A Deeper Dive: Gross Domestic Product (GDP) by State
Gross domestic product by state, formerly referred to as gross state product (GSP), is a broad measure of a state’s production. The “value added” that is generated by the state’s GDP represents the difference between the state’s industries gross output (e.g., industry sales and other operating income, commodity taxes, and inventory changes) and the value of the intermediate inputs (purchase of goods and services from other industries) used in producing the industries’ products.
Economic production and growth are represented by real GSP, so it can be seen as a primary indicator to gauge the health of the state economy. The term “real” refers to GSP and GDP values being indexed to a certain year (2005) to accurately reflect the rate of change. Failure to do so would lead to inflated growth rates. From 2001 to 2010, U.S. real GDP grew by 16.8 percent while Texas’ real GSP grew by 23.5 percent for the same period.
The components of GDP by State are as follows*:
- Labor Income
- Salaries, wages and other benefits earned by workers;
- Business Taxes
- Federal excise, sales, property and other taxes than can be considered as business expenses;
- Capital Income
- Income earned by sole proprietorships, partnerships and corporations; and,
- Depreciation and other income earned by capital.
GSP can be considered as the counterpart to U.S. GDP as GSP is, according to the U.S. Department of Commerce Bureau of Economic Analysis, “the sum of costs incurred and incomes earned in the production of GDP.”
*For more information, refer to “Gross Domestic Product by State Estimation Methodology” for the U.S. Department of Commerce Bureau of Economic Analysis.
|Industry||Dollars (Billions)||Percent of Total|
|Agriculture, forestry, fishing, and hunting||$7.17||0.6%|
|Trade, Transportation and Utilities||$217.09||18.0%|
|Professional and Business Services||$133.41||11.0%|
|Educational and Health Services||$82.59||6.8%|
|Leisure and Hospitality||$38.34||3.2%|
Note: Numbers may not total correctly due to rounding.
Source: Bureau of Economic Analysis