A Look at County-Level Gross Domestic Product Numbers

Posted by Roberto Gallardo on December 12, 2018, in PCRD.

Written by Roberto Gallardo & Bo Beaulieu.

The Bureau of Economic Analysis recently released the 2012-2015 county-level gross domestic product (GDP) figures. This is exciting news since GDP figures have been available at the national, state, and metropolitan statistical area level, but not at the county level. While these county-level calculations are a prototype and likely to be improved over time, the county information portrays some interesting trends that are worthy of discussion.

The dataset includes information on the GDP for all industries, private goods-producing, private services-producing, and government and government enterprises. To delve more deeply into the  county-level GDP trends, we grouped counties in Indiana and the United States into metropolitan, small city, and rural using the Rural-Urban Continuum Codes developed by USDA’s Economic Researh Service.

The graph below shows the GDP share by industry as of 2015 (latest year available) for the U.S., Indiana and by three county types. Almost 70 percent of the national GDP share is generated by service-related industries, followed by nearly 20 percent by goods-related industries and almost 12 percent by government. For the state of Indiana, the service-related share is 57.2 percent, lower than that of the nation, followed by roughly one-third (32.7 percent) by goods-related industries. Just over 9 percent of GDP is linked to government.

Chart 1

Source: Bureau of Economic Analysis; USDA-ERS; Purdue Center for Regional Development

When focus turns to the various county types, results suggest that there is not much difference found in the share of GDP by industry between rural U.S. and rural Indiana. The sole exception is the slightly higher share of GDP in rural counties of the U.S. being generated by government (14.5 percent in the U.S. versus 12.6 percent in Indiana). As for small city or micropolitan counties, more than half of the GDP share in the nation is produced by service-related industries versus close to 40 percent in small city counties in Indiana. On the other hand, 45.6 percent of the GDP share in small city counties in Indiana is linked to goods-related industries, higher than the one-third generated by small city counties in the nation. Regarding metro counties, the share of GDP contributed by goods-related industries is almost double in Indiana (30.4 percent) versus the nation (17.4 percent).

What about GDP change between 2012 and 2015? The graph below highlights changes by industry and county type in the U.S. and Indiana. Taken as a whole, all industries (aggregated from county-level data) increased their GDP by 6.8 percent in the U.S. and 4.2 percent in Indiana. Likewise, the overall GDP increased in all county types between 2012 and 2015, with small city counties in Indiana experiencing the largest increase during this time period.

Chart 2

Source: Bureau of Economic Analysis; USDA-ERS; Purdue Center for Regional Development

When results are explored by key industry sectors, one finds that metro areas experienced limited growth in the goods-related sector between 2012 and 2015, while small cities and rural areas realized healthy expansion in this sector, both in the nation and Indiana. GDP changes in the services arena were quite healthy in metro areas of Indiana and the U.S., but more moderate in small cities and rural areas of the country. The government sector suffered GDP declines in metro, small city and rural areas of the nation, but experienced positive changes in metro areas of Indiana. While small city and rural areas of Indiana saw declines in GDP in small city and rural counties, the percentage drop was far less severe than in these type of counties in the U.S.

Lastly, we analyzed the share of GDP linked to each county type. The graph below reveals that a whopping 90 percent of the county-level aggregated GDP is associated with metro counties, while less than six percent connected to small city counties and 3.5 percent to rural counties. In Indiana, the metro share is slightly smaller at 82.7 percent while the small city’s share is 12.4 and just under five percent in the state’s rural counties.

Chart 3

Source: Bureau of Economic Analysis; USDA-ERS; Purdue Center for Regional Development

While the contribution of metro areas to Indiana’s GDP is sizable, it is important to note that goods producing sectors – such as manufacturing and agriculture – are important economic drivers of Indiana’s small city (micropolitan) and rural counties. The fact that the GDP contribution of the goods producing sector has grown in recent years suggest a need to continue working to grow these sectors – be it by implementing workforce development strategies that can help expand the pipeline of workers, by strengthening technical education and certification programs that align with the needs of employers, and by improving the quality of life offered by these places as locations that workers opt to make their place of residence.

Lastly, map below shows the percent change in county-GDP between 2012 and 2015 for Indiana counties. Dark green indicates a GDP increase of more than 10 percent while dark red indicates a decrease of 10 percent or more. Only three counties had a 10 percent or more decrease in their GDP during this time period: Ohio, Switzerland, and Spencer counties. On the other hand, Lawrence and Grant experienced an increase of more than 30 percent in their GDP. Please note that GDP amounts are adjusted for inflation.

Map 1