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At the 4% Growth Project we are obsessed with growth. So naturally this week’s release of the 2011 state GDP statistics caught our attention. The report is published annually by the Bureau of Economic Analysis and reports GDP growth rates for each of the 50 states. Overall, in 2011 U.S. real GDP by state — which is calculated slightly differently from overall U.S. real GDP — increased 1.5%. Like the country as a whole, each of the eight geographic regions had positive growth in 2011. The Southwest had the fastest growth with a rate of 2.7%, followed by the Far West at 2.1%, and New England at 1.8%. The Southeast and Mideast tied for the slowest growth rate in 2011 at only 0.9%. Some individual states did experience fast growth, even growth in excess of 4%. North Dakota had the fastest growing economy in 2011 at 7.6%. North Dakota’s oil boom has had a large impact; the mining industry itself contributed 2.81 percentage points to the state’s growth and several other industries contributed at least half of a percentage point. Oregon had the second fastest growth at 4.7% followed by West Virginia at 4.5% and Texas at 3.3%. Alaska rounded out the top five with a growth rate of 2.5%. Unfortunately six states had negative growth in 2011, meaning their economies shrank after controlling for inflation. In descending order these six were: Hawaii (-0.2%), Maine (-0.4%), New Jersey (-0.5%), Alabama (-0.8%), Mississippi (-0.8%), and Wyoming (-1.2%). While the mining industry was clearly a major boom for North Dakota and West Virginia, nationwide durable-goods manufacturing added the most to economic growth. The industry as a whole grew 7.9% in 2011 and added 3.94 percentage points of growth in Oregon and 1.17 percentage points in Michigan. The professional, scientific, and technical services matched their 2010 growth rate of 4.9% and contributed significantly to the growth of many East Coast states. On the flip-side, the real estate sector continued its slide in 2011, falling 0.32 percentage points from the year before. Other industries experiencing negative growth included agriculture, utilities, government, construction, and educational services. The good news is that the economy grew in inflation-adjusted terms in 2011. Furthermore, several states and industries had strong growth that could continue into the future. The bad news, however, is that by-and-large the growth rates were weak and growth was slower in 2011 than it was the year before. As mentioned above, real GDP by state for the entire country grew only 1.5% in 2011, down significantly from the 3.1% rate in 2010. Looking at the various geographic regions, the Far West was the only one to increase its growth rate in 2011. Meanwhile, the Mideast, Great Lakes, Plains, and Southeast regions all had GDP growth rates that were at least two percentage points lower in 2011 than they were the previous year. We know that 4% growth is possible because it is happening right here in the United States of America. There are bright spots scattered amidst the disappointing news of slow growth. We should study their models to learn how fast growth might be possible for the entire country.
Matthew Denhart is an expert on immigration policy and is the author of the Bush Institute’s America's Advantage: A Handbook of Vital Immigration and Economic Growth Statistics, now in its third edition. He currently serves as executive director of the Calvin Coolidge Presidential Foundation and is a founder of the Coolidge Scholars Program which provides full-ride merit scholarships to America's most promising college students. A summa cum laude graduate of Ohio University, Denhart has written and spoken widely on a variety of policy topics including the economics of higher education, labor, and taxes. He has contributed articles to numerous national publications including The Wall Street Journal, Forbes.com, CNN Opinion, and Bloomberg View.Full Bio