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  • June 2003 63

    Gross State Product by Industry, 19992001By Sharon D. Panek and Ndidi O. Obidoa

    EW estimates of gross state product (GSP) con-firm that the economic slowdown in 2001, while

    mild by historical standards, was geographically wide-spread. Real GSP grew 0.4 percent in 2001, down froma 4.7-percent increase in 2000. In contrast, real GSPhad declined 0.2 percent during the 199091 recessionand 1.6 percent in the more severe 198182 recession.1

    In 2001, real GSP declined in 20 states, and growth de-celerated in an additional 26 states (table 1, page 66).In the 199091 recession, real total GSP declined in 18states, and growth decelerated in an additional 19

    1. In this article, percent changes are expressed at annual rates. The199091 and 198182 recessions refer to growth rates in 1991 and 1982,respectively.


    The estimate of gross state product (GSP) for each state isderived as the sum of the gross state product originatingin all industries in the state. In concept, an industrysGSP, or its value added, is equal to its gross output (salesor receipts and other operating income, commoditytaxes, and inventory change) minus its intermediateinputs (consumption of goods and services purchasedfrom other U.S. industries or imported). Thus, the GSPaccounts provide data by industry and state that are con-sistent with the Nations gross domestic product (GDP)by industry accounts.

    However, total GSP for the Nation differs from GDP inthe national income and product accounts for three rea-sons. First, like the national estimates of GDP by indus-try, GSP is measured as the sum of the distributions byindustry of the components of gross domestic income,which differs from GDP by the statistical discrepancy.1

    Second, GSP excludes, and GDP and GDP by industryinclude, compensation of Federal civilian and militarypersonnel stationed abroad and government consump-tion of fixed capital for military structures located abroadand for military equipment except domestically locatedoffice equipment. Third, GSP and GDP often have differ-ent revision schedules. Reflecting these differences, realGDP growth has been slower than real GSP growthby0.1 percentage point in 2001, by 0.9 percentage point in2000, and by 0.4 percentage point in 1999. For anaccounting of the differences between GSP for the Nationand GDP by industry in 2001, see appendix A.2

    The GSP estimates are prepared for 63 industries. Foreach industry, GSP is presented in three components:Compensation of employees, indirect business tax and

    1. In the national estimates of GDP by industry, the statistical discrep-ancy is not allocated by industry. In the GSP estimates, insufficientinformation is available for allocating the statistical discrepancy tostates. For more information, see the box The Statistical Discrepancyin Robert P. Parker and Eugene P. Seskin, Annual Revision of theNational Income and Product Accounts, SURVEY OF CURRENT BUSINESS77 (August 1997): 19.

    2. See also the box Gross Domestic Product by Industry: Definitionand Relationship to Gross Domestic Product and Other Measures ofOutput in McCahill and Moyer, 23.

    nontax liability, and property-type income. Compensa-tion of employees is the sum of wage and salary accruals,employer contributions for social insurance, and otherlabor income. Property-type income is the sum of corpo-rate profits, proprietors income, rental income of per-sons, net interest, capital consumption allowances,business transfer payments, and the current surplus ofgovernment enterprises less subsidies.

    Current-dollar estimates of GSP and its compo-nents are controlled to national totals of current-dol-lar GDP by industry and its components for allindustries.3

    The estimates of real GSP are prepared in chained(1996) dollars. Real GSP is an inflation-adjusted measureof each states gross product that is based on nationalprices for the goods and services produced within thatstate. The estimates of real GSP and of quantity indexeswith a base year of 1996 are derived by applying nationalimplicit price deflators to the current-dollar GSP esti-mates for the 63 industries. Then, the chain-type indexformula that is used in the national accounts is used tocalculate the estimates of total real GSP and of real GSPat a more aggregated industry level.4 Real GSP mayreflect a substantial volume of output that is sold to otherstates and countries. To the extent that a states output isproduced and sold in national markets at relatively uni-form prices (or sold locally at national prices), GSP cap-tures the differences across states that reflect the relativedifferences in the mix of goods and services the statesproduce. However, real GSP does not capture geographicdifferences in the prices of goods and services producedand sold locally.

    3. If the initial sum of the state estimates differs from the nationaltotal for an industry, the difference between the national total and thesum-of-state total is allocated to the states according to the state distri-bution of the initial estimates.

