You hear about U.S. Gross Domestic Product (GDP) all of the time in the general business press, because folks use it as a quick-and-easy reference point for the overall health of the national economy. In most cases GDP covers a bit too much ground to have a direct correlation to the electrical economy, because the two customer segment that dominate the electrical wholesaling industry — construction (4% of GDP) and manufacturing (11% of GDP) — only account for a combined total of 15% of the U.S. All Industry GDP Total, according to the most recent data available from the U.S. Bureau of Economic Analysis. And most data is often a quarter or two behind the time period you may want to measure.
However, the regional GDP on data for specific market segments, like Manufacturing GDP data in the table below (Click on the Green Box below to view, or click here to download), gives you a glimpse of which states are lagging in the industrial market. Another revelation with this data is that when you break out GDP by state and Metropolitan Statistical Area (MSA) and county, as well as the various industry and business types available at www.bea.gov, you begin to see some interesting relationships between these areas, and the differences in the mix of businesses in these areas.
At the state level, it always surprises me how a relative handful of states can account for so much of the national total. With Total Industry GDP, 14 states account for 67% of the U.S. total (listed from most to least): California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, New Jersey, Georgia, Massachusetts, North Carolina, Washington, Michigan and Virginia.
I have done the calculations across a variety of economic and demographic metrics, including electrical contractor employment, building permits and population. States, metros and counties often account for a consistent percentage of these metrics when compared to the U.S., or their state or metro. For example, California accounted for 14.5% of BEA’s U.S. All Industry Total GDP in Q1 2019, and accounts for 12% of the total U.S. population; and 12% of private employment. It did come in a few points lower in electrical contractor employment at an estimated 10.4%.
While U.S. Bureau of Economic Analysis’ state and local GDP data have some limitations as economic metrics, it’s still a useful gauge of overall economic conditions when you need to factor in a quarterly or annual change in GDP. It also helps reveal where your company’s business is concentrated so you can deploy your salespeople, inventory and capital investments accordingly.
You can click on the Green Box below to view the data, or click here to download the data.