Bureau of Economic Analysis (BEA)
The Bureau of Economic Analysis (BEA) promotes a better understanding of the U.S. economy by providing the most timely, relevant, and accurate economic accounts data in an objective and cost-effective manner. Vision: To be the world's most respected producer of economic accounts.
Core Values of BEA
BEA is an agency of the Department of Commerce. Along with the Census Bureau, BEA is part of the Department's Economics and Statistics Administration. BEA produces economic accounts statistics that enable government and business decision-makers, researchers, and the American public to follow and understand the performance of the Nation's economy. To do this, BEA collects source data, conducts research and analysis, develops and implements estimation methodologies, and disseminates statistics to the public.
BEA is one of the world's leading statistical agencies. Although it is a relatively small agency, BEA produces some of the most closely watched economic statistics that influence the decisions made by government officials, business people, households, and individuals. BEA's economic statistics, which provide a comprehensive, up-to-date picture of the U.S. economy, are key ingredients in critical decisions affecting monetary policy, tax and budget projections, and business investment plans. The cornerstone of BEA's statistics is the national income and product accounts (NIPAs), which feature the estimates of gross domestic product (GDP) and related measures.
The GDP was recognized by the Department of Commerce as its greatest achievement of the 20th century and has been ranked as one of the three most influential measures that affect U.S. financial markets. Since the NIPAs were first developed in the aftermath of the Great Depression, BEA has developed and extended its estimates to cover a wide range of economic activities. Today, BEA prepares national, regional, industry, and international accounts that present essential information on such key issues as economic growth, regional economic development, interindustry relationships, and the Nation's position in the world economy.
The national income and product accounts (NIPA's) are the comprehensive set of accounts that measure the total value of final goods and services (gross domestic product, or GDP) produced by the U.S. economy and the total of incomes earned in producing that output (Gross Domestic Income, or GDI). GDP measures final purchases by households, business, and government by summing consumption, investment, government spending, and net exports. GDI measures total incomes earned by households by summing wages and salaries, rents, profits, interest, and other income. The accounts also provide information on the prices at which the output is sold and measures of real, inflation-adjusted, measures of output and income.
This integrated set of accounts and the detailed sets of international, regional, and industry accounts that support the national accounts allow for comprehensive and integrated analyses of the impact of alternative policy actions, or of external events, on the entire economy as well as on detailed components of final demand, incomes, industries, and regions of the country.
History of the NIPA's.—Prior to the development of the NIPA's, policymakers had to guide the economy using limited and fragmentary information about the state of the economy. The Great Depression underlined the problems of incomplete data and led to the development of the national accounts:
One reads with dismay of Presidents Hoover and then Roosevelt designing policies to combat the Great Depression of the 1930's on the basis of such sketchy data as stock price indices, freight car loadings, and incomplete indices of industrial production. The fact was that comprehensive measures of national income and output did not exist at the time. The Depression, and with it the growing role of government in the economy, emphasized the need for such measures and led to the development of a comprehensive set of national income accounts.
In response to this need in the 1930's, the Department of Commerce commissioned Nobel laureate Simon Kuznets of the National Bureau of Economic Research to develop a set of national economic accounts./1/ Professor Kuznets headed a small group within the Bureau of Foreign and Domestic Commerce's Division of Economic Research. Professor Kuznets coordinated the work of researchers at the National Bureau of Economic Research in New York and his staff at Commerce. The original set of accounts was presented in a report to Congress in 1937 and in a research report, National Income, 1929–35.
Early in 1942, annual estimates of gross national product were introduced to complement the estimates of national income and to facilitate war time planning. Wartime planning needs also helped to stimulate the development of input-output accounts. Nobel laureate Wassily Leontief developed the U.S. input-output accounts that subsequently became an integral part of the NIPA's. In commenting on the usefulness of the national accounts, Wesley C. Mitchell, Director, National Bureau of Economic Research, said: "Only those who had a personal share in the economic mobilization for World War I could realize in how many ways and how much estimates of national income covering 20 years and classified in several ways facilitated the World War II effort."
