GDP by state: Economic growth slowed in 2007

New estimates released June 5 by the U.S. Bureau of Economic Analysis show that economic
growth slowed in most states and regions of the country in 2007. Real gross domestic product
(GDP) growth slowed in 36 states, with declines in construction and finance and insurance
restraining growth in many states.1 Nationally, real economic growth slowed from 3.1 percent
in 2006 to 2.0 percent in 2007, one percentage point below the average growth of 3.0 percent
for 2002-2006.

 Real economic growth either slowed substantially or was unchanged in all eight BEA regions.
The Far West region experienced the largest deceleration, dropping from 4.1 percent growth in
2006 to 1.9 percent in 2007. Even the Southwest region, which led all regions in growth in 2006
and 2007, slowed to 3.7 percent, down from 5.1 percent in 2006. The two regions that did not
experience a slowdown in 2007 — the Great Lakes and Plains — were already the slowest-growing
regions in 2006.

The deceleration in growth in 2007 was most pronounced in Arizona, California, Florida, and Nevada.
Each of these states had experienced faster real growth than the nation since 2003, but slowed
dramatically between 2006 and 2007, to rates below the national average (Chart 2). In 2006, Arizona
and Nevada were in the highest growth quintile, and California and Florida were in the second-highest
quintile. But in 2007, Arizona dropped to the third quintile; California dropped to the second-lowest
quintile; and Florida and Nevada dropped to the lowest quintile. In Arizona, Florida, and Nevada,
construction subtracted more than 1 percentage point from real GDP growth. In California, construction
and finance and insurance combined subtracted one percentage point from real growth.

Three states — Delaware, Michigan, and New Hampshire — saw their economies contract in 2007.
Like the states above, construction- and finance-related industries were largely responsible for the
weakness. In Delaware, the decline was primarily due to a large decline in finance and insurance,
and secondarily due to a decline in construction. In Michigan and New Hampshire, declines in these
industries and in real estate, rental, and leasing were largely responsible for the decreases in real GDP.

In contrast, Utah had the fastest economic growth in 2007 (5.3 percent), growing at more than twice
the national rate. Durable goods manufacturing, retail trade, and real estate, rental and leasing led
the way in Utah, accounting for more than half the state's growth. New York was the only eastern state
among the ten fastest-growing states. Contrary to the nation and most states, finance and insurance
was a strong contributor to growth in New York. Finance and insurance along with real estate, rental
and leasing accounted for 53 percent of New York's growth.

Per capita real GDP by state in 2007
Delaware's per capita real GDP of $56,496 was the highest in the nation, 49 percent above the national
average. Delaware's ranking reflects a large concentration in the highly capitalized finance and insurance
sector. Mississippi's per capita real GDP of $24,477 was the lowest in the nation, 36 percent below the
national average. Nine of the top 10 states and all of the bottom ten states were in these groups,
respectively, in 2006 and 2007. In the top ten states, Colorado replaced Nevada.

Several states experienced actual declines in per capita real GDP in 2007. In addition to the states with
contractions in real GDP, economic growth slowed in several states to rates below population growth,
causing lower per capita real GDP.