ECON First believes that business success centers around knowing the economic and demographic characteristics of their primary market area. While business experience, insights and intuition are important, they are substantially advanced by hard data.
One standard measure of economic health is the growth rate in real (inflation adjusted) gross domestic product (GDP) per capita. GDP is the output of final goods and services in a geographic area during a specified time period.
The GDP growth rate is the most comprehensive thermometer for judging the temperature of an economy. Examining GDP on a per capita basis controls for the influence of population change on changes in output.
THE BASIC ECONOMICS
GDP encompasses the output of an economy across all industries…including manufactured goods and construction, health services, retail trade, and even government.
Strong growth in real GDP is accompanied by strong growth in annual average wages and total personal income, a decline in poverty rates, and net increase in the population of business establishments. At a regional level strong GDP growth results in high net in-migration of young adults. Obviously all good indicators for business.
As with any economic measure, real GDP is available in more detail and greater frequency at the national level. Still, the U.S. Bureau of Economic Analysis does produce annual estimates of real GDP at the state and county levels.
Not surprisingly, the variation in GDP growth increases exponentially the more one digs down geographically.
Over the most recent 15 years, the growth rate in real GDP per capita among the states ranges from 4.04% per annum in North Dakota to -0.09% in Nevada.
Texas recorded a growth rate of 1.15%, but there was far more variation when economies were measured at the county level. La Salle County, Texas, for example, performed at the top with a real GDP growth rate per capita of 9.08% per annum. King County was at the other end of the spectrum with a rate of -8.63% per annum.
As expected, the annual average wage increase three times faster in La Salle compared to King counties. The poverty rate fell in LaSalle County, the net number of business establishments increased, and there was net in-migration of young adults. The opposite occurred in King County.
ECON First specializes in providing the hard data that allows business owners to make more informed decisions regarding start-ups. expansion, marketing channels, and pricing strategies. Trends in gross domestic product at the county level are obviously one valuable data input that can provide assurance to business owners that they are moving in the right direction.
Let ECON First help you to better understand your primary market.
Dr. John E. Stapleford