From the June 1999 SURVEY OF CURRENT
BUSINESSIn this article, the Bureau of Economic Analysis (BEA) presents new estimates of gross state product (GSP) for 1997 and revised estimates for 1995–96./1/ The new and revised GSP estimates are consistent with the estimates of gross product by industry for the Nation that were published in the November 1998 SURVEY OF CURRENT BUSINESS./2/ The GSP estimates presented here incorporate the results of the most recent annual revisions of State personal income and of the national income and product accounts./3/ The next update of GSP will take place in mid- to late-2000.
The first part of this article discusses the relative performance of various States in terms of growth rates, industry shares of State totals, and State shares of total GSP for the Nation. The second part discusses the revisions to the GSP estimates and the major sources of the revisions.
Comparisons of GSP growth rates and shares of GSP across industries or States provide indications of the relative performance of industries or States. For example, comparing real gross state product growth rates shows the relative performance of particular industries or States. Comparisons can be made of the relative growth rates of real gross state product of a State's various industries or the industries' contributions to the growth rate of that State's economy as a whole. Likewise, comparing the share of total GSP in current dollars that is accounted for by the GSP of an industry over time indicates whether that industry's relative claim on the State's resources is increasing or decreasing.
The rate of growth in real GSP for the Nation in 1996–97 was 4.3 percent (table 1)./4/ Real GSP increased in all States except Hawaii.
By State, the growth rates ranged from an increase of 7.6 percent in Oregon to a decline of 0.2 percent in Hawaii. The five States with the fastest rates of growth in real GSP were Oregon (7.6 percent), New Hampshire (7.5 percent), Texas (6.8 percent), Arizona (6.7 percent), and Colorado (6.5 percent) (chart 1).
In Oregon, the major contributor to the growth in real GSP was durable goods manufacturing, mainly electronic and other electric equipment (table 2)./5/ In New Hampshire, the major contributors were durable goods manufacturing, mainly electronic and other electric equipment; and finance, insurance, and real estate. In Texas, the major contributors were durable goods manufacturing and services. In Arizona, the major contributors were durable goods manufacturing, mainly electronic and other electric equipment; and services, mainly business services. In Colorado, the major contributor was services, mainly business services.
The five States with the slowest rates of growth in real GSP were Hawaii (-0.2 percent), Alaska (0.4 percent), North Dakota (0.6 percent), West Virginia (0.9 percent), and South Dakota (1.7 percent). In Hawaii, the decline reflected declines in finance, insurance, and real estate, mainly real estate, and in construction. In Alaska, the slow growth reflected declines in government, mainly State and local government; and in mining, mainly oil and gas extraction. In North Dakota, the slow growth reflected a decline in agriculture, forestry, and fishing, mainly farms. In West Virginia, the slow growth reflected a decline in nondurable goods manufacturing, mainly chemicals and allied products. In South Dakota, the slow growth reflected a decline in finance, insurance, and real estate.
Industry shares.—In 1996–97, the share of U.S. current-dollar GSP accounted for by private services-producing industries increased 0.5 percentage point, from 63.4 percent to 63.9 percent (table 3)./6/ The share accounted for by private goods-producing industries declined 0.2 percentage point, from 24.4 percent to 24.2 percent./7/ The share accounted for by government declined 0.3 percentage point, from 12.2 percent to 11.9 percent./8/
For individual States, the changes in industry shares show more variation. By State, the change in the share of the private services-producing industries ranged from increases of more than 2.0 percentage points in Delaware, North Dakota, and Nebraska to declines of 0.7 percentage point in New Mexico and 0.6 percentage point in Oregon. In Delaware, the largest increase in share was in finance, insurance, and real estate, mainly depository institutions and holding and other investment offices; in North Dakota, the largest increase was in services, mainly business services; and in Nebraska, the largest increase was in transportation and public utilities, mainly communications. In New Mexico, the largest decline was in services, mainly "other" services. In Oregon, the largest declines were in transportation and public utilities, mainly communications; and in finance, insurance, and real estate, mainly depository institutions.
The changes in the share of the private goods-producing industries ranged from an increase of 1.2 percentage points in New Mexico to declines of more than 2.0 percentage points in North Dakota, Nebraska, and Delaware. In New Mexico, the largest increase was in durable goods manufacturing, mainly electronic and other electric equipment. In North Dakota and Nebraska, the largest declines were in agriculture, forestry, and fishing, mainly farms. In Delaware, the largest decline was in nondurable goods manufacturing, mainly chemicals and allied products.
The changes in the share for government ranged from an increase of 0.4 percentage point in Hawaii to a decline of 0.7 percentage point in Virginia. In Hawaii, the increase in share was in Federal civilian and State and local government. In Virginia, the decline was in Federal civilian and Federal military government.
