While reading through the Bureau of Economic Analysis's “New and Revised Statistics for the U.S. Space Economy, 2012–2021,” I felt reassured upon seeing the following statement in the analysis:
The government statistics do not include spending by government for space activities contracted to private industries; that spending is included in the private industry that makes the product for the government.
The U.S. Space Economy–Less Counting, More Accurate
The BEA is looking at the U.S. space economy and not the world’s, so the numbers in its research are different from other industry research/booster organizations already. But that statement all but assures the Bureau’s numbers will be different from the others for the U.S., too–and that’s a good thing.
It’s a good thing because the statement shows that the folks at the BEA aren’t making the mistake that many space analytics businesses make (if I’m being kind), which is double counting. Too often, satellite or rocket manufacturing is added to the various space economy numbers floating around, which would be fine. But then the government budgets for the various programs using those satellites and rockets are also included. Not only, then, is the revenue of various commercial companies counted, but it’s counted again as a part of government spending.
The double counting allows for at least two things to happen. The most obvious result is that it makes the space economies of various countries appear more extensive and more vibrant than they are. The next logical step is pure GIGO (garbage in, garbage out). That impression of growth and vibrancy drives some government and company decisions, deriving their plans from them, which isn’t a great situation.
I’m not saying all space research companies are guilty of double counting, but there are a few who do (and of those, some may not even realize they are doing it).
Valuing Data, not Feelings (nor Funding)
All this is to note that the data the BEA publishes in its U.S. space economy analysis is likely more accurate than some of the data from other industry research/booster organizations. It’s also likely that the BEA’s published space industry data will not consider the possibility of “hurting” stakeholders’ feelings. That means while its economists might see the words new space and smallsat, the marketing baggage related to those terms likely holds no value. At least, that’s what the BEA’s website indicates: “…a source that's nonpartisan, nonpolitical, and neutral on policy.”
It doesn’t matter to the BEA if the data doesn’t show the U.S. space economy as not growing at a time when others were saying something more optimistic. The data the Bureau is reporting is based on the data gathered and interpreted through the experience of actual economists. Those economists have literally looked at the bigger picture–the overall U.S. economy—and understand fundamentals in a way I will never be able to. It takes a particular kind of personality to become an economist. I freely admit I’ve striven never to develop that personality.
The upshot of the BEA’s work and its entry into the U.S. space economy analysis is that the industry now has another source for verifiable and accurate (we hope) data. The data comes from an organization with no space industry leanings towards legacy, new space, smallsat, or whatever else the industry flavor of the day is. Its data should provide an accurate guide for businesses seriously interested in the space industry. At the very least, it provides a source for informed discussion.
The Incredible Shrinking Economy
Those businesses should be aware that according to one author’s interpretation of the data, the U.S. space economy grew between 2012 and 2021. However, it grew at 3% annually (instead of the 5% annual growth of the rest of the U.S. economy). From work I’ve done for other organizations, that sounds about right. But 3% is a far cry from the growth others predicted during those years. Of course, a few rely on zombie space statistics, which invariably provide inflated industry numbers.
In “New data reveal US space economy’s output is shrinking – an economist explains in 3 charts,” the author also notes that the BEA’s data points to the U.S. space industry’s economic impact through gross output took not only a microscopic share of total U.S. gross output in 2021 (half a percent), it also shrank during 2012 through 2021 (not much–about 0.12%). These numbers contradict what seems to be an active space economy in the U.S. Certainly more active than in the 1990s and 2000s.
If the BEA scoured and published its analysis of U.S. space industry data from earlier decades, the share of the overall U.S. economy and gross output would be significantly less. At a guess, the U.S. space economy between 2012 and 2021 was booming relative to prior decades. The space industry’s activities in the years prior indicate that.
ULA emerged in the 2000s because neither Boeing nor Lockheed Martin wanted to compete for sparse but juicy government launch contracts. Annual satellite deployments were also low during those decades, but the government paid beaucoup bucks for the manufactured and deployed satellites. The shrinking can also be attributed to the part of the growing space industry that yields less revenue than the legacy satellites and launches: smallsats.
Smallsats are useful, and the number of operators embracing a smaller satellite form factor has grown. Smallsats are also popular because they are relatively inexpensive compared to legacy satellite manufacturer offerings. Launch also faces changes. Smallsat launch services are still an expensive way to launch per kilogram, but the overall cost of the launch is much less than using a ULA rocket.
Again, I'm just guessing, but the gross output might be shrinking, not because of a less vibrant industry. The industry is going through technology changes, adopting hardware, software, and processes from the enormous tech industry (which was something the risk-averse legacy space company couldn’t contemplate). It would be interesting to compare the Real Growth in Gross Output between the U.S. space industry and similar changes in the tech industry. I suspect the space industry lags behind the tech industry by a decade or so.
All of the above is to demonstrate that the BEA’s statistics are helpful, not just for providing a valuable picture of the U.S. space economy. It provides information for businesses contemplating their next move. Instead of boggling the mind with insane growth predictions, the BEA’s lack of interest in hyperbole is refreshing–and needed.