Austin Chamber

October 3, 2017 – Gross Domestic Product by Metro

Posted By Beverly Kerr | Oct 03, 2017
Central Texas Economy in Perspective Print Article Austin Chamber
  • Austin’s economy grew an outstanding 4.9% in 2016, making it the fourth fastest growing major metro economy in 2016.
  • Professional and business services was the most significant driver of Austin’s GDP growth in 2016, but financial activities and trade were also important.
  • Over the last 5 years, real per capita GDP is up 16.6%, making Austin the fourth best performing major metro.
  • While Austin ranks as the 31st largest metro based on population, its economy ranks as the 27th largest.

Austin’s economy grew 4.9% in 2016 according to new data on gross domestic product (GDP) by metro released late last month by the U.S. Bureau of Economic Analysis (BEA). Growth for 2015, which was previously stated as 5.0% has been revised to 7.6%. These growth rates are real, inflation-adjusted, rates. While 4.9% growth is slower than what Austin has seen each year since 2010, relative to almost all major metros in 2016, Austin’s performance is outstanding.

Economic growth in 2016 across U.S. metropolitan areas was widespread. However, only 70% of 382 metros saw real gains, compared to 75% in 2015. Aggregate growth for all U.S. metros fell to 1.7% in 2016 after increasing by 2.9% in 2015.

Austin’s 4.9% gain in real GDP is the fourth highest rate of growth among the 50 largest metro economies. Austin follows San Jose which grew by 5.9%, San Francisco (5.4%), and Raleigh (5.3%). San Antonio grew 3.1% and ranked 13th and Dallas-Fort Worth’s 3.0% growth ranks 15th. Houston’s economy, which had growth of 4.9% in 2015, contracted by 3.0% in 2016, ranking 50th.

For the metropolitan portion of the U.S. as a whole, and for Austin, 2009 is the recession low-point for real GDP and positive growth resumes in 2010. Over the last 5 years, real GDP is up 10.9% in the metropolitan portion of the U.S. In Austin, real GDP has grown 34.7% since 2011, making it the second fastest growing major economy—behind only San Jose. San Antonio (up 30.5%), Dallas-Fort Worth (up 26.6%), and Houston (up 14.9%) rank as the third, fifth and 17th fastest growing large metros for 2011-2016.

Austin’s current dollar GDP totals $135.0 billion in 2016, making it the 27th largest U.S. metropolitan economy. At the time of last year’s release of this data, Austin ranked 32nd, however, this release revises upward Austin’s 2015 GDP, making it 27th largest in 2015 as well. On the basis of population, the Austin metro ranks 31st in 2016.

While 70% of all metropolitan economies grew in real terms in 2016, 94% of the 50 largest metros grew (in addition to Houston, Oklahoma City and Virginia Beach had negative growth in 2016). In aggregate, their growth was 1.9%, slightly greater than the 1.7% real gain for the entire metropolitan portion of the U.S. The 50 largest metros account for 73% of U.S. metropolitan area GDP.

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Per Capita GDP

Austin’s real GDP on a per capita basis performed well relative to other large metros over both 2015-2016 and 2011-2016. Austin ranks 13th with 1.9% real growth in per capita GDP in 2016, while the growth for all metros was 0.8%. Since 2011, real per capita GDP is up 16.6% in Austin, making it the fourth best performing large metro. Across all metros, 2011-2016 growth was 6.3%. Gains in real GDP on a per capita basis reflect improvement in an area’s standard of living.

The pre-recession peak for real per capita GDP across all metros was 2007. For the metropolitan portion of the U.S., 2016 per capita GDP just surpasses 2007 by 2.1%. Of the 50 largest metros, 21 still have real per capita GDP that is lower than what it was in 2007. San Jose (up 34.3%) and Pittsburgh (up 18.2%) lead all major metros for real per capita gains since 2007. Austin’s per capita GDP is $61,183 in constant (2009 chained) dollars, which is 16.6% ahead of 2007. This is the third best gain among the large metros. Five large metros have real per capita GDP in 2016 that is more than 10% below the level of 2007: Las Vegas, Phoenix, New Orleans, Orlando, and Jacksonville.

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GDP by Industry

All private industry sectors, except two—natural resources and mining and nondurable goods manufacturing—contributed positively to U.S. metropolitan area real GDP growth of 1.7% in 2016. Professional and business services, information, and financial activities made the greatest contributions to growth of U.S. metros in aggregate. Information only accounts for 5.1% of GDP for the metropolitan portion of the U.S., but it was the fastest growing industry sector in 2016, with 6.5% real growth.

In Austin, where real GDP growth was 4.9%, professional and business services contributed the most to growth (1.33 percentage points), followed by financial activities (1.28), and wholesale and retail trade (1.19). Natural resources and mining and durable goods manufacturing contributed negatively to Austin’s growth in 2016 (by 0.55 and 0.09 percentages points respectively).

The three industries contributing the most to Austin’s growth are also the regions’ three largest. Financial activities, accounts for 16.9% of GDP and saw 7.9% real growth.[1] Professional and business services, accounting for 15.6% of 2016 GDP, and real growth was 8.9%. Wholesale and retail trade makes up 15.3% of Austin’s GDP and was up 8.0% in 2016.[2] After professional and business services, information was Austin’s second fastest growing sector, with real growth of 8.5% in 2016.

Natural resources and mining accounts for 3.5% of Austin’s GDP and the industry’s real growth for 2016 was -12.9%. Durable goods manufacturing, which accounts for 9.2% of Austin’s 2016 GDP, contracted by 1.0% in real terms.[3]

Houston, the sixth largest metro economy, contracted by 3.0% in 2016. Houston’s contraction was driven by natural resources and mining (-1.44 percentage points), durable goods manufacturing (-0.71), and financial activities (-0.42).

Dallas-Fort Worth, the fourth largest metro economy, ranked 15th for growth in 2016. The metro’s 3.0% gain was driven by financial activities (0.76), professional and business services (0.64) and wholesale and retail trade (0.49), while natural resources and mining contributed negatively (-0.46).

San Antonio (ranking 35th largest) had real growth of 3.1% (13th fastest) and the largest contributors to growth in 2016 were financial activities (0.79), durable goods manufacturing (0.75), and professional and business services (0.49). As with the rest of Texas’ major metros, natural resources contributed negatively (-0.49).

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FOOTNOTES:

[1] In Austin in 2016, 33% of the financial activities sector is made up of finance and insurance and the remainder is real estate, rental and leasing. For the metropolitan portion of the U.S., 36% of the sector is finance and insurance.

[2] In Austin, 60% of the trade sector is wholesale trade and the balance is retail. For the metro portion of the U.S., 51% of trade is wholesale.

[3] In Austin in 2016, manufacturing is 79% durable goods and 21% nondurable goods. For the metropolitan portion of the U.S. manufacturing is 55% durable and 45% nondurable.

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Beverly Kerr

Vice President of Research, Beverly Kerr, joined the Chamber’s Economic Development Department in 2004, following 10 years in a similar role with the Kansas City Area Development Council. Beverly earned an M.A. in economics at the University of Missouri-Kansas City.