2008 Annual I-O Update of RIMS II

The Effects of Changes in National and Local Economic Conditions on the Model’s Output

Zoë O. Ambargis

65 th Annual AUBER Fall Conference Indianapolis, IN October 8-11, 2011

www.bea.gov

Outline of Today’s Talk

▪ Comparison of annual and benchmark multipliers ▪ Motivation for making comparisons ▪ Factors contributing to differences

www.bea.gov

2

Annual Update of RIMS II

▪ Incorporates most recent data  More recent information about economy  Improvements in statistical methods ▪ Evaluating the results shows  Changes in national and local economic conditions  Changes in technology

www.bea.gov

3

Annual vs. Benchmark

▪ Annual:  2008 annual I-O and 2008 regional ▪ Benchmark:  2002 benchmark I-O and 2007 regional  2002 benchmark I-O and 2008 regional

www.bea.gov

4

www.bea.gov

Multipliers are Generally Lower

Aggregate-level Final-demand Output Multiplier Statistics Mean percent change

National effect 1

−3.3%

Regional effect 2

−0.9%

Combined effect 3

−4.2% States North Carolina Louisiana −5.8% −1.2% −4.5% 1.0% −10.5% −0.2% 1.

2.

3.

Wyoming −0.2% 0.9% 0.6% 2002 benchmark and 2008 regional compared to 2008 annual and 2008 regional; 28 states below the mean.

2002 benchmark and 2007 regional compared to 2002 benchmark and 2008 regional; 22 states below the mean.

2002 benchmark and 2007 regional compared to 2008 annual and 2008 regional; 27 states below the mean.

5

National Factors

▪ Economic conditions  Hollowing out of U.S. economy  Increase in imports as a share of gross output  Changes in value added as a share of gross output  Increase in personal saving rates ▪ Methodological improvements  Calculation of compensation in 2008 annual I-O table

www.bea.gov

6

Imports

U.S. Import Coefficients Imports share of total commodity output Mean of import share for manufacturing Mean of import shares for services PCE imports share of total PCE

2002

.072

.228

.016

.064

2008

.091

.278

.027

.065

Percent change

27.3

21.8

66.0

2.0

www.bea.gov

7

Compensation and Value Added

Shares of Total Industry Output Compensation share of total industry output Total value added share of total industry output

2002 2008

.32

.56

.30

.54

Percent change

-4.8

-2.3

www.bea.gov

8

Personal Spending

U.S. Personal Tax and Saving Rates

2007*

Tax rate .128

Saving rate *Rates at the time of the 2007 RIMS II update .005

2008

.117

.041

RIMS II Regional Personal Spending Rate Personal Spending Rate   1  National Personal Saving Rate  * 1 State Personal Current Taxes F  S  L State Personal Income

www.bea.gov

9

Regional Factors

▪ North Carolina  Decline in furniture, paper, wood products, motor vehicles and motor vehicle parts, and financial services ▪ Louisiana  Increase in mining, real estate, transportation, and management services ▪ Wyoming  Increase in mining, support activities for mining

www.bea.gov

10

Summary

▪ ▪ ▪ ▪ 2008 annual I-O multipliers generally lower than 2002 benchmark multipliers National and regional effects Effects of technical change Implication on estimated impacts

www.bea.gov

11

Thank You

Zoë O. Ambargis RIMS II Section, Regional Product Division U.S. Bureau of Economic Analysis Phone: 202-606-5343 E-mail: [email protected]

www.bea.gov