State shares.—Chart 2 shows the relative size of the State economies in terms of each State's share of current-dollar GSP for the Nation. The 14 States having the largest GSP accounted for nearly two-thirds of the U.S. total; the five largest States are California (12.7 percent), New York (8.0 percent), Texas (7.4 percent), Illinois (4.9 percent), and Florida (4.7 percent). The 21 States having the smallest GSP—mostly States in the western and in the northeastern parts of the Nation—accounted for slightly more than 10 percent of the U.S. total.
In general, the revisions to GSP as a percentage of the previously published estimates for 1995–96 are small. However, the revisions for 1996 are larger than those for 1995, mainly reflecting the incorporation of newly available source data from the Census Bureau's 1996 Annual Survey of Manufactures.
Current-dollar estimates.—For 1996, the five States with the largest upward percentage revisions were Oregon, Delaware, New Hampshire, Hawaii, and Utah (table 4). The five States with the largest downward percentage revisions were South Dakota, Louisiana, Pennsylvania, Michigan, and Tennessee. The revisions for all these States mainly reflect the statistical changes incorporated into the current-dollar estimates of GSP for these industries: Manufacturing in all of these States except Hawaii and South Dakota; finance, insurance, and real estate in Delaware, Hawaii, South Dakota, Pennsylvania, and Michigan; transportation and public utilities in Hawaii and South Dakota; retail trade in Hawaii and Utah; and services in Hawaii.
Real growth rates.—For 1995–96, the five States with the largest upward revisions to the growth rates of real GSP were Oregon, Alaska, Wyoming, North Dakota, and New Hampshire (table 5). The States with the largest downward revisions were South Dakota, Delaware, Louisiana, and Hawaii. The revisions for all these States mainly reflect the incorporation of statistical changes into the current- dollar estimates.
For the industries that had a major impact on the States with large revisions to current-dollar GSP, the sources of the revisions were either revisions to the national estimates of GPO by industry or revisions to the State source data.
For manufacturing, the revisions reflect the incorporation of newly available data on value-added-in-production by State from the Census Bureau.
For the finance portion of finance, insurance, and real estate, the revisions mainly reflect the incorporation of the revised estimates of national GPO for holding and other investment offices and the incorporation of Federal Deposit Insurance Corporation data on deposits by State for depository institutions. For the real estate portion, the revisions mainly reflect the incorporation of new source data for property taxes by State from the Census Bureau.
For the transportation portion of transportation and public utilities, the revisions mainly reflect the incorporation of income and expense data by company for air carriers; for the public utilities portion, the revisions mainly reflect the incorporation of revised State personal income estimates of proprietors' income by State for electric, gas, and sanitary services.
For retail trade, the revisions mainly reflect the incorporation of new source data for sales taxes by State. For services, the revisions mainly reflect the incorporation of the revised estimates of national GPO.
Box: Gross State Product Estimates
Footnotes:
1. For the previously published estimates of GSP, see Richard M. Beemiller and George K. Downey, "Gross State Product by Industry, 1977–96," SURVEY OF CURRENT BUSINESS 78 (June 1998): 15–37.
2. See Sherlene K.S. Lum and Brian C. Moyer, "Gross Product by Industry, 1995–97," SURVEY 78 (November 1998): 20–40.
3. See Wallace K. Bailey, "State Personal Income, Revised Estimates for 1982–97," SURVEY 78 (October 1998): 20–41; and Eugene P. Seskin, "Annual Revision of the National Income and Product Accounts," SURVEY 78 (August 1998): 7–35.
4. The rate of growth in real GDP—BEA's featured measure of the Nation's output—was 3.9 percent in 1996–97. GSP for the Nation differs from GDP for three reasons. First, GSP, like GPO, is derived from gross domestic income (GDI), which differs from GDP by the statistical discrepancy. Second, GSP excludes, and GDP and GPO include, the compensation of Federal civilian and military personnel stationed abroad and government consumption of fixed capital for military structures located abroad and for military equipment, except domestically located office equipment. Third, GSP and GDP often have different revision schedules. For an accounting of the differences (in current dollars) in 1997 between GSP for the Nation and GPO, see appendix B. For a discussion of the relationship between GPO and GDP, see Lum and Moyer, "Gross Product by Industry," 20.
5. In table 2, an exact formula for attributing GSP growth to the industries is used, so these estimates provide accurate measures of the contributions of the industries to the percentage change in real GSP for 1996–97. See the box "Calculation of Industry Contributions to Changes in Real GSP," and Lum and Moyer, "Gross Product by Industry," 24–25.
6. Private services-producing industries are defined to consist of transportation and public utilities; wholesale trade; retail trade; finance, insurance, and real estate; and "services."
7. Private goods-producing industries are defined to consist of agriculture, forestry, and fishing; mining; construction; and manufacturing.
8. A decline in share does not necessarily indicate a decline in the level of GSP. For example, the share of government declined, but GSP for government increased $34.8 billion (see table 3).
