Fewer Growing MSAs (Metro GDP)


Today we look at the just-released metropolitan area gross domestic product (GDP) data. This data release from the U.S. Bureau of Economic Statistics brings the data up to 2015. We can use this data to compare the 382 metropolitan areas in the U.S. to the overall performance of metropolitan America. As a reminder, GDP is the total value of economic activity produced in an area.

Though there is a delay in this data, it is an important economic indicator for local leaders. The analysis below uses real GDP, which has been adjusted for inflation so we can compare changes over time.

Overall Results

From the BEA press release we see that GDP increased in 292 metropolitan areas in 2015 compared to the previous year. In other words, approximately 76 percent of MSAs saw growth in their total GDP. The sectors that contributed most to this growth were professional and business services; wholesale and retail trade; and finance, insurance, real estate. Growth in these three broad industry categories was widespread. Out of the 382 MSAs, these industries grew in 77 percent, 88 percent and 64 percent of MSAs, respectively.

Per Capita Growth Rates

The headline numbers discussed above do not account for population growth. We like to look at per-capita changes in GDP to give a better idea of the actual health of a community. The economic output per person is a better indicator than overall MSA growth. This is because businesses that are achieving higher per-worker growth rates can afford to increase wages. Slow per-capita GDP growth means stagnant wage growth.

To get a longer term perspective, we looked at compound annual growth rates for three time periods. We calculated these rates of change for the seven years before the great recession (2001 to 2008), the seven years after (2008 to 2015) and we looked at the change from 2014 to 2015. Using compound annual growth rates cancels out the year to year ups and downs.

U.S. Metro Areas

In the seven years before the Great Recession, the per capita GDP for all MSAs grew at a 1.1 percent rate annually. In the seven years after the Great Recession, that growth rate fell to 0.3 percent. Growth accelerated again in the last year to 1.6 percent (between 2014 and 2015.) This national growth rate is a benchmark we can compare all metro areas against. In per capita terms, there were fewer growing MSAs nationally than when looking at growth not adjusted for population. There were 274 MSAs that saw per-capita growth in the last year.

We found that economic growth was more widespread across MSAs before the Great Recession that after it. In the period before the Great Recession, 188 MSAs grew faster than the national average. That amounts to 49 percent of all MSAs. In the seven years after, growth was more concentrated, with only 149 MSAs exceeding the national growth rate. Those MSAs accounted for 39 percent of all MSAs. This trend seems to be intensifying, with only 34 percent of MSAs growing faster than the U.S. in the last year.

Texas Metro Areas

Looking at Texas, we see a different pattern. There are 25 MSAs in Texas. Before the Great Recession, 64 percent of them grew faster than U.S. After the recession, 76 percent, (19 of the 25) grew faster than the U.S. in per capita terms. This may reflect the boost given to many Texas MSAs from the shale oil boom. That boom was beginning to deflate by 2015 and it shows in Texas MSA growth rates. In the last year since the recession, only 10 MSAs in Texas were growing faster than the U.S. The following table lists all Texas MSAs with their per capita GDP growth rates.

Texas MSA Per Capita Income and Compound Growth Rates
Area 2015 Per Capita GDP 2001-2008 Compound Annual Change 2008-2015 Compound Annual Change 2014-2015 Annual Change
United States (All MSAs)  $      52,896 1.1% 0.3% 1.6%
Abilene  $      36,296 2.1% 1.0% -1.5%
Amarillo  $      41,460 1.7% 0.6% 0.5%
Austin-Round Rock  $      55,323 1.7% 1.2% 2.0%
Beaumont-Port Arthur  $      49,966 2.3% 2.5% 5.3%
Brownsville-Harlingen  $      20,088 0.4% 0.2% 1.1%
College Station-Bryan  $      33,457 0.4% 1.6% 0.2%
Corpus Christi  $      46,486 1.5% 2.2% 1.0%
Dallas-Fort Worth-Arlington  $      63,197 0.7% 1.0% 1.4%
El Paso  $      30,865 -0.7% -0.3% 3.0%
Houston-Woodlands-Sugar Land  $      70,797 0.1% 1.1% 1.9%
Killeen-Temple  $      34,632 2.5% -1.0% 2.4%
Laredo  $      25,507 0.5% -0.1% 0.3%
Longview  $      48,403 3.9% 0.4% -2.4%
Lubbock  $      37,359 1.8% 0.7% 2.3%
McAllen-Edinburg-Mission  $      20,007 0.8% 0.8% 0.1%
Midland  $     153,445 2.1% 10.0% 5.9%
Odessa  $      54,638 4.1% 2.9% -10.5%
San Angelo  $      37,942 0.6% 1.5% -1.5%
San Antonio-New Braunfels  $      42,169 0.2% 1.5% 3.4%
Sherman-Denison  $      28,724 1.7% 0.3% -0.4%
Texarkana  $      30,758 1.7% -0.9% 0.3%
Tyler  $      46,578 1.5% 1.0% 0.3%
Victoria  $      49,954 3.3% 1.9% -3.0%
Waco  $      37,530 2.1% 1.3% 2.0%
Wichita Falls  $      41,590 1.9% 0.5% 2.7%
Source: Axianomics, LLC analysis of U.S. BEA data.