    4. For additional information, see J. Steven Landefeld and Robert P.Parker, BEAs Chain Indexes, Time Series, and Measures of Long-TermEconomic Growth, SURVEY 77 (May 1997): 5868; and Howard L.Friedenberg and Richard M. Beemiller, Comprehensive Revision ofGross State Product by Industry, 197794, SURVEY 77 (June 1997):2829.

    Gross State Product Estimates

  • 64 Gross State Product by Industry June 2003

    Note. Quintiles are based on 20002001 growth rates.U.S. Bureau of Economic Analysis

    7Top-quintile states

    United States

    1990 199119921993 1994 1995 1996 1997 1998 1999 2000 2001

    Bottom-quintile states










    Chart 1. Real Gross State Product: Percent Changefrom Preceding YearChart 1. Real Gross State Product: Percent Changefrom Preceding Year

    states. In the 198182 recession, real total GSP de-clined in 37 states, and growth decelerated in an addi-tional 12 states.

    This article presents first-time estimates of GSP for2001 and revised estimates for 1999 and 2000.2 GSP isthe market value of the goods and services producedby the labor and property located in a state (see the boxGross State Product Estimates).

    Some of the highlights of the GSP estimates includethe following:

    Mirroring the national trends in GDP, real U.S. GSPincreased in private services-producing industriesin 2001, and it declined in private goods-producingindustries.3 The performance of high-tech indus-tries was mixed.4

    Although growth was weak across a wide spectrumof industries, declines in real manufacturing GSPcontributed the most to declines in real total GSP inall of the states in the bottom quintile of growthexcept Alaska, where mining was the largest con-tributor.

    In 2001, private services-producing industries shareof current-dollar GSP increased in 40 states.

    In 1999 and 2000, revisions in current-dollar GSPwere generally small. The largest revision was forLouisiana, where state source data on mining pro-duction were revised up substantially.The first part of this article discusses the relative

    performance of states in terms of growth rates, sharesof GSP components, and state shares of total GSP forthe Nation. The second part discusses the revisions tothe GSP estimates and the major sources of the revi-sions.

    2. These estimates are consistent with the estimates of GDP by industryfor the Nation that were published in Robert J. McCahill and Brian C.Moyer, Gross Domestic Product by Industry, 19992001, SURVEY OF CUR-RENT BUSINESS 82 (November 2002): 2341.

    For the previously published estimates of GSP, see Sharon D. Panek andGeorge K. Downey, Gross State Product by Industry, 19982000, SURVEY82 (June 2002): 5777.

    3. Private goods-producing industries consist of agriculture, forestry, andfishing; mining; construction; and manufacturing. Private services-produc-ing industries consist of transportation and public utilities; wholesale trade;retail trade; finance, insurance, and real estate; and services.

    4. In this article, high-tech industries, at the Standard Industrial Classifi-cation (SIC) two-digit level, consist of the following: SIC 35, industrialmachinery and equipment (which includes computer and related hardwaremanufacturing), SIC 36, electronic and other electric equipment (whichincludes semiconductor manufacturing and related products), SIC 48,communications (which includes telephone, satellite, and multimedia ser-vices), and SIC 73, business services (which includes software development,data processing services, and computer rental and leasing). Although somelow-tech industries are included at the two-digit level (the level at which theGSP estimates are produced), this definition is useful for determining theconcentration of high-tech industries in states. This definition also corre-sponds, at the two-digit level, with the definition of information technol-ogy producing industries in Economics and Statistics Administration,Digital Economy 2000, U.S. Department of Commerce, 2000.

    Growth Rates and SharesThe relative performance of states or particular indus-tries within states can be assessed by examining theirreal growth rates, their contributions to real GSPgrowth, their shares of current-dollar GSP, and thecomposition of current-dollar GSP by industry andstate.

    Real growth ratesChart 1 shows trends in real GSP growth for19902001 for the United States and for the top-quin-tile and bottom-quintile states, where the quintiles aredefined by 2001 growth. States in the top quintile in2001 experienced above-average growth in all but 1year of the period, indicating that they are persistentlystrong growers. Further, real GSP growth in the topquintile remained positive and relatively strong bothduring the 2001