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 Outline of Analysis
| California vs. New York Comparative Trends Analysis: Gross Domestic Product Growth and Change, 1987-2016 Introduction  California: 2016 GDP = $2,602,672M 2016 Percent of U.S. = 14.1% 2016 Rank = #1 New York: 2016 GDP = $1,487,998M 2016 Percent of U.S. = 8.1% 2016 Rank = #3 Nationally, GDP (Gross Domestic Product) is widely regarded as the foremost blue-chip barometer for tracking and calibrating the economic performance of the economy nationwide. Like its closely followed national counterpart, the GDP of the state of California is the most comprehensive measure of output of all goods and services produced by labor and property located within California. It is a market valuation of the goods and services—both private and public—produced within a state economy. Unlike the widely and frequently reported employment and job numbers that measure labor as one of the units of input into production, GDP is a valuation of the output. Also, while State Personal Income is representative of the “purchasing power” of those that reside within a state, think of Gross Domestic Product as representative of the “producing power” of that state. For a more detailed and technical explanation of Gross Domestic Product (GDP) by State compiled by the Regional Product Branch of Bureau of Economic Analysis please refer to the July 2013 Survey of Current Business article, (pp. 115-120). BEA: DefinitionGDP by state is the state counterpart of the Nation's gross domestic product (GDP), the Bureau's featured and most comprehensive measure of U.S. economic activity. GDP by state is derived as the sum of the GDP originating in all the industries in a state. The statistics of real GDP by state are prepared in chained (2009) dollars. Real GDP by state is an inflation–adjusted measure of each state's gross product that is based on national prices for the goods and services produced within that state. The statistics of real GDP by state and of quantity indexes with a base year of 2009 were derived by applying national chain–type price indexes to the current–dollar GDP–by–state values for the 64 detailed NAICS–based industries for 1997 forward. The chain–type index formula that is used in the national accounts is then used to calculate the values of total real GDP by state and of real GDP by state at more aggregated industry levels. Real GDP by state may reflect a substantial volume of output that is sold to other states and countries. To the extent that a state's output is produced and sold in national markets at relatively uniform prices (or sold locally at national prices), real GDP by state captures the differences across states that reflect the relative differences in the mix of goods and services that the states produce. However, real GDP by state does not capture geographic differences in the prices of goods and services that are produced and sold locally. United States. Bureau of Economic Analysis, Regional Product Division. BEA: Relation of GDP by state to U.S. Gross Domestic Product (GDP)An industry's GDP by state, or its value added, in practice, is calculated as the sum of incomes earned by labor and capital and the costs incurred in the production of goods and services. That is, it includes the wages and salaries that workers earn, the income earned by individual or joint entrepreneurs as well as by corporations, and business taxes such as sales, property, and Federal excise taxes—that count as a business expense. GDP is calculated as the sum of what consumers, businesses, and government spend on final goods and services, plus investment and net foreign trade. In theory, incomes earned should equal what is spent, but due to different data sources, income earned, usually referred to as gross domestic income (GDI), does not always equal what is spent (GDP). The difference is referred to as the "statistical discrepancy." Starting with the 2004 comprehensive revision, BEA's annual industry accounts and its GDP–by–state accounts allocate the statistical discrepancy across all private–sector industries. Therefore, the GDP–by–state statistics are now conceptually more similar to the GDP statistics in the national accounts than they had been in the past. U.S. real GDP by state for the advance year, 2012, may differ from the Annual Industry Accounts' GDP by industry and, hence NIPA (National Income and Product Account) GDP, because of different sources and vintages of data used to estimate GDP by state and NIPA GDP. For the revised years of 2009—2011, U.S. GDP by state is nearly identical to GDP by industry except for small differences resulting from the GDP–by–state accounts' exclusion of overseas Federal military and civilian activity (because it cannot be attributed to a particular state). The GDP–by–industry statistics are identical to those from the 2012 annual revision of the NIPAs, released in July 2012. However, because