News Release: GDP by Metropolitan Area, Accelerated 2008, New 2007, and Revised 2005-2006
ECONOMIC SLOWDOWN WIDESPREAD IN 2008
New statistics released today by the U.S. Bureau of Economic Analysis show that the slowdown in U.S. economic growth was widespread: 60 percent of metropolitan areas saw economic growth slow down or reverse. Real GDP growth slowed in 220 of the nation's 366 metropolitan statistical areas (MSAs) in 2008 with downturns in construction, manufacturing, and finance and insurance restraining growth in many metropolitan areas. Growth in real U.S. GDP by metropolitan area slowed from 2.0 percent in 2007 to 0.8 percent in 2008.1
Real economic growth slowed in all eight BEA regions, but three were particularly hard hit—the Southwest region experienced the largest deceleration, the Southeast region slowed to no growth, and the Great Lakes region contracted. Metropolitan areas in the Southwest region were slowed by a decline in nondurable goods manufacturing. Declines in construction, manufacturing, and finance and insurance caused metropolitan areas in the Great Lakes and Southeast to slow or contract.
In 2008, real GDP by metropolitan area declined in 111 of the 366 MSAs. Many metropolitan areas in the Sun Belt, which had previously experienced large growth in the housing market, were adversely affected by protracted housing declines. Much of the decline in the housing-related industries (construction and finance and insurance) can be attributed to metropolitan areas in Arizona, California, Florida, and Nevada. Specifically, the areas of Los Angeles-Long Beach-Santa Ana, CA; Miami-Fort Lauderdale-Pompano Beach, FL; Phoenix-Mesa-Scottsdale, AZ; and Reno-Sparks, NV were hard hit. Metropolitan areas in Florida—Cape Coral-Fort Myers, FL; Punta Gorda, FL; Naples-Marco Island, FL; Palm Coast, FL; and Bradenton-Sarasota-Venice, FL—were among the hardest hit in the nation by the construction slowdown.
In contrast, growth accelerated in 146 metropolitan areas, most notably in areas where natural resources and mining industries are concentrated such as Casper, WY and Grand Junction, CO. Grand Junction had the fastest real GDP growth (12.3 percent) of any metropolitan area in 2008 due largely to growth in natural resources and mining. The professional and business services industry group also showed strong growth in 2008, contributing the most to real GDP growth in 112 metropolitan areas.
Per capita real GDP by metropolitan area in 2008. San Jose-Sunnyvale-Santa Clara, CA had the highest per capita real GDP in 2008 of $82,880, which was almost twice the U.S. metropolitan area average. San Jose's ranking reflects its high concentration in the information and data processing sector. Palm Coast, FL had the lowest at $11,611, which was 72.2 percent below the U.S. metropolitan area average.
Accelerated Statistics of GDP by Metropolitan Area for 2008 by NAICS Sector
This is the first release of accelerated GDP-by-metropolitan-area statistics. These accelerated statistics for 2008—released one year earlier than previous statistics—are prepared for NAICS sectors and are based on a more limited set of source data and on an abbreviated estimation methodology compared to the data and estimation methodology used to prepare the new 2007 statistics and the revised statistics for 2005-2006. The accelerated GDP-by-metropolitan-area statistics are based primarily on preliminary earnings-by-industry data from BEA's regional economic accounts, released August 6, 2009, and on advance GDP-by-state data released June 2, 2009.
More information on the methodology used to produce the accelerated 2008 statistics, on the new statistics for 2007, and on revisions to the GDP-by-metropolitan-area statistics for 2005-2006 will appear in an article in the October 2009 issue of the Survey of Current Business, BEA's monthly journal.
Definitions. GDP by metropolitan area is the sub-state counterpart of the nation's GDP, the Bureau's featured and most comprehensive measure of U.S. economic activity. GDP by metropolitan area is derived as the sum of the GDP originating in all the industries in the metropolitan area. Real GDP by metropolitan area is an inflation-adjusted measure based on national prices for the goods and services produced within the metropolitan area. The statistics of real GDP by metropolitan area and of quantity indexes with a base year of 2001 were derived by applying national implicit price deflators to the current-dollar GDP-by-metropolitan-area statistics for the 61 detailed NAICS-based industries.2
The chain-type index formula that is used in the national accounts is then used to calculate the statistics of total real GDP by metropolitan area and of real GDP by metropolitan area at more aggregated industry levels. Real GDP by metropolitan area may reflect a substantial volume of output that is sold to other areas and countries. To the extent that a metropolitan area's output is produced and sold in national markets at relatively uniform prices (or sold locally at national prices), real GDP by metropolitan area captures the differences across metropolitan areas that reflect the relative differences in the mix of goods and services that the areas produce. However, real GDP by metropolitan area does not capture geographic differences in the prices of goods and services that are produced and sold locally.
The U.S. metropolitan area growth rates of real GDP released today may differ from national real GDP growth rates released in July 2009 and the U.S. growth rates of real GDP by state released in June 2009. U.S. metropolitan area real GDP growth may differ from U.S. GDP by state growth due to the exclusion of non-metropolitan areas. Differences with the national growth in real GDP are primarily due to the direct linkage and consistency of GDP-by-metropolitan-area statistics with the most recently released statistics of GDP by state and GDP by industry. At this point in time, GDP-by-state and GDP-by-industry statistics are based upon national real GDP statistics released in July 2008 and have not yet incorporated revisions to national GDP released since.
Metropolitan (statistical) areas. The metropolitan (statistical) areas used by BEA for its entire series of GDP statistics are the county-based definitions developed by the Office of Management and Budget (OMB) for federal statistical purposes and last updated in November 2008. OMB's general concept of a metropolitan area is that of a geographic area consisting of a large population nucleus together with adjacent communities having a high degree of economic and social integration with the nucleus.
The statistics of GDP by metropolitan area in current and real (chained) dollars are available from the Regional Economic Accounts page of the BEA Web site at http://www.bea.gov/regional/index.htm.
The next release of GDP by metropolitan area is scheduled for February 2011.
BEA's national, international, regional, and industry statistics; the Survey of Current Business; and BEA news releases are available without charge on BEA's Web site at www.bea.gov. By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases and announcements.
1. The growth rates may differ from the national rates of GDP growth. See the "Explanatory Notes" for a detailed description.
2. County earnings are not available in 2000 on a NAICS basis. Therefore, the implicit price deflators and quantity indexes were re-based to 2001 in order to compute real GDP by metropolitan area.