State GDP Shows A Manufacturing Rebound In 2012

Includes: FXR, IYJ, PRN, XLI
by: The Wilder View

State GDP shows the following in 2012: Durable goods manufacturing and finance and insurance are primary drivers of cross-sectional growth. This confirms the national story, according to the BEA.

A state-level breakdown shows strong (a surge in) economic activity in North Dakota, Oregon, Texas, and Utah, as 2012 real GDP was the highest in these economies compared to a long-term average (since 1997): 55%, 33.2%, 26%, and 25.3%, respectively (see table in appendix below). By contrast, 2012 real GDP in Missouri, Ohio, Michigan, and Connecticut were the worst performers compared to their long-term averages at 5.6%, 4.2%, 2.3%, and -2.4%, respectively.

A couple of articles from My San Antonio and Money paint of a picture of an oil/gas boom driving capital investment in Texas and North Dakota. Tech manufacturing is adding to Oregon's GDP to the tune of a 2.87% contribution in 2012. Texas and North Dakota are benefiting from the oil and investment boom. However, in looking at the accounts for these two states, the economic improvement is rather broad- based. In North Dakota, for example, construction and real estate added 2.37% to the total 13.4% annual growth -- striking. Connecticut is an interesting case -- apparently the consolidation of the hedge fund industry is having a large and adverse effect on the economy, as finance and insurance pulled the economy down -0.57% and more than offset the positive gains from durable goods manufacturing (+0.46% in 2012). And perhaps Ohio stands to gain from the shale gas boom.

With regard to jobs at the aggregate level, we saw last week that growth in manufacturing correlated with growth in manufacturing jobs in 2012. Likewise for finance and insurance industries -- see the graph below and here. But in 2013, manufacturing jobs have been dropping.

Overall, the aggregated and state GDP data suggest that durable goods manufacturing was a big driver of the economy in 2012 In looking at the state-by-state comparison, I wonder how much of that is being driven by structural shifts related to oil and gas drilling and production. Perhaps I'll do a little more research in this area.

I'm open to comments.


Here is the full cross-section of 2012 real GDP relative to the long-term average for the U.S. states: