Great Lakes Gross Domestic Product was $2.5tn in 2015
The Great Lakes Gross Domestic Product (GDP) increased to $2.5tn in 2015 from $1.4tn in 1997 and contributed 14% to the US economy (1997 16.5%) that year. The Great Lakes GDP grew by 79% in total from 1997 to 2015 but this ranked 8th of 8 when compared to the growth achieved in the other regions. In comparison, the national economy grew by 110% with the Southwest region growing by 150% in the same period.
The government sector contributed 10% to GDP and the private sector 90%, 66% from the service sector and 24% from the goods-producing sector. In monetary terms that’s $1.6tn from services, $590m by goods and $259m from the government in 2015.
Great Lakes Gross Domestic Product grew by 3.3%p.a. since 1997
The compound annual growth rate (CAGR) of the Great Lakes economy was 3.3%p.a. in the eighteen years from 1997 to 2015 which is below the 4.2%p.a. achieved nationally. The Great Lakes services and government sectors both ranked 8th for growth at 3.7%p.a. (USA 4.5%) and 3.2%p.a. (USA 4.1%) respectively, and the goods producing sector ranked 6th, ahead of the Mideast and New England. Goods GDP increased by 2.3%p.a. compared to 3.2%p.a. nationally.
Greater insights into the momentum behind the  Great Lakes regional economy are revealed when the CAGR% are calculated for the three very distinctive periods in the 1997 to 2015 time period, namely:
1997 to 2007: The Pre-Recession Years
2008 to 2009: The Great Recession Years
2010 to 2015: The Post-Recession Years
Great Lakes Gross Domestic Product growth of 3.9%p.a. up to 2007 was the lowest of eight regions
Pre-recession the Great Lakes economy may have grown by 3.9%p.a. (USA 5.4%p.a.) but it ranked 8th for growth in all three sectors. The services sector CAGR of 4.5%p.a. (USA 5.6%) was best of the three, followed by 4.3%p.a. (USA 5.3%) in the government sector and only 2.4%p.a. (USA 4.6%p.a.) in the goods-producing sector. Much has been made of the decline of the goods-producing sector in the Great Lakes region in the recession, but it is worth noting it was struggling to grow prior to the recession too. In contrast regions like the Southwest and Rocky Mountain enjoyed goods-producing CAGR’s of 7.8%p.a. and 7.5%p.a. pre-recession.
Great Lakes Gross Domestic Product in the goods-producing sector fell by 7.8%p.a. in 2008 and 2009
The Great Recession hit the Great Lakes region particularly hard, dependent as it is on the auto industry. GDP declined by1.6%p.a. (USA down 0.2%) and while there was a 0.3%p.a. (USA +0.4%p.a.) decline in the services sector in 2008 and 2009, the goods sector fell by 7.8%p.a. (USA down 5%p.a.). The government sector did grow by 3.2%p.a. but again this was less than the 4%p.a. growth nationally.
Post-recession tells a different story again, because the Great Lakes goods-producing economy grew at 5.6%p.a. (USA 3.7%) from 2010 to 2015 and was ranked #1 compared to all other regions.
The auto industry did benefit from a Federal financial support program and it did rebound, albeit off a lower base. GDP is up $100m from 2007 to 2015 in this sector.
The relative weakness of the Great Lakes economic performance continued into the post-recession period. The services sector CAGR of 3.7%p.a.(USA 4.2%) and the government sector’s CAGR of 1.4% (USA 2%) were lower than the national average and ranked 7th and 8th respectively. As a result the service sector share of GDP fell to 66% in 2015 from 66.7% in 2009.
In conclusion the Great Lakes Gross Domestic Product increased by 79% from 1997 to 2015, the lowest growth of all eight regions, and almost half the 150% growth rate achieved in the Southwest region. Renowned as an industrial economy, the goods-producing sector’s share has declined from 28.1% to 23.6% in eighteen years, while the service sector has increased to 66% from 61.4% at the same time. The goods sector is growing faster than the service sector from 2010 and consequently its share of GDP has increased from the low point of 21.3% in 2009. Analysis by state and by industry will provide greater insights into the Great Lakes region and the challenges it faces.
To see the same posts for the other regions, here are the links
Gross Domestic Product data is sourced from the Bureau of Economic Analysis (BEA) and is up to date as of June 20th 2017.
