Economic Output

How is the Bay Area’s economy doing?

Economic Output

Definition: 
Economic output — measured by both the total and per capita gross regional product — refers to the value of goods and services generated by workers and companies in a region.

Dynamic metro area economies help to drive growth in our national economy. Looking at the gross regional product (or GRP) – similar to gross domestic product which gauges the size and strength of a nation’s economy – allows us to tally the value of the goods and services produced. A growing GRP indicates that a region’s businesses are competing successfully in today’s fast-moving, globalized economy.

Regional Performance
The Bay Area economy has grown by 42 percent since the “dot-com” bust in 2001.

The Bay Area economy, $722 billion strong, is faring well in the first decade-plus of the 21st century. Notwithstanding two significant recessions – in 2001-2002 and in 2007-2009 – the region boosted its economic output by 42 percent from 2001 to 2015. While a growing population explains some of this growth, the region’s economy has still grown by 28 percent when evaluated on a per capita basis. Since 2009, the low point of the recent downturn, the region has added $144 billion to its GRP, an average of nearly 4 percent growth each year.

It’s worth noting that the Bay Area’s impressive growth in output since 2001 has not been accompanied by a proportional growth in overall employment. The number of jobs in the region grew just 5 percent over this period, moving from 3.5 million in 2001 to 3.7 million in 2015. Much of the region’s economic growth can therefore be attributed to the presence of job growth in high-productivity industry sectors such as electronic component manufacturing, computer software design, and scientific research and development services.

Read More

Historical Trend for Economic Activity — Bay Area

 
Local Focus
All Bay Area subregions have seen positive trends for economic output, but Silicon Valley is powering the region’s economic surge.

Riding a technology boom, the economic output of Silicon Valley grew by 77 percent from 2001 to 2015, almost double the overall regional growth rate. While the San Francisco-Oakland subregion still accounts for over 60 percent of the Bay Area economy, Santa Clara County now contributes over 30 percent of our region’s economic output.

In the North Bay, Sonoma County saw a 7.2 percent annual jump in GRP in 2015, by far the fastest year-over-year growth in over a decade. Growth in economic output came from beverage manufacturing and real estate. Compared to the other Bay Area subregions, Sonoma County still has the smallest long-term growth in GRP since 2001 at 18 percent.

Read More

National Context
When it comes to economic output, the Bay Area is growing faster than any of its peer metro areas.

The Bay Area’s economy has been the nation’s best performer since 2001, with its 28 percent per capita GRP growth outpacing other major metro areas by a wide margin. Prior to the Great Recession, our region’s economy was also one of the faster-growing in the nation, along with those of Los Angeles, Miami, Washington and New York. Since the Great Recession, however, these other large metro areas have seen little-to-no growth in per capita GRP – whereas the Bay Area economy has taken off thanks to Silicon Valley. Our region’s 2015 per capita GRP also topped the list of its big-city peers, surpassing the nation’s energy, political and financial hubs (Houston, Washington and New York, respectively) by at least $14,000 per person.

Houston and Dallas had experienced similar growth trajectories in recent years, but they diverged in 2014. While Dallas has continued to grow at a post-recession rate that is one of the fastest in the country due to its relatively diversified economy, Houston shrank in 2014 as a result of a slowing energy sector. Like Houston, the per capita economic output of the Washington metro area has also decreased and has generally declined since 2010 – in this case as a result of federal budget cuts.

Read More

Sources: 

Bureau of Economic Analysis: Regional Economic Accounts (2001-2015)

California Department of Finance: Population and Housing Estimates

Table E-8: Historical Population and Housing Estimates (2001-2009)

Table E-5: Population and Housing Estimates (2011-2015)

U.S. Census Bureau: Intercensal Estimates

Annual Estimates of the Population (2001-2009)

Annual Estimates of the Population (2010-2015)

Image: Flickr (Creative Commons license), Photographer: Winston Hearn

Methodology Notes: 

As gross regional product data is only available on the MSA level, Bay Area data includes 10 counties (the nine core counties + San Benito County); this results in a slightly higher regional GRP as a result of additional population and business activity. Per capita data reflects the additional population included as a result of San Benito County’s participation in the San Jose MSA. 2015 data should be considered preliminary. The statistics for GRP for 2015 are based on source data that are subject to further revision and are limited to 22 NAICS-based sectors. Data is inflation-adjusted by using both nominal and real data developed by BEA and appropriately escalating real GRP data in 2009 dollars to today’s dollars (2015). This inflation adjustment approach is specific to each MSA and is different from the CPI inflation approach used for other datasets on the Vital Signs website.