Over time, in response to policy needs and changes in the economy, the accounts have been expanded to provide quarterly estimates of GDP and monthly estimates of personal income and outlays, regional accounts, wealth accounts, industry accounts, and expanded international accounts. In the past decade, the accounts have been updated by introducing measures of real output and prices that reflect current expenditure patterns; quality-adjusted prices for high-tech goods; and most recently, investment in computer software and a new measure of banking output that recognizes ATMs, electronic funds transfers, and the wide range of other services that banks provide.
A time line of the major innovations introduced in the accounts in the last 50 years would include the following:
The national accounts have become the mainstay of modern macroeconomic analysis, allowing policymakers, economists, and the business community to analyze the impact of different tax and spending plans, the impact of oil and other price shocks, and the impact of monetary policy on the economy as a whole and on specific components of final demand, incomes, industries, and regions.
The national accounts, in combination with better informed policies and institutions, have contributed to a reduction in the severity of business cycles and a post-war era of strong economic growth. Prior to World War II, the business cycle was much more severe and more frequent. There were 6 severe depressions between 1854 and 1945 with an average duration of nearly 3 years. Including recessions as well as depressions, the average downturn between 1854 and 1945 was 21 months, with a contraction occurring on average once every 4 years. During the postwar era the length of the average downturn has been halved to 11 months, with a contraction occurring on average once every 5 years.
The post-World War II era stands out as a period of unprecedented growth for the United States. Real GDP per capita and real wealth has more than doubled since 1948. This period of economic prosperity has not only dramatically improved standards of living but has contributed to large improvements in social conditions, cutting poverty in half, raising life expectancy, and adding to leisure time.
The bank runs, financial panics, and depressions that were recurring problems before World War II became a thing of the past. The business cycle was not eliminated, but its severity was curtailed. This post-war success was based on a more stable economic environment that was due in significant part to the timely, comprehensive and accurate data on the economy provided by the national accounts.
BEA and the GDP of the next century.—In the next century, the needs of the information age will only get larger, and if the national accounts and the rest of the U.S. statistical system is to meet that challenge, several things must happen. First, the Bureau of Economic Analysis, the Bureau of the Census, and the rest of the U.S. statistical system must take a strong leadership role in the harmonization of economic and financial standards in the United States and abroad. The U.S. statistical agencies will also need to continue their work with business and government to increase the use of electronic data collections and administrative records. This will require not only harmonization of financial and accounting standards, but also the adoption of common product and industry codes, the sharing of data between statistical agencies, strong assurances of confidentiality, improvements in administrative records, and an information technology system in the U.S. statistical agencies that is equipped to handle the information needs of the 21st century.
If all this comes to pass, one can imagine a Bureau of Economic Analysis in the future that will obtain its national accounts data from coordinated electronic data collection systems. These systems will use existing electronic data from business accounts, administrative records, and financial clearance systems. The trend toward harmonization of business and economic accounting standards will have reached the point where the data can be used interchangeably. Standardized business, financial, and administrative codes will become so commonplace, and electronic confidentiality protections so secure, that economists and statisticians at BEA, the Census Bureau, and elsewhere in the U.S. statistical system will be able to simply "sample" data plucked from the existing stream of business, financial, and administrative transactions.
Not only will respondent burden be substantially reduced, but the timeliness, accuracy, and quality of the national accounts will also be dramatically improved. Data will be available on a continuous flow basis, and new firms and firms going out of business will be instantly identified. Given the universal use of common scanner, billing, and Internet order codes, the level of detail available from the accounts will exceed anything imagined today. Finally, the internationalization of markets and the need to coordinate government policy will mean that this same type of data will be available globally, as well as nationally. Such a system will produce a quantum leap in the quality and efficiency of the information infrastructure available for marketing, for business, household, and government transactions, for planning, and for decision making
(Link: https://www.bea.gov/about/mission.htm)