Mideast Gross Domestic Product was $3.3tn in 2015
The Mideast Gross Domestic Product (GDP) increased to $3.3tn in 2015 from $1.6tn in 1997 and contributed 18.4% to the US economy (1997 18.8%). In 2015 the government sector contributed 13% to GDP and the private sector 87%, 11% from the goods-producing sector and 76% from the services-providing sector. In dollar terms, services GDP was $1.6tn, goods was $590bn and government GDP was $259bn in 2015.
Mideast Gross Domestic Product grew by 4%p.a. from 1997 to 2015
From 1997 to 2015 the compound annual growth rate (CAGR) of GDP was 4%p.a. in the Mideast. The services sector grew fastest at 4.3%p.a. followed by a government sector CAGR of 4%p.a. and a CAGR of 2.3%p.a. in the goods sector. All four of these CAGR’s are below their respective national averages, ranking the Mideast region 6th out of 8 in terms of growth from 1997 to 2015, ahead of New England and the Great Lakes.
The Pre-Recession, Great Recession and Post-Recession periods
Greater insights into the momentum behind the Mideast 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
Pre-recession growth in Mideast Gross Domestic Product was 4.8%.p.a.
The Mideast Gross Domestic Product grew by 4.8%p.a. (USA 5.4%) in the pre-recession period thanks to a 5.1%p.a. (USA 5.6%) increase in the services sector and a 5%p.a. (USA 5.3%) increase in the government sector. The goods-producing sector only grew by 2.9%p.a. (USA 4.6%), and so the Mideast ranked 7th in both services and goods growth and 6th in the government sector growth. Overall the Mideast region ranked 7th for growth in the pre-recession times.
In the post-recession period, the performance is not much better, relative to the other regions. Total GDP increased by 3.5%p.a. (USA 3.8%), the services sector growing fastest at 3.9%p.a. (USA 4.2%) followed by the goods sector at 2.5%p.a. (USA 3.7%) and then the government sector at 2.2%p.a. (USA 2%). Mideast post-recession growth ranked 6th of 8 regions and only the government sector CAGR exceeded the national average for this period.
In contrast to the pre- and post- recession periods, the Mideast “excelled” during the 2008 and 2009 years that included the Great Recession. The Mideast ranked 1st in terms of total GDP growth with a CAGR of 1.3%p.a. compared to a decline of 0.2%p.a. nationally.
The federal bailout of the finance and insurance sector made a huge impact on that part of the economy that caused the Great Recession in the first place. As I have pointed out in another post, the finance and insurance sector increased its GDP by 9.5% during the Great Recession which technically lasted from 2007 Q4 to 2009 Q2, whilst overall the economy lost $634bn in that period of six quarters.
The goods-producing sector of the Mideast region was also more resilient than most in the recession period. It did decline by 1.6%p.a. but this was the second best regional performance (Plains fell by 1.4%) in a sector that declined by 5% nationally in 2008 to 2009, as regions such as New England, Great Lakes and Southwest all declined by more than 7%p.a. It is also worth noting that the goods producing sector’s share of the Mideast region economy is one of the lowest at 12.9% in 2007 just prior to the Great Recession, so it was less dependent on the sector that fell the most during the recession years.
In conclusion, The Mideast Gross Domestic Product has increased by 101% from 1997 to 2015, equivalent to a compound annual growth rate of 4%p.a. The national GDP increased by 110% and the fastest growing region was the Southwest region which grew by 150%. From 1997 to 2007 the Mideast ranked 6th of 8 regions and it ranked 7th from 2010 to 2015, yet it ranked 1st in the Great Recession years thanks to the federal bailout of the finance and insurance sector. Further posts by state and industry for these three periods will reveal further insights.
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.
