On March 29 last week, the Bureau of Economic Analysis (“BEA”) announced that new multipliers for the Regional Input-Output Modeling System (“RIMS II”) had been released. The new multipliers have been updated to reflect 2016 regional data; they replace the previous multipliers, which had been based on 2015 regional data and had been released at the end of 2016.
We took a preliminary look at the multipliers for the New York City metro area for some of the industries that often appear in our EB-5 economic studies: the four construction industries, architecture and engineering services, hotel services, and food services. The quick look indicates that, for final-demand effect on employment, there has been an extremely slight decrease for most industries (between -0.7% and -2.6% for seven industries), an extremely small increase (0.9%) for one industry, and no change for the last industry. Across the board, the direct-effect employment multiplier increased slightly, between 0.2% and 2.9%. Consequently, the indirect-and-induced-effect also shows a slight increase across all industries, between 0.8% and 1.8%.
The BEA resumed the annual updates to the RIMS II multipliers in 2015; previously, updates had been on hold since 2012 due to limited funding. Updated multipliers were released in late 2015 and in late 2016; the next release was therefore expected in late 2017 but was delayed until just last month. While the annual update this year was released a couple months later than in previous years, it appears that the BEA is still on track to continue providing annual updates – allowing for more accurate estimates of regional economic impacts.
The data underlying the RIMS II multipliers comes from two sources: national input-output data and regional input-output data. The regional data is used to adjust the national data to illustrate region- and industry-specific industrial structures and trading patterns. The multipliers released in 2015, in 2016, and this year all incorporate updated regional data, which is updated annually by the BEA.
Updates to the national data, which occur less frequently, are generally expected to result in larger changes to multipliers than the annual updates to the regional data. According to previous statements, the BEA updates the national input-output data for “benchmark” years, which occur every five years (years ending in -2 and -7). Currently, the benchmark year national data that underlies the multipliers is from 2007. The BEA projects that in 2019, the annual update will include an update of both national and regional data, and it is expected that the national data will be updated from 2007 to 2012.
RIMS II continues to be the most-used model for estimating job creation in the EB-5 industry. We wrote a detailed article for IIUSA’s Regional Center Business Journal last year that covers how job creation for an EB-5 project might be impacted for the annual release and discusses some situations where an updated economic study based on the new multipliers may or may not be needed for an EB-5 investor or EB-5 project.
If you have any questions about how EB-5 job creation is estimated, or if you’re wondering if the new RIMS II multipliers release may affect you, please don’t hesitate to reach out to our EB-5 team!
