The University of Tennessee, Knoxville


Gross Domestic Product by State


Definitions (from the Bureau of Economic Analysis):  GDP by state is the state counterpart of the Nation's gross domestic product (GDP), the Bureau's featured and most comprehensive measure of U.S. economic activity.  GDP by state is derived as the sum of the GDP originating in all the industries in a state.

The statistics of real GDP by state are prepared in chained (2005) dollars.  Real GDP by state is an inflation–adjusted measure of each state's gross product that is based on national prices for the goods and services produced within that state.  The statistics of real GDP by state and of quantity indexes with a base year of 2005 were derived by applying national chain–type price indexes to the current–dollar GDP–by–state values for the 64 detailed NAICS–based industries for 1997 forward.

The chain–type index formula that is used in the national accounts is then used to calculate the values of total real GDP by state and of real GDP by state at more aggregated industry levels.  Real GDP by state may reflect a substantial volume of output that is sold to other states and countries.  To the extent that a state's output is produced and sold in national markets at relatively uniform prices (or sold locally at national prices), real GDP by state captures the differences across states that reflect the relative differences in the mix of goods and services that the states produce.  However, real GDP by state does not capture geographic differences in the prices of goods and services that are produced and sold locally.

Relation of GDP by state to U.S. Gross Domestic Product (GDP).  An industry's GDP by state, or its value added, in practice, is calculated as the sum of incomes earned by labor and capital and the costs incurred in the production of goods and services.  That is, it includes the wages and salaries that workers earn, the income earned by individual or joint entrepreneurs as well as by corporations, and business taxes such as sales, property, and Federal excise taxes—that count as a business expense.

GDP is calculated as the sum of what consumers, businesses, and government spend on final goods and services, plus investment and net foreign trade.  In theory, incomes earned should equal what is spent, but due to different data sources, income earned, usually referred to as gross domestic income (GDI), does not always equal what is spent (GDP).   The difference is referred to as the "statistical discrepancy."

Starting with the 2004 comprehensive revision, BEA's annual industry accounts and its GDP–by–state accounts allocate the statistical discrepancy across all private–sector industries.  Therefore, the GDP–by–state statistics are now conceptually more similar to the GDP statistics in the national accounts than they had been in the past.

U.S. real GDP by state for the advance year, 2012, may differ from the Annual Industry Accounts' GDP by industry and, hence NIPA (National Income and Product Account) GDP, because of different sources and vintages of data used to estimate GDP by state and NIPA GDP.  For the revised years of 2009—2011, U.S. GDP by state is nearly identical to GDP by industry except for small differences resulting from the GDP–by–state accounts' exclusion of overseas Federal military and civilian activity (because it cannot be attributed to a particular state).  The GDP–by–industry statistics are identical to those from the 2012 annual revision of the NIPAs, released in July 2012.   However, because of revisions since July 2012, GDP in the NIPAs may differ from U.S. GDP by state.

revised:  June 13, 2013


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