Monday, October 5, 2015

Gross Domestic Product and Metropolitan Statistical Areas

By Lecia Parks Langston, Senior Economist

“Too much and for too long, we seemed to have surrendered personal excellence and community values in the mere accumulation of material things. . . It (Gross National Product) measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.” Robert Kennedy

While Gross Domestic Product (GDP) may not measure everything, it certainly remains our most comprehensive measure of economic activity. If you have forgotten that Econ 101 course, GDP represents the market value of all goods and services produced in a given time period.

In recent years, the U.S. Bureau of Economic Analysis has upped its game by publishing GDP estimates for Metropolitan Statistical Areas (MSAs). The most recent set of estimates (which includes preliminary 2014 data) just hit the streets last week. These estimates have been adjusted for inflation and therefore have been dubbed “real” GDP.

While the information is somewhat dated when compared to jobs data, it provides an additional analytical tool in our study of local-area economics. The data visualization which accompanies this post also includes detailed industry-level estimates for all U.S. MSAs (see tabs).

What do the data show for Utah’s five Metropolitan Statistical Areas?

  • With 4-percent expansion, the St. George MSA (Washington County) presented the fastest 2013-2014 GDP growth in Utah, with Ogden-Clearfield MSA (Box Elder, Weber, Davis and Morgan counties) following close behind with an expansion rate of 3.9 percent.
  • Both the St. George and Ogden-Clearfield MSAs showed expansion far higher than the national MSA average of 2.3 percent.
  • Nevertheless, most Utah areas trailed far behind the MSA-growth leaders. For example, Midland, TX showed an extraordinary 24-percent rate of GDP growth between 2013 and 2014. In fact, Texas claimed five of the top 10 GDP-growth leaders. However, with the recent collapse of oil prices, this performance seems unlikely to continue through 2015.
  • Almost three-quarters of the country’s MSAs generated growth in 2014. All Utah’s MSAs were encompassed in that group.
  • The Utah MSA with the highest population, Salt Lake City, MSA (Salt Lake and Toole counties) showed the slowest Utah expansion (2.2 percent), just slightly below the national average.
  • In most cases, the business cycle dictated growth and contraction in GDP. However, the Logan, UT-ID MSA (Cache County and Franklin County, ID) experienced only a slight drop in GDP during the recession (2009) with a much stronger decline in occurring in 2012.
  • Prior to its strong recent showing, the Ogden-Clearfield MSA also experienced a 2012 decline.
  • In the Salt Lake City, Provo-Orem, and St. George MSAs, recessionary GDP declines began in 2008. The St. George MSA experienced three straight years of GDP contraction during the recession.

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