Oregon GDP Growth Ranks Second Fastest Among All States
by Amy Vander Vliet, Oregon Employment Services
Oregon’s Gross Domestic Product (GDP) grew by 3.3 percent in 2016 according to the Bureau of Economic Analysis. This was more than double the pace of national growth (1.5%) and the second-fastest among all states. A year earlier, in 2015, Oregon’s growth tied with Texas for the fastest in the nation at 4.5 percent.
GDP measures the total market value of final goods and services produced in a given region over a specified period of time. It’s a comprehensive and widely used measure of economic activity.
National GDP growth was fueled by the information sector, as was also the case in Washington and Utah; the states with the fastest and third-fastest growth. This wasn’t the situation in Oregon. Instead, economic growth was driven by durable goods manufacturing, which accounted for nearly one-third of net gains. Oregon derives a disproportionate share of its GDP from this sector relative to the nation due to high tech (semiconductors); 19.1 percent or three times the national share. These manufacturers provide an unusually large amount of added value to their products, and invest heavily in research and development.
Despite being a powerhouse of Oregon’s economy, our growth advantage relative to other states does not hinge on durable goods. Removing it from the equation across all states, Oregon’s GDP comes in at 2.9 percent; more than 1 percentage point faster than the nation and seventh fastest among all states.
Oregon’s GDP growth ranking has been all over the map in recent years. The state went from recording the slowest to the fastest growth in just three years – 2012 to 2015. Similarly, during the dot.com bust, it dropped from second fastest to sixth slowest in just one year. Such volatility tends to be the case when a region is more concentrated in one or two cyclical industries. We’re not alone. Wyoming and North Dakota, highly dependent on the even more volatile oil and gas industry, are far more extreme. Together, they’ve recorded the fastest growth in eight of the last 16 years and the slowest growth in five.
Despite Oregon’s relative volatility, long term trends are strong. Annual growth over the past two decades averaged 3.3 percent; second only to North Dakota at 4.7 percent.