The Importance of Economic
Census Data for Federal Policy
Katharine G. Abraham
Member, Council of Economic Advisers
Hi-Beams for the Economic Road Ahead
Washington, DC
September 26, 2011
Outline
• Economic Census data critical to the reliability of economic
accounts and business survey data
• Federal policy makers use data from economic accounts and
business surveys to. . .
 Understand the state of the economy and forecast future economic
conditions
 Allocate federal funds to state and local governments
 Make informed policy choices and implement existing policy
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Economic Accounts and Business Surveys Rest
on the Economic Census
• National economic accounts benchmarked every 5 years to
Economic Census data
 National output (Gross Domestic Product)
 Disaggregated measures of output by industry and region
 Input-output tables that show linkages across sectors
• Sample frames and weights for business surveys conducted by the
Census Bureau rest on information collected during the Economic
Census
 Large number of monthly, quarterly and annual surveys
• Roughly 40 percent of firms included in the Economic Census were
not in business five years earlier
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Dynamism of the U.S. Economy Makes the
Economic Census Especially Important
3
Dynamism of the U.S. Economy Makes the
Economic Census Especially Important (cont’d)
4
Outline
• Economic Census data critical to the reliability of economic
accounts and business survey data
• Federal policy makers use data from economic accounts and
business surveys to. . .
 Understand the state of the economy and forecast future economic
conditions
 Allocate federal funds to state and local governments
 Make informed policy choices and implement existing policy
5
Understanding the State of the Economy and
Forecasting Future Economic Conditions
• U.S. macroeconomic policymakers rely on information about
Gross Domestic Product (GDP) and its components
 The White House, the Treasury, and the Congressional Budget Office
use GDP data to prepare the federal budget and to project federal
spending and tax receipts.
 An error of ½ percentage point in the forecast of trend real GDP growth
would cause the federal deficit forecast to be off by a cumulative $1.6
trillion over the standard ten-year window.
 The Federal Reserve System relies on GDP data to formulate sound
monetary policy
6
Effect of ½ Percentage Point Lower Trend GDP
Growth on Federal Budget Deficit Projection
Revision to the Federal Budget Deficit
Fiscal year; billions of dollars
2011
2012
2013
2014
2015
2016
2011 - 2016
2017 - 2021
$7.3
$24.3
$42.1
$68.9
$98.5
$130.3
$371.0
$1,238.0
Source. Analytical Perspectives, table 3-1 (Office of Management and Budget), adjusted by CEA. Revision assumes that real
GDP growth is ½ percentage point lower than baseline for each year 2011-2021, with no change in the unemployment rate.
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Outline
• Economic Census data critical to the reliability of economic
accounts and business survey data
• Federal policy makers use data from economic accounts and
business surveys to. . .
 Understand the state of the economy and forecast future economic
conditions
 Allocate federal funds to state and local governments
 Make informed policy choices and implement existing policy
8
Allocation of Federal Funds
• Data from BEA Regional Income and Product Accounts used to
distribute $327 billion in federal funds in FY2010
Source: BEA. Figures in billions of dollars.
9
Outline
• Economic Census data critical to the reliability of economic
accounts and business survey data
• Federal policy makers use data from economic accounts and
business surveys to. . .
 Understand the state of the economy and forecast future economic
conditions
 Allocate federal funds to state and local governments
 Make informed policy choices and implement existing policy
10
Example: Estimating the Impact of Policy Choices on
Jobs and Output
• Important for DOD planners to assess the economic impact of
military base closures on communities
 Analyses make use of BEA regional input-output modeling system
• Broad interest in the impact of infrastructure spending on jobs
 DOT uses BEA industry input-output tables to estimate the impact of
specific transportation projects on jobs
 CEA and CBO have used GDP data and BEA industry input-output
tables to estimate the effects of infrastructure spending on jobs
• GDP and input-output estimates rest on the Economic Census
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Example: Forecasting the Demand for Transportation
Infrastructure and Equipment
• The Department of Transportation prepares periodic
forecasts of the demand for transportation infrastructure
• In developing its forecasts, the Department relies on data
from the Commodity Flow Survey
 In Economic Census years, this survey collects detailed information
about establishments’ shipments, including value, commodity type,
weight, destination, and mode of transportation
• Data from the Economic Census are used to stratify the
sample by industry, size and location and to compute weights
for aggregate estimates
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Example: Determining the Small Employer
Premium Tax Credit for the Affordable Care Act
• The Department of Health and Human Services is responsible
for determining the premium tax credit that small employers
will receive under the Affordable Care Act
 Determination requires data on the average premium in the
employer’s state
• Data for this purpose obtained from the Medical Expenditure
Panel Survey—Insurance Component (MEPS-IC)
 Survey collects data on health insurance plans offered by private and
public employers and measures the cost of employer-provided health
insurance
• Sample for the MEPS-IC rests on the Economic Census
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