California leads the U.S. with 15% of the nation’s output, but even the best-performing states haven’t returned to Q4 2019 levels.
By Manuel Gutierrez, Consulting Economist to NKBA
The nation’s Gross Domestic Product bounced back by 33% in the third quarter of last year, recouping most, but not all, of the losses in the first two quarters of 2020. Despite this impressive gain, with GDP rising to $18.6 trillion in real terms, it is still 3.4% below levels seen at the end of 2019, when U.S. GDP was $19.3 trillion.
Contributions vary significantly by state, as illustrated in Map 1. California leads the nation, generating nearly 15% of U.S. output, followed by Texas with 9.2%.
Other states with a large GDP are New York (7.6%), Florida (5.1%) and Illinois (4%). These five states jointly contribute over 40% of the nation’s total output.
The top eight states generate half of the American GDP, with Pennsylvania (3.8%), Ohio (3.2%) and Washington (3%) rounding out those top eight.
Along with the national drop in GDP since the end of 2019, all states suffered declines in output between the fourth quarter of 2019 and the second quarter of 2020. Despite their improvement in the third quarter, states’ output has not recovered to levels seen in the 2nd quarter of 2019. The only exception is Utah, whose 3rdquarter GDP brought it fully back.
Map 2 displays each state’s change in GDP between the end of 2019 and the 3rd quarter of 2020. Lighter shades of green highlight the largest negative gaps from the fourth quarter of 2019.
Hawaii has the greatest negative gap with current GDP, still nearly 9% lower than the peak at the end of 2019. This is followed by Wyoming, with a 7.8% gap, and New York with 6.1%.
Conversely, states shaded darker indicate a better recovery. Utah leads all other states, with its 3rd quarter GDP recovering as noted to prior peak levels seen at the end of 2019. Other relatively good performers are Washington, with a 0.2% gap; Iowa, with a 1% gap, and Idaho and Arizona, each with a 1.3% shortage.
An alternate view is shown in Map 3, where the green-shaded states are those outperforming the U.S. That is, their current gap to the corresponding level in 2019 is smaller than the U.S. gap of -3.4%. Generally, the states in the Midwest, Southeast and Northwest regions are doing better than the US overall.
On a long-term basis, the nation’s Gross Domestic Product increased by 18.7% over the last decade from the 3rd quarter of 2010 to the same quarter of last year. Similar to the recent, post-pandemic experience, with some states recovering better than others, there are dissimilar growth rates among the 50 states.
Growth rates for individual states over the last decade are shown in Fig. 1, which again shows the dominance of the Rocky Mountain and Pacific states.
