USA Private Sector Gross Domestic Product: How the structure of the US economy is changing
Much is made of the structural changes in the USA economy as private sector Gross Domestic Product (GDP) moves to services and away from the traditional goods-producing sectors. In this series of posts I wanted to try and quantify that change over the 1997 to 2015 period and to present the data for the national economy as well as all the states and the eight economic regions.
The GDP data is sourced from the Bureau of Economic Analysis (BEA). Private sector Gross Domestic Product only changed from 87.6% of total GDP in 2015 from 87.3% in 1997, and the goods-producing sector’s share has only fallen to 19% from 22.6% over the same period, but there are significant variations across the regions as well as the states.
The Goods-Producing Sectors
There are four sectors classified as goods-producing by the BEA:
- Mining
- Agriculture
- Construction
- Manufacturing
The topline analysis in this series of posts combines all four. To illustrate the significant variances across the states, goods-producing contributed 35.2% to Wyoming’s GDP in 2015 (a mining based economy) and 35% to Indiana’s GDP (a manufacturing based economy). In contrast goods-producing GDP was 8.5% in New York in the same year and only 1.5% in the District of Columbia.
This post is about the Far West BEA Region and all of the states within it.
Far West BEA Region Private Sector GDP ratio was 87.3% in 2015
In the Far West Economic Region in 2015, private sector Gross Domestic Product (GDP) contributed 87.3% to the total, split 69.7% to 17.6% services to goods. Back in 1997 the split was 66.2% to 20.7% for a total of 86.9%. The private sector share of the economy has increased but the goods-producing sectors share has declined by 15%.
This is a very similar picture to the national GDP for private goods producing industries, which fell from 22.6% to 19% in the same period, a decline of 15.9%.
In a previous post I have shown that the Far West Region economy grew by 128% in total for 1997 to 2015, or at a compound annual growth rate (CAGR) of 4.7%p.a. for these 18 years. The service sector grew by 5%p.a. and the goods-producing sector by 3.7%, so the service sector is growing just over a third faster than the goods-producing sector. GDP was worth $3.4tn in 2015 and the goods-producing sector had increased its GDP from $310bn in 1997 to $598bn in 2015.
Index calculations of growth prepared using 1997 as the base year
For ease of reference two tables have been prepared to illustrate the growth by 2015 since 1997 in the private sector GDP attributable to the private services providing sector and the goods producing sector. Using 1997 as index 100 the tables give a quick snapshot of the relevant performance of each sector.
The tables also illustrate any differences within each state, revealing how the structure of its economy may be changing over time. It is interesting to note the contrasting fortunes of the Hawaii and Nevada economies. In the goods producing growth table, the sector was growing fastest in Hawaii (+146%) and slowest in Nevada (+59%) whereas the opposite is true in the service providing sector, with Nevada top at 147% and Hawaii bottom at 107%.
These tables are used for references in the paragraphs on individual states below.
Alaska’s Private Sector GDP ratio was 80.3% in 2015
The government sector share of the Alaska economy was one of the largest in the country at 19.7% in 2015 compared to 12.4% nationally. Alaska’s private sector Gross Domestic Product (GDP) has changed from 79.7% of the total in 1997 to 80.3% in 2015 but the mix between the services-providing industries and the goods-producing industries changes dramatically during the eighteen year period.
Alaska’s GDP from goods-producing industries at 27.8% was higher than the average for the Far West region of 17.6%, the 10th highest percentage in the country. Its share declined by 12.1% since 1997, which was slower than the regional and the national average. The index of 182 confirms the value of Alaska’s goods production is increasing a little faster than the national average rate (Index 176).
In 1997 Alaska’s goods-producing industries contribution to its GDP of 31.8% was the highest in the Far West region but in 2015 Oregon’s share at 28.5% was the highest.
What is most interesting about Alaska’s goods-producing economy was that in 2007 its share had risen to 41.8%, the 2nd highest in the country that year, behind Wyoming. Alaska’s goods-producing sector is dominated by the mining industry, and in 2007, and especially 2008, there was a market boom in commodity prices.
