A more detailed set of estimates released Tuesday by the federal Bureau of Economic Analysis pinpoints the kind of trends — such as increases in both the oil and tourism industries — that account for the territory’s consistent growth in gross domestic product (GDP) from 2003 to 2007.
Preliminary reports released in May show that GDP in the territory outpaced the other insular areas and the nation during the same time period. During this time, the average annual rate of growth in American Samoa was 0.4 percent, while Guam’s grew annually by 1.8 percent, and the Commonwealth of the Northern Mariana Islands actually decreased at an average annual rate of 4.2 percent.
Meanwhile, GDP in the U.S. Virgin Islands grew at an average annual rate of 2.9 percent, edging out the national estimate, which showed an annual 2.8 percent rate of growth during the same period.
A look at the more detailed estimates this week show a range of highs and lows over the four years, but according to federal officials, those fluctuations correspond with spikes and drops in areas such as construction, the price of oil and consumer spending. For example, the category of private fixed investment — money spent by businesses on buildings or equipment — took a large jump in 2005, when some of the territory’s major projects, such as the Yacht Haven Grande development on St. Thomas broke ground, then dropped substantially in 2007 when the projects wrapped up, according to Carol E. Moylan, chief of BEA’s National Income and Wealth Division.
It’s for that reason the numbers in the same category are low in 2003, she explained during an interview Tuesday, adding that other projects, such as the Hovensa coker plant, were either complete or almost complete by that time.
Further, after showing growth from 2003 to 2005, the territory’s tourism industry shows negative growth in 2006 and 2007, which, according to V.I. Bureau of Economic Research (BER) head Lauritz Mills, accounts for a decrease in passenger spending.
Meanwhile, the category of government spending on the territorial level shows the most consistent rate of growth, peaking in both 2006 and 2007. According to Moylan, contributing factors include an uptick in government construction projects, along with an increase in taxes from major contributors such as Hovensa.
Mills said the numbers — compiled for the first time on the national level — will help local officials and policy makers take a good look at each sector and figure out what works and what doesn’t.
"For example, we see that we have a large dependency on oil, and those numbers can maybe help us determine whether we want to make some changes in our manufacturing sector to address that," she explained Tuesday.
Unlike the states, where the federal Bureau of Economic Analysis is required to generate these kind of numbers, there previously was no such mandate for the territories, so the local BER has done much of its own legwork of years.
More recently, however, the Interior Department’s Office of Insular Affairs has begun to supply the funding needed to develop a framework for measuring GDP within the territories, and through a Memorandum of Agreement has enabled federal BEA officials to work hand in hand with each of their counterparts on the local level to compile this first set of estimates.
"We wanted the territory to have U.S. official government-sanctioned GDP estimates," Wali Osman, regional economist for the Office of Insular Affairs under the U.S. Interior Department, said in an interview Tuesday. "It gives them official statistics which they can use for important policy decisions and comparisons against the other states and territories."
Estimates for 2008 and 2009 should be released in the spring of 2011, said Brian C. Moyer, BEA’s associate director for industry accounts. Moyer added that new indicators, such as personal income levels and savings rates, are being researched, but might not necessarily be included in the upcoming two years’ data.
Moylan, Moyer, Osman and BEA project manager Aya Hamano were in the territory this week to brief local officials on the new details.
“With this new economic framework, we are able to better gauge V.I. economic activity, including expenditure levels for households and businesses, as well as incomes earned from production," Gov. John deJongh Jr. said in a statement Tuesday. "This information is very useful in capturing an economic snapshot of the territory during a certain time period, and marks a tremendous achievement by the U.S. Department of Commerce toward that end."
