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The business economist at work: regional analysis in a state bureau of economic and business research.

State Bureaus of Economic and Business Research are a good source of state and local economic data and expertise. The economic forecasting program at the University of Florida is described in detail.

INFORMATION DRIVES THE modern economy. Everyone knows that thousands of people move to sunny Florida from the cold north after retirement every year. But how many know that almost two-thirds of Florida's in-migrants are still in the labor force?

Everyone knows that Sarasota has one of the highest concentrations of elderly in the nation, but how many realize that almost half of the personal income in that metropolitan area comes from interest earned on savings accounts and other types of property?

Everyone knows that the U.S. has lost several million manufacturing jobs since 1979 and that it is unlikely those jobs will be regained anytime soon, but how many know that Florida has gained about 80 thousand manufacturing jobs during the same time and is forecast to gain as many more over the next decade and a half?

Collecting data, analyzing and interpreting data, and then getting that data analysis to people in the public and private sectors is what the University of Florida Bureau of Economic and Business Research is all about.

Most states have a similar bureau at one or more universities. Many of them are engaged in economic forecasting or at least in tracking current economic statistics. Many are also engaged in population estimation and projection. These bureaus (which go by many names) often are the best source of local economic and demographic information. If one needs information on all states, all Metropolitian Statistical Areas (MSAs), and all counties in the U.S., a single national source is perhaps more economical. But if one needs information on particular states, MSAs and counties, then a state bureau often has the most knowledgeable staff and publications with the right information. Check out the bureau in your state.


The Bureau at the University of Florida is relatively large and performs many activities. These are grouped into four programs: Economic Forecasting, Population Estimation and Projection, Consumer Survey, and Local Government. I will focus on economic forecasting in this article but mention the other programs as well because of the interdependence of their work.

The Bureau takes seriously both its major tasks of academic research and practical research. The Bureau is highly regarded by the business community in Florida. Its credibility is enhanced by its ties to the College of Business Administration. The Bureau is also highly regarded by the College for the articles published in academic journals regarding forecasting methodology.

The focus of the economic forecasting program is employment, income and construction. Both quarterly and long-term (ten to fifteen years) economic forecasts are made. To accomplish this we must do several things: gather and process data, analyze data, and disseminate research findings.


Perhaps the greatest frustration in regional economics is the lack of extensive high-quality data for countries and MSAs. Data collection is difficult and expensive -- but essential. Therefore, the Bureau devotes considerable resources to data collection. The Bureau's data collection activities are of two types:

1. We gather all the important economic statistics generated by other private and public statistical agencies. Many of these data come from federal agencies, but the state of Florida also estimates the number of visitors to the state by mode of travel, and compiles sales tax data by kind of business. In addition, employment statistics are produced by a cooperative effort of the state and federal governments.

2. We conduct our own surveys to gather other data, primarily electric customer data and consumer confidence. The electric customer data come from a mail survey of electric utilities and are the basis of our population estimates.

The consumer confidence data come from a telephone survey begun in 1983; it is a source of much good economic data. We are currently using the survey to make experimental estimates of the amount of in-migration to the state and characteristics of the in-migrants.

Gathering the data is just the beginning of the process. Using building permit data from the Census Bureau, we prepare estimates of single-family and multifamily housing starts by county. Much of our effort is devoted to adjusting the MSA data so that they refer to the area within a common boundary over time. As a rapidly growing state, Florida has gone from seven MSAs in 1960 to twenty currently. The boundaries of these MSAs have changed from time to time as population growth and commuting patterns have changed. Other data such as county labor force data have undergone several major methodological revisions in collection. The source agency does not maintain the data as a time series, so we have had to adjust them as well to maintain historical comparability. The gross sales data generated by the state Department of Revenue must be adjusted for anomalies. The list of details that must be attended to goes on and on. Economists who rely basically on the National Income and Product Accounts may not have any idea of the amount of resources regional workers must devote to maintaining their time series data. In our Bureau, all of this must be done for sixty-seven counties, twenty MSAs and the state.

The job requires close and continual contact with the state Department of Labor regarding employment data. Although some of these data eventually are released in Employment and Earnings, there is a long publication lag that can be shortened considerably by dealing with the state department directly. However, there is a more important reason for doing so, highlighted by the publicity given to the poor quality of the national establishment employment data during the recent recession. The employment data are benchmarked to a complete count of wage and salary jobs once a year. Between benchmarks, employment is estimated by means of a survey. During periods of rapid growth or decline (the most interesting phases of the business cycle) the survey can provide very misleading indications. The Bureau can mitigate this to some extent by benchmarking the data ourselves, because the complete count is made monthly, albeit with a six-month lag.

Our economic and population forecasting tasks require the use of an extensive array of data. It is only natural that the Bureau also publishes a state statistical abstract. The staff that puts it together is very knowledgeable about data, sources, and limitations.


Formal data analysis consists to a large extent of estimating and testing econometric models and then using the models to produce forecasts. The models are under continual development. Unlike national models that are used for several years before reestimation, our models are reestimated before every use. Why? One reason is that, with the short time series available, every observation helps to increase the efficiency of the estimates.

Short-term forecasts (two to three years) are produced quarterly for the state and the metropolitan areas. Detail is restricted to the major income, employment, and construction aggregates along with population.

Long-term forecasts (up to fifteen years) are produced annually for the state, the MSAs, and counties and have much more detail than the short-term forecast. The forecasting process is quite intensive since the models are not merely "spun" to produce a mechanical forecast. The MSA models (and models for the nonmetropolitan balance of the state) are simulated independently and their forecast compared to the forecast from a state model. Discrepancies between the sum of the areas and the state are then resolved on a variable-by-variable, year-by-year basis. Afterwards, the forecasts of the MSAs and the nonmetropolitan basis are allocated to the counties. In this process every forecast number is scrutinized and most are adjusted to some degree. Producing the long-term forecast takes about five months from the time the data are prepared to the distribution of the forecast publication.


The Bureau's research findings are disseminated in a variety of ways, through presentations of forecasts and forecasting methodology at conferences, through our publications, the news media, and personal contacts. Some of the economic and demographic publications include:


The Florida Outlook (short-term economic forecast)

The Florida Long-Term Economic Forecast

Economic Leaflets (short research summaries)

Florida Statistical Abstract

Florida Estimates of Population

Population Studies (population projections)

Special data:

Gross and Taxable Sales

Building Permit Activity in Florida

Monthly news release:

Florida Consumer Confidence Index

Long-term forecasting is done first and foremost to provide local government (cities and counties) with some guidance in developing plans in accordance with the growth management laws. However, much of the interest in the forecast comes from developers, builders, and bankers. Some of the banks have their own economists who study the Florida economy and there are several well-respected private regional economic consultants. We are in continual contact with them. Being in the College of Business Administration, we also provide assistance to students and faculty doing research on regional economics.


The job requires a thorough knowledge of the data, how they are compiled, how different data series relate to each other, and their relative strengths and weaknesses. It requires good statistical and econometric skills, as well as good economic common sense. The former can be learned in a classroom, the latter only with hands-on experience.

The economic forecasting program employs four professional economists and a professional statistician. Two of the economists hold PhDs and the other two economists and statisticians hold master's degrees. The Bureau also employs another PhD economist who studies current economic issues. In addition there are support personnel for computers, publications, secretarial services, etc.

One of the major sources of job satisfaction comes from keeping abreast of the vigorous pace of change. It is said that the best test of a theory is prediction. At the Bureau we are continually putting our theories to the test.
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Author:Lenze, David
Publication:Business Economics
Date:Jul 1, 1992
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