By Tim Brown, County Information Senior Analyst
How do we measure economic growth? Most of us are familiar with the term “gross domestic product” (GDP) as used to describe the economy of the United States, and we associate an increase in GDP with economic growth at the national level.
In the past, however, GDP data was not available by county. That changed in December 2019, when the U.S. Bureau of Economic Analysis (BEA) released its first official set of GDP data by county. This initial release covers the years 2001 through 2018, which allows us to look at trends in local economies. The BEA released both current dollar GDP data (not adjusted for inflation) as well as “real” or “chained” GDP data that has been adjusted for inflation.
The release of county level GDP data by the BEA will increase our ability to analyze how economic activity is changing at the county level both in total and, where available, by certain industries. As a result, the data will allow county officials and other stakeholders make better, data-driven decisions about the future of their communities.
The data and trends discussed in this article represent chained 2012 data — data for the years prior to 2012 has been adjusted for inflation that occurred before 2012 and data for the years after 2012 has been adjusted for inflation that occurred after 2012.
While annual county GDP data can be accessed for every year from 2001 to 2018, the following analysis only looks at trends from 2009 to 2018. In the United States, the Great Recession, the economic downturn originating in the U.S. housing market crash of 2007 and the global financial crisis set off by the bankruptcy of Lehman Brothers in September 2008, officially ended in July 2009. In addition, in 2008 Petrohawk Energy Corporation drilled the first discovery well in the Eagle Ford Shale. By 2010, more than 1,000 drilling permits were issued in the Eagle Ford. As a result, starting with data from 2009 avoids the worst of the Great Recession while largely capturing the growth of the oil and gas industry in Texas due to hydraulic fracturing or fracking.
Before drilling down to look at the mining and petroleum industry, let’s first look at trends in total GDP.
Map 1 shows the change in total GDP from 2009 to 2018 for all 254 Texas counties. Note that 73 counties experienced a decrease in GDP, indicating that total economic activity declined in these counties over this period. At the other end of the spectrum, GDP increased by more than 100% in 27 counties, with the greatest increases occurring in the counties of Karnes (3,072.11%), La Salle (2,062.34%), Reeves (1,827.45%) and Dimmit (1,547.02%). Three of those counties lie in the Eagle Ford Shale. Reeves County is located in the Delaware Basin, which is the western portion of the Permian Basin in Texas.
Map 2 looks at the change in GDP for private industries only — no governments or government enterprises. The map demonstrates that governments and government enterprises have a moderating influence on the economy, given the greater extremes we see after removing them from the analysis.
For example, Map 2 includes 32 counties with a change in GDP of more than 100% compared to only 27 counties in Map 1. While both maps show 73 counties with decreases in GDP, 19 counties lost at least 30% of their private industry GDP over the period, while total economic activity declined by at least 30% in only 16 counties.
Of course, much of the increase in economic activity statewide was driven by the oil and gas industry as seen in Map 3, which shows the change in the mining, quarrying and oil and gas extraction industry categories. The BEA did not provide this category of GDP data for every county, since doing so might reveal confidential data about specific businesses (in counties that have very few businesses in these industries).
The portions of the Eagle Ford Shale where there is more oil and less gas clearly stand out on Map 3, joining other counties along the Interstate 35 corridor from central Texas to the international border. This creates one of the larger groupings of counties where GDP in the mining, quarrying and oil and gas extraction industries grew by more than 30%. A second area on the map with significant growth in these industries is comprised of counties in the Permian Basin of West Texas.
Map 4 and 5 differ somewhat from the first three. Instead of focusing on a specific category or subcategory of industries, these maps look at changes in the production of goods by private industries and the production of services by private industries respectively. Each uses data from multiple industry categories to create super groups or umbrella groups. The private goods-producing industries in Map 4 include agriculture, forestry, fishing and hunting; mining, quarrying and oil and gas extraction; construction; and manufacturing.
The private services-producing industries in Map 5 cover an even broader range — utilities; wholesale trade; retail trade; transportation and warehousing, excluding Postal Service; information; finance and insurance; real estate, rental, and leasing; professional, scientific, and technical services; management of companies; administrative and support and waste management and remediation services; educational services; health care and social assistance; arts, entertainment, and recreation; accommodation and food services; and other services (except government and government enterprises).
Similar to Map 3, the BEA did not provide data for all 254 counties for Maps 4 and 5 in order to avoid releasing information about specific businesses. This is represented in the “No Data” categories on all three maps. However, even allowing for the missing data, Maps 4 and 5 reveal that, for much of the state, growth in services drove the increase in economic activity from 2009 to 2018, not growth in the production of goods. In addition, by comparing Map 3 to Map 4 we see that a significant number of the counties with growth in goods-producing industries lie in the Eagle Ford Shale and Permian Basin regions.
The maps provide a statewide overview of how GDP has changed over the selected time period. The maps also provide insights of how individual counties fared. However, the real value of this data for county officials is the ability to look at economic activity in their counties.
For example, Chart 1 looks at how GDP changed from 2009 to 2018 for certain industry groupings in Caldwell County. While overall GDP increased by 33.7% over this period, a large amount of variation existed in the different industry categories. Specifically, transportation and utilities increased by 236.28% while natural resources and mining decreased by 5.92%, yet the actual largest dollar increase occurred in the umbrella group of private services-producing industries.
Chart 1 reveals that, at least in Caldwell County, natural resources and mining make up a substantial portion of the private goods-producing umbrella group. The chart also shows how a surge in the natural resources and mining industry from 2011 to 2015 greatly impacted the private goods-producing umbrella group over the same years.
For now, county GDP data is scheduled to be released annually, unlike U.S. GDP data which is released monthly. Those interested can find more GDP information, in chained 2012 dollars, through the appropriate County Profile page (just scroll to the bottom of the specific county page and click on the GDP link). For complete details, including GDP in constant dollars and percent change by year, look at the county level Interactive Data on the BEA web site.