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

Outline of Today’s Talk ▪ Comparison of annual and benchmark multipliers ▪ Motivation for making comparisons ▪ Factors contributing to differences 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 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 4

Multipliers are Generally Lower Aggregate-level Final-demand Output Multiplier Statistics 5 National effect 1 Regional effect 2 Combined effect 3 Mean percent change−3.3%−0.9%−4.2% States North Carolina−5.8%−4.5%−10.5% Louisiana−1.2% 1.0%−0.2% Wyoming−0.2% 0.9% 0.6% benchmark and 2008 regional compared to 2008 annual and 2008 regional; 28 states below the mean benchmark and 2007 regional compared to 2002 benchmark and 2008 regional; 22 states below the mean benchmark and 2007 regional compared to 2008 annual and 2008 regional; 27 states below the mean.

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 6

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

Compensation and Value Added Shares of Total Industry Output Percent change Compensation share of total industry output Total value added share of total industry output

U.S. Personal Tax and Saving Rates Personal Spending RIMS II Regional Personal Spending Rate *2008 Tax rate Saving rate *Rates at the time of the 2007 RIMS II update

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 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 11

12 Thank You Zoë O. Ambargis RIMS II Section, Regional Product Division U.S. Bureau of Economic Analysis Phone: