While the country is heading towards the best U.S. GDP growth rate in decades, the same is not true across all states. As usual the TINSTAANREM Axiom is invoked — There Is No Such Thing As A National Real Estate Market or economy.
Gross Domestic Product (GDP) is the value of all the goods and service produced. Along with job numbers, GDP is among the best indicators for economic performance. After posting the largest decline in GDP in U.S. history in Q2 2020 due to the pandemic (plunging 31.4 percent on an inflation-adjusted annualized basis), that was followed by the largest one-quarter gain ever of 33.4 percent in Q3 2020.
Just released by the Bureau of Economic Analysis (BEA) were Q1 2021 GDP growth rates for all states and the District of Columbia. For the second quarter in a row all states posted a positive annualized growth rate. Also included in the table is the annualized growth rate performance from Q3 to Q4 2020. Data are sorted both by the greatest to least GDP growth rate in Q1 2021 and alphabetically. Many of the poorer performing states are included in the nation’s top oil producing states and were hindered by cheap energy prices since the beginning of the pandemic through the first quarter of the year. Three of the bottom five GDP growth states were in the top-10 oil producing states and five of the top-10 oil-production states ranked in the bottom-10 GDP growth-rate states: Texas, New Mexico, Louisiana, Wyoming and Alaska.
The was no statistically valid correlation for same state GDP growth rates in Q4 2020 and Q1 2021. The Pearson Product Correlation Coefficient rate was 0.1553 and the Spearman Rank Correlation Coefficient 0.0954 with a corresponding 0.50037 PValue. Hence high (low) GPD growth rates in Q4 2020 did not correlate to a high (low) Q1 2021 GDP growth rates or vice versa.
Types of businesses, tax laws, incidence of the pandemic, migration and varying government closures by state along with differing job growth rates all combined to form the variability in GDP gains.
GDP growth rates in 2020 did not include the economic benefit of the $1.9 trillion American Recovery Plan stimulus— which alone is estimated to boost GDP 4 percent in 2021 and contribute 2 percent to the 2022 U.S. GDP rate.