First Quarter GDP Numbers Reveal Thriving Coasts, Struggling Interior
This week, the U.S. Bureau of Economic Analysis released their Gross Domestic Product numbers for each state and region for the first quarter of 2016, which saw increases in GDP for 37 states plus the District of Columbia. The aggregate change for the U.S. as a whole for first quarter GDP was a growth rate of 1.2%, down from 1.7% in 2014. These U.S. numbers are slightly different from the numbers commonly reported for the nation in other reports, as they do not include overseas economic activity of the Federal government.
States are grouped by the BEA into eight separate geographical regions. Looking at the top and bottom performers in the fourth quarter, we see that two of the top three states, Oregon and Washington, are both in the Far West region. Colorado at number four is in the Rocky Mountain region, directly east of the Far West region. Arkansas, the top performer, and New Hampshire, number five, are in the South East and New England regions, respectively. Michigan, Arizona, Utah, Maine, and Maryland make up the rest of the top ten states. All together, three BEA regions, New England, Rocky Mountain, and Far West have two states in the top ten.
BIGGEST MOVERS – STATE GDP 4TH QUARTER 2015
TOP FIVE:
- Arkansas – 3.9%
- Oregon – 3.9%
- Washington – 3.9%
- Colorado – 3.0%
- New Hampshire – 2.9%
BOTTOM FIVE:
- West Virginia – -2.5%
- Iowa – -2.6%
- South Dakota – -2.8%
- Wyoming – -4.9%
- North Dakota – -11.4%
Looking at the lower performing states in first quarter GDP growth takes us to the nation’s interior. Low oil prices continued to have negative impacts on the state economies of the northern Rocky Mountain and Plains regions. North Dakota, Wyoming, and West Virginia are among the top ten states in terms of oil, gas, and mining as a percentage of their state economies, according to work done by Lucy Dadayan and Donald Boyd at the Rockefeller Institute of Government.
As you can see from data courtesy of Bloomberg, crude oil bottomed out below $30 a barrel in the first half of Q1 2016. Oil recovered to peak at over $50 a barrel in the second quarter, but has lost over 19% of its value since that peak as of 07/29. We will see to what extent recovering oil prices help these hard-hit states, particularly North Dakota, which has seen double-digit percentage GDP losses in three of the past five quarters going back to the beginning of 2015.
The map below is provided courtesy of the Bureau of Economic Analysis, and breaks out each region. The colors define tiers of performance, and illustrate the significant movements in the Rocky Mountain and Plains regions. Michigan, Arizona, and Kansas all outperformed all other states in their respective regions. With the exception of Alaska, all oceanic coastal states experienced positive growth. New England and the Mideast regions saw positive growth in every state.
HOW REGIONS RANK
MuniNet ranked the eight regions categorized by the Bureau of Economic Analysis by growth rate for the first quarter GDP of 2016, and compared to the growth rates in the fourth quarter of 2015 and corresponding rankings. We highlighted which states fell or rose in the rankings; the Southwest and Plains region held steady in the seventh and eighth spots respectively. We also pointed our the biggest movers. The Far West and Rocky Mountain regions each jumped up two spots, from third and fourth in Q4 2015 to first and second in Q1 2016. New England, although still seeing positive growth, fell from being the top performing region last quarter to fourth in Q1.
Data Source: U.S. Bureau of Economic Analysis
Taking a deeper look at the data shows much going on underneath the surface of the overall national figures. Clear clusters of strong and weak performing states are revealed. Our state economies influence he we perceive the country is doing. However, economists are looking at other factors, debating whether GDP is the best measurement of economic performance. Access to the full set of data provided by the BEA can be found here.
by Jeffrey L Garceau