Alaska’s private sector GDP was worth $43bn in 2015 in an economy worth $53bn in total, the 6th smallest in the country.
California’s Private Sector GDP ratio was 87.8% in 2015
The value of California’s Gross Domestic Product from goods-producing industries at 16.8% was below the average for the Far West region of 17.6%, and is the 17th lowest in the country, similar to states like Georgia, Illinois and Colorado. Its share declined by 16.8% since 1997, but its Index of 190 confirms that California’s goods-production GDP grew a little faster than the national average rate (Index 176).
California’s economy in 2015 was worth $2.49tn, with private sector GDP worth $2.19tn. California’s economy is the largest by far in the country, accounting for 14% of the national economy and 72% of the Far West region’s economy. It is $900bn bigger than Texas, the second largest state, and the same size as the combined GDP of the smallest 25 states.
Hawaii’s Private Sector GDP ratio was 78.4% in in 2015
The value of Hawaii’s Gross Domestic Product from goods-producing industries at 8.7% was the third lowest in the country (only New York and DC are lower) and well below the average for the Far West region of 17.6%. Its share has actually increased from 7.5% in 1997, one of only 9 states to record such an increase.
The Index of 246 confirms the value of Hawaii’s goods production was increasing a lot faster than the national average rate (Index 176) between 1997 and 2015, so this apparent anomaly is not down to weaknesses in the private sector services industries.
The government sector’s share of Hawaii’s Gross Domestic Product has also increased to 21.6% in 2015. Only DC and New Mexico have higher shares of their economy attributable to their government sectors.
Hawaii’s private sector GDP was worth $63bn in 2015 in an economy worth $81bn in total, the 13th smallest in the country.
Nevada’s Private Sector GDP ratio was 88.6% in 2015
The value of Nevada’s Gross Domestic Product from goods-producing industries at 11.9% is below the average for the Far West region of 17.6%. Its share in 1997 was 17%, so this decline of 30% is almost twice as fast as the national average.
Its goods-producing GDP Growth Index of 159 is just below the national average of 176 yet it share of Nevada’s total GDP is declining at a rate twice as fast as the national average. This is due to the fact growth in the service sector is outstripping that in the goods-producing sector. In fact Nevada’s service sector was the fastest growing in the Far West Region with a Growth Index of 247, and the goods-producing sector has the slowest growth in the region with an Index of 159.
Nevada’s private sector GDP was worth $125bn in 2015 in an economy worth $141bn in total, the 33rd largest in the country.
Oregon’s Private Sector GDP ratio was 88.3% in 2015
Oregon was one of only 10 states where the share of the state’s Gross Domestic Product attributable to goods-producing industries did not fall from 1997 to 2015. Its 27.8% share was the highest in the region alongside Alaska’s, and was the 8th highest share of a state economy in the country.
The index of 222 confirms the value of Oregon’s goods production is increasing a lot faster than the national average rate (Index 176), and slightly faster than the service sector (Growth Index 219).
Oregon’s private sector GDP was worth $191bn in 2015 in an economy worth $217bn in total. Oregon’s economy is it the 25th largest in the country, and similar in size to Louisiana.
Washington’s Private Sector GDP ratio was 86.5% in 2015
 
The value of Washington’s Gross Domestic Product attributable to private goods-producing industries at 19.2% is just above the average for the Far West region of 17.6%. From 1997 its share fell from 22%, a decline of 12.7% which is a little slower than the national average. Yet its index of 196 is above the national average of 176 which means the good-producing industries have done well, but other parts of the economy have grown faster. That is in fact the case as the private services-providing sector grew 24% faster with a Growth Index of 244 for the same period.
Washington’s private sector GDP was worth $385bn in 2015 and the whole economy was worth $446bn, making it the 14th largest in the country, similar in size to Michigan and Virginia, and with a topline profile in between the two of them.
Gross Domestic Product data is sourced from the Bureau of Economic Analysis (BEA) and is up to date as of June 20th 2017.
