How BEA Numbers Come Together
At the U.S. Bureau of Economic Analysis (BEA), we tend to use the words “statistic,” “estimate,” and “indicator” interchangeably. Sometimes we’ll mention our economic “statistics,” at other times we’ll call out our “estimates,” and in some places we’ll refer to our economic “indicators.” In each case, we’re generally referring to a collection of numerical measures produced through a rigorous economic accounting system. Most people, however, probably think of these slightly differently. For them, statistics are synonymous with methods for collecting data such as surveys and associated concepts like response rates, sample size, margin of error, and standard deviation.
We do some of that, but most of our economic indicators are produced by bringing together data collected in different ways—from surveys to scanner transactions—from a wide variety of data suppliers within a rigorous economic accounting system. We’re bringing together hundreds of millions of data points within that system to produce estimates such as gross domestic product, the current-account balance, or state personal income.
As you might imagine, given such large data volumes, it’s inevitable there will be inconsistencies across data sources. It’s our job to ensure—using well-established standards and methods—that the source data “hang together” so our statistics draw as complete and accurate a picture of the U.S. economy as possible. In practice, that means we sometimes adjust source data when there are inconsistencies in concepts, coverage, and timing—or if there are quality concerns.
Let’s start with conceptual mismatches. Adjustments are sometimes needed so that source data conform to appropriate economic accounting concepts and definitions. For example, Internal Revenue Service data from corporate tax returns include estimates of depreciation, but these are based on historical-cost valuation and tax service lives. We necessarily adjust such estimates to match the definition of depreciation used in economic accounting—consumption of fixed capital—which is based on current-cost valuation and economic service lives.
We also sometimes adjust source data due to gaps in coverage. For example, the U.S. Census Bureau Monthly Wholesale Trade Survey is our primary source for estimating quarterly changes in private inventories. This survey, however, excludes the inventories of wholesalers who don’t take title to the goods they sell. To fill this gap in coverage, the survey data must be augmented by separate BEA inventory estimates for such nonmerchant wholesalers.
Time of recording and valuation may also differ between available source data and what is needed for economic accounting purposes. For example, available source data on imports of goods from Canada are valued at the point of manufacture. To be conceptually consistent with BEA’s economic accounts, these data must be adjusted to reflect the value of those goods at the point of exportation to the United States.
The final type of adjustment BEA may make to source data is when there are quality concerns, generally either inaccurate or inconsistent source data. For example, most components of BEA’s personal consumption expenditures (PCE) price index are based on consumer price indices from the U.S. Bureau of Labor Statistics (BLS). There have been instances where BLS has stopped publishing individual consumer price index series due to quality concerns. In those cases, BEA uses other relevant indicators to adjust the PCE price index until a more suitable methodology can be implemented.
There are also sometimes inconsistencies between source data that are measuring the same thing. For example, the way goods are valued between different surveys can differ—one may be reporting at market value, while another reports at book value. In those cases, when using data from those surveys, BEA makes an adjustment to align the inconsistent series.
Each of the adjustments outlined above—due to inconsistencies in the concepts, coverage, timing, or quality of source data—is handled on a case-by-case basis. While we try to minimize adjustments, our goal is to draw as accurate, complete, and consistent a picture of the U.S. economy as possible. Former BEA Director George Jaszi summed it up well over 50 years ago:
“[BEA] can be viewed as assembling a jigsaw puzzle which depicts the national economy… some pieces of the puzzle may be missing or may not quite fit. But, by and large, we manufacture the best mouse trap and assemble the finest picture of the economy.”
