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Using BEA`s Gross State Product (GSP) Estimates
George K. DowneyUnderstanding Regional Economic Data for
Policy and Planning—Dallas, TexasSeptember 8, 2006
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Understanding the Texas Economy
How big is the Texas economy? How much does Texas contribute to real U.S.
Production? How productive is the Texas economy, and how
does it compare to other states? What industries or products drives growth in
Texas? How much do these (basic) industries contribute
to overall real growth in the state? Which states are Texas’ competition for the
production of these goods and services? Are Texas’ industries labor or capital intensive,
and how has this relationship changed over time?
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What Is GSP?
GSP is the state counterpart of gross domestic product (GDP) for the nation
GSP measures the value added to U.S. production by the labor and capital in each state Value added is defined as gross output
(sales or receipts) less intermediate inputs (goods and services purchased in the production process)
Value added can also be measured as the incomes earned by capital and labor plus taxes on production and imports
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Why is GSP Important?
Since GSP measures the value of all of the goods and services produced in the state it provides the most comprehensive measure of state production
Consistent with the concepts and methods used to produce GDP, the national income and product accounts (NIPAs), and the GDP-by-industry accounts
One series in the Regional Income and Product Accounts which are used to distribute $215 billion in federal funds
Used for tax analysis and projections, state budget forecasting, and regional policy planning
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The GSP Series
Current-dollar GSP Compensation of employees
Wages and salaries and their supplements
Taxes on production and imports less subsidies Sales taxes, property taxes, and federal excise taxes
Gross operating surplus Proprietors’ income Corporate income: Corporate profits, net business
interest, business transfer payments, consumption of fixed capital, and nontax payments
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The GSP Series
Real GSP is an inflation-adjusted measure of a state’s gross product Derived by applying national chain-type price indexes
by industry to the current-dollar GSP estimates Caveat: If regional prices differ significantly from
national prices, changes in real GSP may not accurately represent real state growth
Research is underway to produce regional price indices
Accelerated GSP Total GSP, available 6-months after the calendar year
(current dollars and real) Industry sectors, available 10-months after the
calendar year (current dollars and real) Extrapolated using BEA’s earnings by industry
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Relation of GSP to Personal Income (PI)
GSP* PI*
Place of work11,655,33
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Place of residence 9,705,504
Wages and salaries (accrual/disbursement) 5,381,519 5,383,900
Proprietors’ income 1,048,098 895,286
Employer contributions for employee pension and insurance funds
888,450 888,450
Employer contributions for government social insurance 401,952
Taxes on production and imports less subsidies 809,353
Corporate income 3,125,962
Receipts on assets (dividends, interest) 1,529,780
Transfer receipts (Social Security benefits, Medicare, Medicaid) 1,428,159
Less: Personal contributions for government social insurance 418,838
Plus: Residence adjustment to personal income -1,233
*2004 dollar values in millions
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What GSP Estimates Are Available?
Advance total GSP for 2005 Current and real dollars
1997-2004, 81 NAICS industries Current dollars by component Real dollars and quantity indexes for GSP
only, no components 1963-97, 75 SIC industries
Current dollars by component 1990-97 Real dollars and quantity indexes
for GSP only, no components
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Where Can GSP Be Found?On the Internet, at www.bea.gov
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Where Can GSP Be Found?
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Where Can GSP Be Found?
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How Can GSP Be Used?
