Gross Domestic Product Growth Rankings Slip for Oregon’s Metropolitan AreasOctober 2, 2018
The Bureau of Economic Analysis recently released the 2017 metropolitan gross domestic product (GDP) figures with most Oregon metros seeing growth in production slow, in some cases, quite dramatically. As a reminder, 2016 was a banner year for GDP growth amongst Oregon metropolitan areas. Four of Oregon’s eight metropolitan statistical areas ranked among the top 35 for fastest annual growth in gross domestic product out of over 380 metros nationwide. With slower rates of growth in production in 2017, fewer Oregon metros ranked among the fastest growing for GDP.
As a reminder, gross domestic product represents an estimate of the total dollar value of all goods and services produced in the given geography over a specific time. It is the economy's output. The majority of this output is market production, meaning those goods and services produced for sale in the market. However, a portion of GDP is non-market production, such as education services provided by local governments or management of our public lands. Gross domestic product is equal to the value of final goods. For instance, if a business produces cogs (intermediate product) for clocks (final product) then their production is not directly counted in GDP. Instead GDP measures the value of the clock (final product), which theoretically includes the production value of the individual cog.
Across all metro areas in Oregon, GDP grew by 2.9 percent between 2016 and 2017, slower growth than the previous two years when growth exceeded 4 percent annually. This tracks closely with employment trends where the rates of growth have been slowing the past several years as the current expansion matures. Six of Oregon’s metropolitan areas posted slower rates of growth in production in 2017 compared with the year prior. Grants Pass was a notable exception with GDP growth up to 4.3 percent year-over-year compared with 2.6 percent in 2016. The only other metro area that did not post a slower rate of growth was Eugene where GDP growth (+2%) was fairly consistent with gains in 2016.
Although GDP growth is slowing, the rate of growth still remains at a relatively strong pace. Nearly all of the metro areas posted rates of growth over 2 percent, highlighted by Bend-Redmond and Grants Pass metro areas each seeing GDP expand by 4.3 percent from the previous year. The Albany metro area (Linn County) was the only metro area to see declines in GDP from 2016 (-0.7%).
The Portland metro area remains the elephant in the room, accounting for nearly three-quarters of Oregon metro areas’ gross output. To put it in dollar terms, GDP in the Portland metro area was just shy of $172 billion in 2017. The next closest was Salem ($17.3 billion), followed by Eugene ($15.8 billion) and Bend ($10 billion).
When looking at the drivers of economic output we see quite a few patterns emerge across Oregon’s metro areas. GDP growth is largely being driven by professional and business services, health care, and the trades. Despite rapid employment growth in construction, the share of GDP growth attributed to construction is relatively small. Even in the Bend-Redmond area where construction employment growth has been particularly fast, we only see construction accounting for around 10 percent of the gains seen in local GDP.
Rates of employment growth in 2018 continue to slow across most metro areas in Oregon. Expect to see slower rates of growth again reflected in the gross domestic product figures for 2018 when they are released next year.