Wednesday, August 20, 2014

MAP: Where in the US is the economy growing?


We tend to talk about the US economy as one big, unitary whole, but that's not always the best way to think about it. While the US economy grew at a modest pace of 1.8 percent last year, that growth was really uneven. The Commerce Department reported Wednesday that the North Dakota economy, for example, grew by 9.1 percent in 2013, while Alaska's GDP fell by 2.5 percent.

The economies of those fast-growing states often looked far different from the rest of the country's economy. For example, while mining barely contributed to national GDP growth, it was a major reason why North Dakota, Wyoming, Colorado, West Virginia, and Oklahoma had such strong years. The oil and gas boom in North Dakota has helped it lead the nation in GDP growth since 2010.

Meanwhile, a bad year in a given industry can really bring a state down. Only two places — Alaska and the District of Columbia — had declining GDPs last year. Lower oil and gas production from Alaska's North Slope helped drag Alaska's GDP down by 2.5 percent last year. Likewise, the decline of the government sector helped drag DC down. Nearly one-third of the District of Columbia's economic output comes from the federal government.

But it's not exactly that the western states saved the nation from economic ruin last year, and that's because the math of this can be deceiving. North Dakota and Wyoming's GDPs may have exploded, but those two states also have small economies compared to states like New York, where growth was only 0.7 percent last year. In other words, add $1 billion to Wyoming's 2013 GDP ($45.4 billion) next year and it will be a bigger percentage change than if New York ($1.3 trillion) tacks on a billion dollars.

Yes, national economic indicators matter, but maps like this also emphasize that simply thinking in national terms obscures some very important trends. In practice, there's not just one big economy or labor market; there are also a lot of smaller ones based on industry and geography.

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