Rogue Valley’s Economic Activity on the UpswingOctober 18, 2016 The Federal Bureau of Economic Analysis (BEA) recently published the Gross Domestic Product (GDP) estimates for 2015. These preliminary estimates showed solid growth in economic output for the Grants Pass and Medford metropolitan areas (Jackson and Josephine counties). Rates of growth were not too surprising considering the levels of job growth over the same period. In fact, Josephine County had the 29th fastest GDP growth among 292 U.S. metro areas. Josephine's GDP growth rate was 4.7 percent from 2014 to 2015, almost double the U.S. metro area average of 2.5 percent increase. Jackson County had the 86th fastest growth among all metro areas over that time. Even as U.S. metro area economies were expanding following the end of the Great Recession in 2011, it took until 2014 before Josephine County's GDP showed an increase.
As a reminder, gross domestic product represents an estimate of the total dollar value of all goods and services produced in a 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.
Jackson County's gross domestic product rose to $7.16 billion in 2015. Levels of production in our economy are relatively small compared with other metropolitan areas, ranking 241st out of 382 metro areas nationally, just behind Bend MSA's total GDP ranking. Jackson County's GDP rose by $379 million from 2014 to 2015. Josephine's increased by $132 million to reach $2.02 billion, impressive increases for an economy the size of the Rogue Valley's. In terms of GDP growth rates, over the past five years Jackson County ranked 159th out of 382 areas. Josephine's five-year growth rate ranking was a bit lower, at 250th among U.S. metro areas.
Despite the rapid growth in GDP, levels of economic activity remain below pre-recession levels. Josephine County GDP figures were $130 million lower than the previous peak in 2006, in inflation-adjusted dollars. Jackson County's 2015 GDP was $556 million below the peak in 2006. Although total economic output remains below pre-recession levels, total nonfarm employment regained nearly those pre-recession levels by August 2016.
One reason that the Rogue Valley economy has yet to reach peak inflation-adjusted levels of economic output is the nature of the last recession and what led up to such a steep drop once the recession hit. The Rogue Valley, particulary the Medford MSA (Jackson County) has been frequently cited as one of the "housing bust metro areas." See this post for more data from Josh Lehner with the Oregon Office of Economic Analysis.
With such a frothy housing market, soaring prices and construction activity during the mid-2000s, the Great Recession and associated housing bust and decline in construction, real estate and finance activity was particulary acute in the Rogue Valley. All of these factors have conspired to create additional hurdles to reach pre-recession levels of overall economic output in the Rogue Valley.
Faster growth in the Rogue Valley's GDP over the past year was due to continued growth in health care and social assistance, which contributed the largest share of GDP growth in both counties. Financial activities and professional and business services also contributed to economic output in Jackson and Josephine counties. Construction is still contributing very little to GDP growth. Construction contributed just 5 percent of Josephine's GDP growth and none of Jackson County's in 2015.
As employment continues its strong gains in 2016, it is probable that the Rogue Valley's GDP growth will show continued expansion as well when the data are released in September 2017.