Next week, we will share our best reads for the month. These are the studies and reports that we think are most helpful for local leaders who are working to strengthen their communities fiscal and economic health. In the meantime, let us know how we can help you make more confident economic and fiscal choices for your community. Contact



Uneven State Growth and Local Impact

Following key economic indicators helps you make better decisions in annual revenue forecasting, budget development or long range planning. This week we call your attention to Gross Domestic Product (GDP) by state.

State Performance Impacts Local Options

Your community is unique and may be doing better or worse than your peer cities, but keep your state’s performance in mind. Education and infrastructure funding is heavily dependent on state funding. These services drive long-term economic growth. Also, states set broad tax and regulatory policy that limits what local communities can do. To fix their budget problems, states often shift the burden on localities. GDP is a good indicator of your state’s overall performance.

What is State GDP?

GDP by state is released every calendar quarter, with about a quarter delay, from the U.S. Bureau of Economic Analysis (BEA). It is a state version of national GDP. GDP is the final value of every good and service produced in a place. Our analysis compares [first quarter of 2016] to the first quarter of 2015> We are interested in absolute changes and the relative performance of the states. We discuss 51 jurisdictions, because the BEA considers the District of Columbia a state for their calculations.

Uneven State Performance Compared to the U.S.

Total growth over the year for all states gives us a 3.3% national economic growth rate. Performance from state to state varied. There were 29 states that grew faster than the overall U.S. rate. There were 14 states that grew slower and there were eight states that had shrinking economies. This diverging pattern across the country has been common since the recovery from the financial crisis. Let’s look at the best and worst performers as groups.

Fastest Growing States

Among the faster than average growth group, seven states grew at least 150% faster than the U.S. These grew at 5% or faster over the year, and included: Maine, New Hampshire, New York, Florida, Tennessee, Virginia and Washington. Combined, these represent 21% of the total U.S. economy ($3.8 trillion.) Their total growth was $195 billion. This means they accounted for one-third of the total growth in the country.

Shrinking State Economies

On the other end of the spectrum were eight state economies that shrank over the year. These include: North Dakota, Louisiana, West Virginia, New Mexico, Oklahoma, Texas, Wyoming and Alaska. These eight states account for almost 13% of the U.S. economy ($2.3 trillion.) They lost a combined $48 billion in economic activity. Collectively their declines shaved a third of a percentage point off U.S. growth over the year. Given recent low fossil-fuel prices, it is unsurprising that these poor performers are energy-producers.

These diverging absolute growth rates mean some states’ share of the total national economy is changing. Some states grew in relative importance while others declined. In the last year, four states increased their share of national GDP: New York, Florida, Tennessee and California. Five states lost absolute national share. These were: Connecticut, Illinois, Alabama, Louisiana and Texas. The remaining 42 states maintained their relative importance in the U.S. economy.


A year of data is not destiny. It is a good reminder, however, that troubled state economies often mean pressure for local governments as states reduce local aid. In a few weeks we will be reporting a more detailed study of how state economic performance has been affecting local government finances.

What’s Next

Next week we will look at one of the most important tools for helping local leaders make better – fiscal impact analysis. In the meantime, sign up for email updates and let us know how we can help you nurture your community.