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Impact of Sequester: Economic Impact Estimates will Become Less Reliable and More Expensive to Produce

The Bureau of Economic Analysis (BEA) is planning to make significant program cuts as a result of the Budget Control Act of 2011 and the Sequester of funding. One such program that is in danger of being cut is the Regional Input-Output Modeling System (referred to as RIMS II).

RIMS II has served as a critical tool used for economic analysis for decades. It is used to describe how changes in economic activity (spending) impact jobs, earnings and additional spending in a specific region. It is the basis for projecting changes in jobs, earnings, and tax revenues, resulting from projects such as major hotel and casino developments, airport construction efforts, chemical plants expansions, as well as the jobs and spending created by major events such as the Super Bowl or the Final Four NCAA National Basketball Championship.

Since the 1970s, BEA has collected and processed economic data in order to generate RIMS II and offer it to the public on a cost-recovery basis. RIMS II is a commonly used tool by universities, public agencies, and private business alike.

The BEA has announced that effective immediately, the RIMS product will no longer be updated. Furthermore, effective September 30, 2013, all current versions and historical RIMS products will no longer be available for purchase.

On June 19th, the BEA released the following statement about the production RIMS II:

“BEA will eliminate its RIMS II product, which currently generates products on demand as events warrant. The RIMS II program will continue to accept and process orders, which are fulfilled on a cost-recovery basis, through the end of the fiscal year. BEA will not build and develop the data needed to update the data set and fulfill orders in future years.”

The BEA intends to discontinue RIMS II by September 30 of this year and estimates that cutting the program will save $1.4 million. This represents only 0.00016% of the Department of Commerce’s total budget of $9 billion in FY13, yet it will gravely impact the ability of  public agencies and private businesses to demonstrate how projects and initiatives can benefit the general public.

RIMS as a Share of Commerce Department Budget

RIMS II will not be easily replaced by a private sector solution, since most of these alternatives have historically relied upon the BEA and RIMS II in their own development. Without the collection and reporting of the data from BEA, these private sector alternatives will no longer be based on the independent and verifiable information. These potential private sector alternatives are also substantially more expensive than RIMS II, which was produced on a cost-recovery basis by the federal government.

TMG Consulting has reached out to our federally elected leadership and have urged them to support any efforts that would allow the reinstatement of the RIMS II program within the BEA budget. TMG would also ask that any other parties that rely upon the RIMS II program do the same.

Contributed by: Eric Melancon & Bonnie Garrigan

Eric Melancon is an Associate for TMG Consulting who specializes in evaluating economic impacts of major developments and events. Bonnie Garrigan is the Manager of Economic Analysis for TMG Consulting.


The views, interpretations, or strategies expressed are those of the authors, and do not necessarily reflect the position of TMG Consulting. This site is meant for educational purposes only and does not constitute professional advice. TMG Consulting makes no representation as to accuracy, completeness, or suitability of any information on this site and will not be liable for damages arising from its display or use.

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