Archive for August, 2012

Strict Measures Taken to Ensure That Our Economic Measures Remain Secure

U.S. gross domestic product (GDP) is considered one of the United States’ most vital economic statistics. Each release of GDP by the U.S. Bureau of Economic Analysis (BEA) can have a significant impact on decisions made by government officials, businesses, investors, and American households. A number that important must have the full faith and confidence of the public behind it. No one wants to chart his or her economic future on data whose accuracy or objectivity is in question.

So how do we keep the numbers secure? Each month, as the final source data come together, BEA implements “GDP lock-up.” The lock-up is governed by a set of rigorous procedures to ensure the security of GDP and other sensitive statistics.

As the numbers begin to come together, the staff of BEA’s National Economic Accounts Directorate has Internet access disabled and implements other measures to further restrict access to portions of the building where this staff works and the data are kept. Data are kept compartmentalized so that only a few key staff members have access to enough pieces to assemble the estimate. Key staff, including members of BEA’s executive staff and others whose expertise is necessary for the final review, turn their focus to the final estimation. As always, these staff members are forbidden from speaking to any non-BEA staff about the estimates.

On the eve of the public release of the GDP report, BEA’s leaders and other designated staff enter a specially designed suite of rooms to review the final numbers. All telephone and Internet connections in the room are disabled. Cell phones and Blackberrys must be checked in and locked away, and thick curtains are pulled over the few windows. While in lock-up, certain rules and customs are always followed. For example, the final GDP estimate is never said out loud. Additionally, given that lock-ups usually take at least 5 to 6 hours to complete, someone is assigned the critical task of bringing in snacks to munch on.

The review process is comprehensive, with a systematic review of each component of the estimate presented and approved by the Bureau’s leaders. Once the estimate is finalized, the staff proceeds to draw up all the necessary documents and files related to the GDP and personal income releases. These include the news releases, graphs, and technical notes you see published. Copies of the final documents are made on secure equipment and are locked away in a specific room until time for their release.

The participants are not allowed to leave the room until they are officially dismissed by the Bureau’s Director. At the earliest, that’s around 6 p.m., following the closure of U.S. financial markets, although some lock-ups have been known to stretch late into the night. Once the lock-up ends and employees have signed out, they are forbidden to talk about the estimates with anyone until the numbers are officially released at 8:30 a.m. the next morning. Any notes or doodles jotted down during the lock-up or ink cartridges and scrap paper used during the process must be turned in to the lock-up manager. Those materials remain secure until the GDP numbers are made public the following morning. For the next 12 hours or so, the only people who know the new estimate of U.S. GDP are a select few BEA staffers and the Chairman of the President’s Council of Economic Advisors, who by law, is the only non-BEA person provided an advance copy.

The final steps in this embargo process ensure that the data is provided to everyone at the same, precise time. At 7:30 a.m., a representative from BEA delivers the GDP news release to members of the media in another specially designed facility at the main building of the U.S. Department of Commerce. In the media lock-up room, accredited members of the news media have designated work stations, with controlled access to the Internet. There is another set of lock-up rules that govern the media’s pre-release access to the data. All reporters must sign in and lock their cell phones in a special case that blocks their signals. The media room is locked promptly at 7:30 a.m., with no one allowed to exit after that. Reporters are cut off from all communications at that time. They have 60 minutes to write their stories. At precisely 8:30 a.m., Internet access to their workstations is restored so they can post their stories to the public.

Meanwhile, back at BEA, the final GDP release files are delivered at 7:45 a.m. to the Bureau’s Web team, who gather in another specially designed and outfitted room, where communications have also been cut off. The Web team systematically codes and processes each of the specially designated files on two computers simultaneously, to ensure redundancy. Then at the strike of 8:30 on an official atomic clock, the team uploads the files to the Web and thus to the outside world.

Similar procedures are used to ensure the security and integrity of all of BEA’s releases.

Personal Income: More Than Your Paycheck

When someone asks you what your income is, what do you tell them? Probably most of you would respond with the salary you earn from your job, right? Well, your income includes more than just that paycheck you receive every other week.

The most widely cited sources of income data are the Bureau of Economic Analysis’ (BEA) personal income and the Census Bureau’s money income. It is important to understand the differences between these two barometers, which are often used as a way to track how ordinary Americans are faring. The main difference between the two statistics is the way income is measured.

BEA defines income as an individual’s total earnings from wages, interest on investments, and from other sources, such as Social Security payments or unemployment insurance, known as transfer receipts. You can find a listing of what’s included in personal income by looking at the components on BEA’s interactive tables. Check out table 2.1 of the national income and product accounts: Personal Income and Its Disposition. You will see compensation of employees on line two. That includes wages and salaries and benefits paid by employers, such as pension/insurance funds, as well as social insurance. Any income earned from rental property is noted on line 12. Lines 13 through 15 break down the income people receive on assets, such as interest or dividend income. The last piece is on line 16, income from personal transfer receipts. This includes anything from Social Security, Medicare/Medicaid, and unemployment insurance to Veterans’ benefits and more.

One factor BEA does not include in its personal income measure is income earned abroad, such as income earned from leasing out an apartment in Paris or salary earned while working for a foreign company abroad. Personal income, like gross domestic product, is intended to capture domestic economic activity. Thus, only domestic sources of income are included.

The Census Bureau collects income data on several major surveys. These surveys ask for a household’s income and include up to 50 sources of income. While a highly valuable tool and a data set that BEA makes use of in several ways, such surveys also suffer from the challenge of people having to recall what they earned and where it came from. Many people, for example, associate income only with their salary or wages, so that is all they report.

BEA produces personal income data on a monthly, quarterly, and annual basis at the national, state, metropolitan, and county levels. The Census Bureau’s money income is calculated annually with several different surveys.

New Census Mobile App to Feature BEA Data

Want to keep tabs on the latest gross domestic product data while waiting for lunch? A new mobile app from the Census Bureau puts live access to key economic indicators at your fingertips. It’s the perfect tool for geeking out on the go.

The America’s Economy app, available today for Android smartphones in the Google Play Store, combines real-time access to 16 closely watched economic indicators from the Bureau of Economic Analysis, the Bureau of Labor Statistics (BLS), and the Census Bureau. Among the indicators available through the app are gross domestic product, consumer spending, disposable personal income, and the U.S. international trade balance.

This is the first mobile app to feature real-time statistics from the three primary U.S. economic statistical agencies. With the ability to review recent economic trends, browse upcoming data releases, and set alerts for key indicators, this app allows you to keep up with the U.S. economy anywhere you go.

America’s Economy features three data series from the Bureau of Economic Analysis:
• Gross domestic product
• Personal income and outlays
• International trade in goods and services (joint release with Census)

Other featured indicators include:
• Advance monthly retail sales (Census)
• New residential construction (Census)
• New residential sales (Census)
• Construction spending (Census)
• Advance report durable goods (Census)
• Business inventories (Census)
• Manufacturers’ goods (Census)
• Monthly wholesale (Census)
• Homeownership rate (Census)
• Quarterly Services Survey (Census)
• Quarterly financial report—retail trade (Census)
• Quarterly financial report—manufacturing (Census)
• Unemployment rate (BLS)

Looking for even more data? Check out the Federal Reserve Bank of St. Louis’ FRED (Federal Reserve Economic Database) app, the mobile version of the bank’s signature database. The FRED mobile app provides access to nearly 42,000 data economic series from 38 regional, national, and economic sources. It is available for Android and iPhone.

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