Bureau of Economic Analysis

What It Means

The Bureau of Economic Analysis (BEA) is a division within the U.S. Department of Commerce (DOC), the agency responsible for fostering the nation’s economic growth and technological advancement by promoting the health and vitality of domestic (U.S.) businesses and international trade. The BEA is one of two main bureaus (the other is the Bureau of the Census) in the DOC’s Economics and Statistics Administration, which uses the information provided by these two bureaus to advise the president, the DOC, and other government agencies on economic matters.

The BEA’s mission is to collect, analyze, and publish certain economic statistics that help the government, businesses, and the American public chart and understand the performance of the U.S. economy and its position in the global economy. (Statistics are numerical facts. The study of statistics is the science of turning these numerical facts into useful information.)

The BEA presents statistics about the American economy in the form of two-column accounting reports called NIPA (national income and product accounts) tables. One column shows the amount and breakdown of the various types of production in the economy; the other column shows the amount of income that is earned in the course of production and how it is distributed among the U.S. population. According to the double-entry system, a use (or expenditure) recorded in one column is accounted for as a source (or receipt) in the other column. Thus the sum totals in the right and left columns should be roughly equal. The NIPA tables are used to trace the flow of money in and out of the major sectors of the national economy.

When Did It Begin

Before the Great Depression (a severe, worldwide economic crisis that lasted from 1929 to about 1939), data about the performance of the American economy was fragmentary at best. When the U.S. government was suddenly faced with responding to, and trying to lift the country out of, the Depression, this information gap was exposed, and economists recognized the need for a comprehensive measure of national income and output.

The DOC commissioned Simon Kuznets (1901–85), an economist at the National Bureau of Economic Research, to develop the set of national economic accounts known today as NIPAs. Kuznets’s report outlining the original set of accounts was presented to Congress in 1937. The NIPA tables have been refined and expanded since that time. The DOC and many prominent economists regard the development of the NIPA tables as the one of the greatest economic achievements of the twentieth century.

The predecessor of the BEA was the Office of Business Economics, which was established in 1945 as a division of the Bureau of Foreign and Domestic Commerce (a predecessor of the DOC). In 1972 the DOC reorganized its principal statistical agencies, and the Office of Business Economics was renamed the Bureau of Economic Analysis.

More Detailed Information

The most closely watched economic account published by the BEA is gross domestic product (GDP), the total dollar value of all goods and services produced within the country during the year. Simply put, GDP reflects the size of the economy. An increase in GDP from one year to the next reflects an economy that is expanding, while a decrease suggests that the economy may be contracting (shrinking).

GDP is calculated by adding together the following figures: consumption (private consumer spending for goods and services, including things such as groceries, televisions, and medical care); government spending (from military defense to employee wages to office supplies); investment (not the kind of investment that involves purchases of stocks and bonds, but rather businesses’ investments in their own means of production, such as computer software or new factory equipment); and the nation’s net exports (total exports minus total imports).

Another main account produced by the BEA is gross domestic income (GDI), a measure of the total of incomes earned in the process of the nation’s annual production. In addition to GDP, GDI, and other national accounts, the bureau also collects data that focuses on specific industries and their relationships to one another, international trade and investment, and economic growth (or decline) in specific regions of the United States. In all, the BEA publishes some 130 NIPA tables.

Recent Trends

Prior to 1991 the size of the U.S. economy was measured as gross national product (GNP). GDP differs slightly from GNP in terms of how the country’s productivity is measured. GNP counts the total production of all of the country’s citizens and firms, whether the production occurs in the United States or in a foreign country. GDP counts only the production that occurs within U.S. borders by either foreign or domestic firms and workers.

As it entered the twenty-first century, the BEA was focused on harnessing technological advances to create coordinated electronic data collection systems that would greatly improve the accuracy, efficiency, and timeliness of its statistical accounts.