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BEA economic area projections of income, employment, and population to the year 2000.

BEA Economic Area Projections of Income, Employment, and Population to the Year 2000

THE analysis of the regional distribution of economic activity in the United States has sometimes been limited by the use of geographic units that are political or administrative rather than economic. The BEA economic areas were defined to overcome this limitation. Each economic area consists of an economic node--a metropolitan statistical area (MSA) or a similar area that serves as a center of economic activity--and the surrounding counties that are economically related to the center. Commuting patterns are a major factor used in determining the economic relationships among counties, and, to the extent possible, each economic area includes the place of work and place of residence of its labor force. The BEA economic areas cover the entire Nation (chart 11).

This article presents BEA economic-area projections to the year 2000 of total personal income, per capita personal income, employment, and population. The economic-area projections are based on data through 1988; they are consistent with the State and MSA projections that were presented in the May 1990 and October 1990 issues of the SURVEY OF CURRENT BUSINESS. (1)

Economic area definition

BEA economic areas were first defined in 1969, using data from the early 1960's. (2) These economic areas were redefined in 1977 to recognize changes in the regional distribution of economic activity, which in part reflected the opening of major portions of the Interstate Highway System. (3) These changes led to the growth of new centers and the absorption of former centers--particularly those in agricultural areas--into other economic areas. The 1977 definition of economic-area boundaries was based primarily on three sets of data: (1) Journey-to-work data from the 1970 Census of Population, (2) newspaper circulation data for 1972, and (3) 1975 county commuting data developed from Social Security Administration and Internal Revenue Service records.

The economic areas defined in 1977 were reevaluated when the journey-to-work data from the 1980 census became available. According to the data, changes in commuting patterns generally were small, so no changes in the economic-area boundaries were made at that time. (4) The boundaries will be evaluated again the early 1990's using journey-to-work data from the 1990 census.

The following procedure were used to define the BEA economic areas. First, a principal center was chosen. The MSA containing the largest percentage of employment in an area that was identified as a potential economic area usually was chosen as the principal center. In cases where smaller MSA's were in the same area, they were added as secondary centers. Where an MSA was an integral part of a larger metropolitan complex, that complex was chosen as the principal center. (5) In sections of the Nationa with no MSA's, major cities that function as economic nodes were identified as principal centers for the economic areas. In all, 183 principal centers were chosen.

After the principal centers were chosen, each of the approximately 2,600 counties that were not within a center was examined to determine the center to which it was most closely related. For most of these counties, the primary data source was journey-to-work data from the 1970 census. These data showed the commuting pattern of workers from each county of residence to as many as 13 counties of work. Counties were assigned to centers in accordance with commuting patterns. In many instances, the association between a county and a particular center was based not on direct commuting ties to the central city or county but on commuting ties to a noncentral county that was tied to the center.

The assignment of counties to principal centers was more difficult in rural areas than in urban areas because commuting data alone could not be relied on the determine economic ties. This problem was resolved through the use of supplemental data, such as metropolitan newspaper circulation in rural areas, and the advice of State planning officials who were familiar with the geographic and economic characteristics of the areas.

Preliminary definitions of BEA economic areas were reviewed by State planning offices, university bureaus of business and economic research, and field offices of Federal agencies involved in water resources planning. The final definitions reflect their comments.

The definition of each BEA economic area is held constant for the entire historical and projected data series. This procedure is appropriate because the objective is a series that describes the past and future economic structure of a given area.

Economic-area projections

Projections for the BEA economic areas are based on an extension of past economic relationships and assume no major policy changes; they are baseline projections. The projections were made in four steps. In the first step, the national projections were developed. In the second step, the national projections were distributed among the States according to the historical record of each State's share of the national totals. In the third step, projections for each State were distributed among substate areas according to the historical record of each substate area's share of the State totals. In the fourth step, the substate-area projections were summed to arrive at projections for the economic areas. (6)

Table 1 shows summary estimates for 1988 and projections for 1995 and 2000 for all 183 BEA economic areas.

(1) Kenneth P. Johnson, John R. Kort, and Howard L. Friedenberg, "Regional and State Projections of Income, Employment, and Population to the Year 2000," SURVEY OF CURRENT BUSINESS 70 (May 1990): 33-54; Regional Economic Analysis Division, "Metropolitan Statistical Area Projections of Income, Employment, and Population to the Year 2000," SURVEY 70 (October 1990): 26-30.

(2) U.S. Water Resources Council, 1972 OBERS Projections, Regional Economic Activity in the U.S., Volume 1: Concepts, Methodology, and Summary Data (Washington, DC: U.S. Government Printing Office, 1972). See also Regional Economic Analysis Division, "The BEA Economic Areas: Structural Changes and Growth, 1950-73," SURVEY OF CURRENT BUSINESS 55 (November 1975): 14-25.

(3) U.S. Department of Commerce, Bureau of Economic Analysis, BEA Economic Areas (Washington, DC: U.S. Government Printing Office, 1977).

(4) Only one change has been made to the 1977 economic-area boundaries. In 1983, the Office of Management and Budget reassigned Monroe County, MI, from the Toledo, OH, MSA (BEA Economic Area 70) to the Detroit, MI, MSA (BEA Economic Area 71); the 1977 boundary between BEA Economic Areas 70 and 71 was changed to reflect this reassignment.

(5) The metropolitan complexes chosen in the 1977 definition of economic-area boundaries do not always correspond to the consolidated metropolitan statistical areas (CMSA's) subsequently defined by the Office of Management and Budget. However, each metropolitan complex and its CMSA counterpart are in the same BEA economic area.

(6) The substate areas are defined so that their boundaries do not cross State or economic-area boundaries. Additional information on projection methodology is available in the three-volume set, BEA Regional Projections to 2040; see the box on data availability for ordering information.

BEA's regional projections program is under the guidance and direction of Hugh W. Knox, Associate Director for Regional Economics. The BEA economic-area projections were prepared under the supervision of Kenneth P. Johnson, Chief of the Projections Branch of the Regional Economic Analysis Division, by Lyle Spatz, Duane G. Hackmann, Gerard P. Aman, George K. Downey, and John S. Turner. The projections were developed from historical estimates of earnings, income, and employment prepared by the Regional Economic Measurement Division under the direction of Linnea Hazen, Chief.
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Title Annotation:United States. Bureau of Economic Analysis
Publication:Survey of Current Business
Date:Nov 1, 1990
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