in equipment and software was also revised down.

Corporate profits

BEA released its preliminary estimate of second-quarter corporate profits. Profits rebounded in the second quarter, rising 0.5 percent at a quarterly rate, after falling 2.7 percent in the first quarter. Profits of nonfinancial corporations rose 2.8 percent, while profits of financial corporations fell 9.1 percent. Profits from the rest of the world rose 4.8 percent.

To learn more about gross domestic product, read the full report.