The ultimate measure of economic activity, in my opinion, is job growth. Most economists, however, utilize Gross Domestic Product (GDP) as the measure of economic activity. Nationally, GDP is defined as:
GDP = Consumption + Investment + Government Spending + Exports – Imports
GDP is essentially the market value of all officially recognized final goods and services produced, less the value of goods purchased from foreign sources. GDP per capita is recognized as a measure of relative standard of living of a country or locale. GDP is calculated by the Bureau of Economic Analysis (BEA), which in addition to national data, also reports state and metropolitan statistical areas at http://www.bea.gov/regional/index.htm
In 2012, the U.S. GDP grew at an annual pace of 2.5 percent compared to a miniscule 1.6 percent in 2011. Once again , I invoke the TINSTAANE clause — There Is No Such Thing As A National Economy. Each local economy is different. Ditto real estate markets. And for each locale, whether be it a town, city or state, the true rate of progress is growth from the prior period.
24/7 Wall St completed a review and ranking of State GDPs in for 2012, as published in USA Today. The measure used was Real Gross Domestic Product, which also includes an adjustment for inflation. In addition to GDP, 24/7 Wall St included population and employment growth rates.
The top 10-states in percentage GDP growth from July 1, 2011 to July 1, 2012 include:
The authors pointed out that following points:
- Energy production driven by new oil and gas production enabled via hydraulic fracturing of shale formations was a major contributor to the growth of North Dakota, Texas and West Virginia
- Durable goods manufacturing (yep—manufacturing in the U.S.), and think auto parts autos and computers, increased GDP in Indiana, Oregon and Tennessee
- California grew based on telecom, techs, banks and financial markets
- Population growth (think demographic driven demand) impacted North Dakota, Texas and Utah
- The bottom line is jobs. Period.
- Not one East Coast State made the top-10 list
To read the entire article with added descriptions of state-specific economies click: http://www.usatoday.com/story/money/business/2013/06/15/states-with-the-fastest-growing-economies/2416239/
The bottom line is that many markets are finally showing signs of significant economic growth, and that is good news.