Posts Tagged 'BEA'

BEA to Move to Accrual Accounting for Defined Benefit Pension Plans

Published June 17, 2013 BEA News Leave a Comment
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• Employers provide employees with retirement benefits largely through two mechanisms: defined contribution plans like 401(k)s or defined benefit pension
plans. Under defined benefit plans, employees accrue benefits based on factors such as the employee’s length of service and salary history.
• Employers provide these promised benefits to employees through a pension fund. Employers, and in some cases employees, make cash contributions to the
fund. In addition, the fund holds financial assets, earns income and capital gains on those assets, and pays out benefits to retirees and beneficiaries.
• As part of its 14th comprehensive revision of the national income and product accounts that will be released beginning on July 31, BEA will switch from a cash accounting method to an accrual accounting method to measure the transactions of defined benefit pension plans.

Why is BEA making this change?
• Accrual accounting better reflects the retirement benefits an employee earns while working and improves BEA’s measures of compensation by more closely aligning the accrual of retirement benefits with the employee’s work. Accrual accounting also is consistent with business accounting standards.
• With the current cash accounting approach, sporadic cash contributions made by employers to the pension funds result in volatility in BEA’s measure of
compensation that does not accurately reflect the relatively smooth manner in which benefits are earned by the employee.
• In some cases, the pension plans may be underfunded, meaning that the plans do not have sufficient financial assets to cover pension promises. Employers are generally liable for payment of those promised benefits. If an employer does not make a cash contribution directly to the plan, the employer is effectively
borrowing from the pension plan. BEA will recognize an imputed interest expense associated with underfunding.

How will this change affect BEA’s accounts?
• Compensation will reflect the value of the pension promises made by the employer, rather than the employer’s cash contributions to the pension fund. The switch to accrual accounting will dampen some of the volatility seen in the compensation measures.
• Business and government interest expenses will include imputed interest associated with pension plans’ unfunded liabilities, which will also be reflected in
personal interest income.
• Personal and government saving will be impacted by the changes to compensation and interest payments. In general, because most plans are underfunded, these changes will boost personal saving and lower government saving.
• Corporate profits will reflect the accrual-based estimates of compensation and the interest costs associated with unfunded liabilities.

For more information, go to www.bea.gov/gdp-revisions.

BEA Introduces New Measures of the Regional Economy

Published June 12, 2013 BEA News , Regional Leave a Comment
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Today, the U.S. Bureau of Economic Analysis released experimental real, or inflation-adjusted, estimates of personal income for states and metropolitan areas. The inflation adjustments are based in part on regional price parities (RPPs), which provide a measure of differences in price levels across each state and region relative to the national price level for each of the years 2007–2011. When RPPs are applied in conjunction with BEA’s national Personal Consumption Expenditures (PCE) price index, which measures price changes over time, personal income comparisons can be made across regions and time periods. These prototype statistics are being released for evaluation and comment by data users.

PI_1_0612Growth in real state personal income from 2010 to 2011 ranged from 1.3 percent in Mississippi to 10.4 percent in South Dakota. These growth rates reflect the year-over-year change in the state’s nominal personal income, the change in the national PCE price index, and the change in the regional price parity for that state. After South Dakota, the states with the largest growth rates of real personal income are North Dakota (9.5 percent), Iowa (6.1 percent), Nebraska (6.0 percent), and Texas (4.3 percent). The states with smallest growth rates after Mississippi are Maine (1.4 percent), Rhode Island (1.5 percent), Vermont (1.6 percent), and New Mexico (1.6 percent). Four states—Arizona, Indiana, North Carolina, and Oregon—had growth rates equal to the national average of 2.7 percent.

PI_2_0612Growth in real metropolitan area personal income from 2010 to 2011 ranged from a decline of 0.7 percent in Rochester, MN, to an increase of 11.9 percent in Odessa, TX. After Odessa, TX, the metropolitan areas with largest growth rates of real personal income were Midland, TX (10.7 percent), Hanford-Corcoran, CA (6.7 percent), San Jose-Sunnyvale-Santa Clara, CA (6.4 percent), and Madera-Chowchilla, CA (6.2 percent). In addition to Rochester, MN, four metropolitan areas had declining or flat growth rates. These are Ocean City, NJ (–0.3 percent), Anniston-Oxford, AL (–0.2 percent), Gadsden, AL (–0.2 percent), and Cape Girardeau-Jackson, MO-IL (0.0 percent).

To learn more, read the full report.

Widespread State Economic Growth in 2012

Published June 6, 2013 BEA News , GDP by State Leave a Comment
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gdp_by_state_2012• Real gross domestic product (GDP) increased in 49 states and the District of Columbia in 2012. Leading industry contributors were durable-goods manufacturing, finance and insurance, and wholesale trade.

• Durable-goods manufacturing was the largest contributor to U.S. real GDP by state growth in 2012. This industry was the leading contributor to real GDP growth in 22 states, contributing 2.87 percentage points to growth in Oregon and 1.70 percentage points to growth in Indiana.

• Finance and insurance was the leading contributor to growth in the Mideast region and contributed 0.75 percentage point or more to real GDP growth in Utah, South Dakota, and Delaware.

• Wholesale trade contributed to real GDP growth in 48 states and the District of Columbia.

• In North Dakota, the fastest growing state in 2012, mining contributed 3.26 percentage points to real GDP growth.

• In contrast, agriculture, forestry, fishing, and hunting subtracted from real GDP growth in 6 of 8 BEA regions and in 35 states in 2012.

• Per capita real GDP ranged from a high of $61,183 in Delaware to a low of $28,944 in Mississippi. Per capita real GDP for the U.S. was $42,784.

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

April 2013 Trade Gap is $40.3 Billion

Published June 4, 2013 BEA News , Trade Deficit , Trade in Goods and Services Leave a Comment
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The U.S. monthly international trade deficit increased in April 2013 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit increased from $37.1 billion (revised) in March to $40.3 billion in April as imports increased more than exports. The previously published March deficit was $38.8 billion. The goods deficit increased $3.2 billion from March to $58.6 billion in April; the services surplus increased $0.1 billion from March to $18.3 billion.

Exportstrade_april2013
Exports of goods and services increased $2.2 billion in April to $187.4 billion mostly reflecting an increase in exports of goods. Exports of services also increased.
• The largest increases in exports of goods were in consumer goods and in capital goods.
• The largest increases in exports of services were in other private services, which includes items such as business, professional, and technical services, insurance services, and financial services, and in travel.

Imports
Imports of goods and services increased $5.4 billion in April to $227.7 billion mostly reflecting an increase in imports of goods. Imports of services also increased.
• The largest increases in imports of goods were in consumer goods, in automotive vehicles, parts, and engines, and in capital goods.
• The largest increases in imports of services were in other transportation, which includes freight and port services, and in travel.

Goods by geographic area (not seasonally adjusted)
• The goods deficit with the European Union increased from $9.9 billion in March to $12.4 billion in April. Exports decreased $1.8 billion to $21.1 billion, while imports increased $0.7 billion to $33.6 billion.
• The goods deficit with China increased from $17.9 billion in March to $24.1 billion in April. Exports decreased $0.4 billion to $9.0 billion, while imports increased $5.8 billion to $33.1 billion.
• The goods deficit with Mexico decreased from $5.3 billion in March to $4.4 billion in April. Exports increased $1.9 billion to $19.9 billion, while imports increased $1.1 billion to $24.3 billion.

To learn more about U.S. international trade in goods and services, read the full report.

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