U.S. Bureau of Economic Analysis Will Measure Contribution of the Arts to Gross Domestic Product

There is some good news from the National Endowment for the Arts today as they unveil a partnership that will report the financial contribution of the creative sector in the U.S. economy. We all know how the arts improve our lives, encourage critical thinking, redevelop our communities and form the backbone of all learning, but explaining the economic impact has always been a hard case to make. This news is encouraging:

For the first time, the American creative sector will be measured on a macroeconomic level by the Bureau of Economic Analysis (BEA), the federal agency of record on the U.S. economy and a part of the U.S. Department of Commerce. In a groundbreaking partnership, the BEA and the National Endowment for the Arts will develop an "Arts and Cultural Production Satellite Account" (ACPSA). This new account will identify and calculate the arts and culture sector's contributions to the Gross Domestic Product (GDP), a measure representing the final dollar value of all goods and services produced in the United States. The ACPSA will collect detailed information on a select group of arts and cultural goods, services, and industries -- both commercial and not-for-profit -- that are currently reflected in the GDP. The NEA announced the news today at the public session of the National Council on the Arts.

"Before this, you could look at pieces of the puzzle, now you can see the whole puzzle," said NEA Chairman Rocco Landesman. "Our partnership with BEA gives the arts the same level of precise, national data on GDP as other sectors like manufacturing, construction, and services. I think economists and policymakers will take notice."

The BEA satellite account reflects the NEA's new research agenda, which has begun to look at 'impact analysis,' or how the arts affect various domains of human life, such as the economy, human development, science and technology, and education. Starting this year, the Arts and Cultural Production Satellite Account will identify and measure industries and commodities that involve creative or cultural engagement, or help bring creative and cultural goods and services to the public. For example, the satellite account will include national-level data on the number of people employed by museums, or theater production expenses, or revenues at architectural firms. Additionally, the account can report figures on worker compensation in the music industry, or the value added by the book publishing industry to the U.S. economy. The arts satellite account will tap into data to which only certain agencies have routine access, and it uses the same methodology as existing BEA satellite accounts on travel and tourism, research and development, and health care.

This new satellite account will offer far more detail, and far more precision on the arts sector. Previously, the BEA reported estimates for select arts domains (such as the performing arts) every five years with the benchmark Input-Output Table, and the estimates were very broad, sometimes combined with other sectors such as sports and recreation. The ACPSA will delve into specific industry details; in the performing arts category for example, it will parse data on dance, theater, and music. The ACPSA will also include estimates of “direct” employment, such as employment at publishing firms or art dealerships, as well as “indirect” employment, which refers to employment in industries that produce goods and services for the arts and cultural industries.

In 2013, both BEA and NEA will release preliminary estimates on relevant creative and cultural industries, including estimates on annual outputs (such as revenue and expenses), direct and indirect employment, compensation, and "value-added," which refers to an industry's contribution to the economy through its labor and capital, excluding material and energy costs. In 2014, BEA will release final estimates, and publish the findings in The Survey of Current Business, a key publication for leaders in economics and policy.