of revisions since July 2012, GDP in the NIPAs may differ from U.S. GDP by state. United States. Bureau of Economic Analysis, Regional Product Division. California Gross Domestic Product, 1987-2016 Current vs. Chained 2009 Dollars (Billions)  Figure 1. Figure 1 depicts California's annual gross domestic product over 1987-2016 in current and constant (chained 2009) dollars. Constant dollar measurements remove the effects of inflation. They allow for comparison of changes in the real total good and services output of California over time. When measured in current dollars, California's GDP increased 323.0%, from $615B in 1987 to $2,603B in 2016. When measured in constant 2009 dollars to adjust for inflation, it advanced 121.3%, from $1,040B in 1987 to $2,301B in 2016. Real Gross Domestic Product, 1987-2016 (Billions)  Figure 2. Figure 2 tracks California's and New York's annual real gross domestic product for the period 1987-2016 to illustrate real gross domestic product patterns over time. During this 30-year period, California's real gross domestic product rose from $1,040B in 1987 to $2,301B in 2016, for a net gain of $1,261B, or 121.3%. In comparison, New York's real GDP advanced from $775B in 1987 to $1,275B in 2016, for a net advance of $500B, or 64.6%. California's real GDP ranked 1st among the 51 states in 2016, New York's ranked 3rd. Real Gross Domestic Product Indices (1987=100): 1987-2016  Figure 3. Figure 3 shows California's real gross domestic product growth in a broader context by offering direct comparisons across time with New York, the United States. The growth indices shown here express each region's real gross domestic product in 1987 as a base figure of 100, and the real gross domestic products in later years as a percentage of the 1987 base figure. This method allows for more direct comparison of differences in real gross domestic product growth between regions that may differ vastly in size. California's overall real GDP growth was 121.3% over 1987-2016 outpaced New York's increase of 64.6%, and topped the United States' increase of 100.4%. Gross Domestic Product as a Percent of the United States Total: 1987-2016  Figure 4. Another interesting and insightful way of highlighting the gross domestic product growth of California and New York is to compare their individual percentage contributions to the United States' total gross domestic product over time, as shown in Figure 4. A rising share means a state's gross domestic product grew faster—or declined less—than the United States' gross domestic product, while a declining share shows they grew more slowly. In 1987, California's GDP comprised 13.2% of the United States' GDP, while in 2016 it comprised 14.1% thereby yielding a +0.9% share-shift. Similarly, in 1987, New York's GDP made up 9.0% of the United States' GDP, while in 2016 it equated to 8.1%, resulting in a -0.9% share-shift.
California Real Gross Domestic Product: Annual Percent Change, 1988-2016  Figure 5. Figure 5 highlights the short-run pattern of California's real gross domestic product growth by tracking the year-to-year percent change over 1988-2016. The average annual percent change for the entire 29-year period is also traced on this chart to provide a benchmark for gauging periods of relative high--and relative low--growth against the backdrop of the long-term average. On average, California's real GDP grew at an annual rate of 2.81% over 1988-2016. The state posted its highest growth in 2000 (7.43%) and recorded its lowest growth in 2009 (-4.07%). In 2016, California's real GDP grew by 2.92% California Real Gross Domestic Product: Annual Percent Change and Decade Averages Over 1988-2016  Figure 6. Figure 6 again illustrates the annual percent change in California's real gross domestic product since 1988, but this time they are overlayed with average growth rates for the decade of the 1990s, 2000s, and 2010-2016. During the 1990s, California's annual real GDP growth rate averaged 2.99%. It averaged 2.33% throughout the 2000s, and 2.68% thus far this decade (2010 to 2016). Real Gross Domestic Product Growth: Average Annual Percent Change by Decade  Figure 7. Figure 7 compares the decade average growth rates for California noted in the previous graph with the corresponding decade averages for New York and the nation. As the chart reveals, California's average annual real gross domestic product growth outgained New York's average in the 1990s (2.99% vs. 1.94%), topped New York's average throughout the 2000s (2.33% vs. 1.52%), and outperformed New York's average over the 7 year period of the last decade, 2010-2016 (2.68% vs. 1.51%). Finally, relative to nationwide real gross domestic product growth trends, California fell under the nation in the 1990s (2.99% vs. 3.31%), topped the nation over the 2000s (2.33% vs. 1.68%), and recorded above the nation over 2010-2016 (2.68% vs. 1.91%).
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