Metro areas' GDP: Better in 2010, but still a long way to go
Last week we wrote about the city of Savannah, noting that its recent economic performance is similar to what the nation as a whole is experiencing. One of my colleagues asked if I were playing favorites by highlighting only one area. The answer is, of course, no (although I do think Savannah is terrific). But just to make sure there are no lingering questions, today I'm going to write about every other metro area in the region.
On September 13, the U.S. Bureau of Economic Analysis (BEA) released its annual estimate of metro areas' gross domestic product (GDP) for 2010. In the Sixth District, a majority (49) of metropolitan statistical areas (MSAs) reported positive growth in Real GDP. Only 11 of 60 MSAs experienced a contraction in their real GDP in 2010. In 2009, all but seven regional MSAs saw a contraction in real GDP, quite a turnaround. The BEA data for all U.S. metro areas can be found here.
In 2010, Lafayette, Louisiana, recorded the strongest expansion, at 8.3 percent annual growth in real GDP. (Lafayette also took the top spot in 2009 at 8.8 percent.) Hinesville-Ft. Stewart, Georgia, was second in 2010 at 7.7 percent, and Morristown, Tennessee, rounded out the top three regional performers at 5.1 percent. The bottom three performers were Brunswick, Georgia (down 2.4 percent), Pascagoula, Mississippi (down 2.8 percent), and Sebastian-Vero Beach, Florida (down 3.6 percent).
But one year does not tell the whole story. If we looked back to 2007 and calculated the percent change in real GDP for the region's metro areas, the picture is quite different. Only 19 of the 60 MSAs in the Sixth District show positive real GDP growth. Pascagoula—one of the weakest metro areas in 2010—has by far the strongest three-year performance, with a gain in real GDP of 30 percent. This gain is largely attributable to a one-off increase in manufacturing activity in 2008 linked to the huge Chevron refinery there. Hinesville-Ft. Stewart, Georgia, is second at 17.1 percent, but this increase is tied to the military base realignment, which has benefited this area over the past few years. Lafayette, Louisiana, is third at 17 percent. As President Lockhart noted in his August 31 speech in Lafayette, part of Lafayette's increase is a result of increased energy exploration and extraction activity:
"Positive news is coming from the oil and gas industry, especially here in Louisiana. Business contacts in the region have been reporting an influx of fabrication work and backlogs in orders for pipelines, supply boats, and drilling equipment. In Lafayette, employment in the energy sector has increased, providing a big boost to the local economy."
Less positive news from Florida over the past several years was backed by fact that seven of the 10 weakest performers in terms of GDP were from the Sunshine State—southwest Florida in particular, where Punta Gorda, Ft. Myers, and Naples were all near the bottom. But the worst-performing metro area in the region in terms of real GDP growth over the past three years was Dalton, Georgia, which was down 18.6 percent. Long known for its carpet and home-flooring industry, the collapse of homebuilding during the recession has hit this city hard.
While 2010 metro area GDP reports for the region's metro areas showed some improvement, the report also showed that we are still a down quite a bit from prerecession levels.
The tables below rank the region's metro area performance in real GDP for 2010 and for the 2007–10 period. Data are annual percent changes for 2010 and total percent changes from 2007–10.
By Mike Chriszt, an assistant vice president in the Atlanta Fed's research department
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Let's focus on what we do know
The Wall Street Journal's Real Time Economics blog quotes recent analysis from J.P. Morgan Chase in its post, Oil Spill May End Up Lifting GDP Slightly.
" 'The spill clearly implies a lot of economic hardship in some locations, but given what we know today, the magnitude of these setbacks looks dwarfed by the scale of the US macroeconomy,’ said chief U.S. economist Michael Feroli. If anything, he added, U.S. GDP could gain slightly from it….
"Commercial fishing in the Gulf is also likely to suffer, but that's only about 0.005% of U.S. GDP. The impact on tourism is the hardest to measure, although it's fair to expect that many hotel workers who lose their jobs will find it hard to get new ones. Still, cleaning up the spill will likely be enough to slightly offset the negative impact of all this on GDP, J.P. Morgan said. The bank cites estimates of 4,000 unemployed people hired for the cleanup efforts, which some reports have said could be worth between $3 and $6 billion."
Another point brought up by several analysts is that the size of the U.S. economy requires that a disaster would have to be massive to have an impact on national economic performance. Earthquakes, hurricanes (including Katrina), and other disasters simply did not have a significant impact on short-term national economic growth.
Smartly, the Real Time Economics post also notes that the J.P. Morgan commentary points out that:
"[G]ross domestic product measures are often not a good guide to an economy's well being."
It is also important to note that this story continues to unfold. We simply do not know what the long-term implications of the oil spill will be or what potential changes in the regulatory environment could have on future energy extraction—not only in the Gulf but also nationally.
Analysts will continue to strive to put a number tag on the oil spill, both in terms of the impact on the macroeconomy and in terms of the regional economic impact. The truth of the matter is that what we do know is still far less than what we don't know.
By Michael Chriszt, an assistant vice president in the Atlanta Fed’s research department
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