To analyze a state’s economy over time Use Real (inflation-adjusted) GSP Don’t use current-dollar GSP because change
from year-to-year will include quantity change as well as price change
To analyze a state’s economy in a given year Use Current-dollar GSP and/or components Don’t use Real GSP because real GSP is not
additive, except in the base year
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Using Real GSP
2002 2003 2004 2005
Texas 760,588 771,082 810,510 845,512
Southwest 1,072,012 1,094,165 1,147,570 1,203,450
United States 9,981,85010,237,20
110,662,19
611,035,62
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Real GSP (millions of chained 2000 dollars)
From 2004 to 2005, Texas’ economy grew 4.3%
From 2004 to 2005, Texas’ economic growth slightly lagged the growth in the Southwest region (4.9%)
From 2004 to 2005, Texas’ economy grew faster than the national rate (3.5%)
Since 2002, Texas’ economy averaged 3.6% annual growth compared to 3.4% for the U.S. and 3.9% for the Southwest region
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Using Real GSP In the Survey of Current Business (July, 2006), we
publish a table in the GSP article (Table 2) titled “Contributions to Percent Change in Real GSP”
From 2003 to 2004, Texas Real GSP growth was 5.1%
The largest contributors to Texas’ growth were: Manufacturing (durable- and nondurable-goods):
2.13 percentage points Professional and business services: 0.91
percentage point (2.13 + 0.91) / 5.1 = 0.596 These two sectors accounted for nearly 60% of
Texas’ economic growth
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Using Real GSP
Texas 2.0 12.9 13.4
Arizona 1.5 4.3 0.4
New Mexico 1.9 29.0 0.0
Oklahoma 2.1 5.2 7.2
United States
2.1 9.2 5.9
Average Annual Percent Labor Productivity Growth by industry and State 2001-2004
Total Manufacturing Manufacturing
Durable Goods Non Durable goods
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2004 Industry Specialization Index for Chemical Manufacturing
State Value
AL 101
AK 9
AZ 11
AR 34
CA 70
CO 21
CT 132
DE 232
DC 4
FL 21
GA 57
HI 2
ID 30
IL 103
IN 321
IA 148
KS 68
KY 81
LA 285
ME 15
MD 64
MA 51
MI 64
MN 35
MS 94
MO 144
State Value
MT 12
NE 51
NV 6
NH 15
NJ 239
NM 8
NY 106
NC 230
ND 8
OH 116
OK 19
OR 24
PA 219
RI 53
SC 81
SD 14
TN 107
TX 153
UT 41
VT 21
VA 44
WA 14
WV 201
WI 88
WY 107
US 100
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2004 Industry Specialization Index for Computer Manufacturing
State Value
AL 54
AK 1
AZ 323
AR 28
CA 179
CO 129
CT 37
DE 41
DC 6
FL 52
GA 18
HI 0
ID 593
IL 56
IN 40
IA 59
KS 34
KY 33
LA 4
ME 51
MD 62
MA 237
MI 19
MN 156
MS 12
MO 27
State Value
NE 43
NV 13
NH 214
NJ 41
NM 591
NY 47
NC 73
ND 46
OH 34
OK 22
OR 822
PA 47
RI 38
SC 34
SD 81
TN 124
TX 166
UT 66
VT 306
VA 50
WA 54
WV 10
WI 67
WY 4
US 100
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Using Current-Dollar GSP
2001 2002 2003 2004
Texas, Total GSP 762,247 783,480 828,456 903,208
Texas, Manufacturing 92,275 94,463 93,222 110,172
Texas, Retail trade 54,660 57,244 58,755 61,208
Southwest, Total1,073,29
31,105,10
31,172,14
71,272,93
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Current-Dollar GSP (millions of dollars)
In 2004, Texas’ economy totaled $903.2 billion
In 2004, manufacturing accounted for 12.2% of the Texas economy
Retail trade in Texas decreased from 7.2% of the state’s economy in 2001 to 6.8% in 2004
In 2004, Texas accounted for 71.0% of the Southwest economy
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Using Current-Dollar GSP
2002 2003 2004
Gross state product 783,480 828,456 903,208
Compensation of employees
431,579 443,971 470,553
Taxes on production and imports less subsidies
64,190 66,052 71,498
Gross operating surplus 287,711 318,434 361,157
Texas Components of GSP (millions of dollars)
The capital and labor shares of GSP can be analyzed using gross operating surplus and compensation of employees, respectively
In 2004, the labor share of Texas’ economy was about 52%
The capital share of Texas’ economy increased from 36.7% in 2002 to 40.0% in 2004, an increase larger than the national increase
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Upcoming Release Schedule
October 26, 2006 Revised advance 2005 Total GSP in current
and real dollars Advance 2005 GSP for NAICS sectors in
current and real dollars
June 7, 2007 Revised 2003-2005 GSP by industry, by
income component for 81 NAICS industries Advance 2006 GSP for NAICS sectors in
current and real dollars
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Contact
George K. DowneyChief, Regional Product BranchRegional Economic Analysis DivisionBureau of Economic Analysis
