Federal data show how far Great Lakes economy has shrunk

The national recession didn’t strike every part of the United States with equal force, and it appears the Great Lakes region got the worst of the severe economic blow.

Stateline Midwest, Volume 19, No. 11- December 2010


The national recession didn’t strike every part of the United States with equal force, and it appears the Great Lakes region got the worst of the severe economic blow.

Federal data released in Novembershow that real gross domestic product in the five-state region fell 3.4 percent between 2008 and 2009 — the most of any of the eight regions tracked by the U.S. Bureau of Economic Analysis. This percentage-point drop in economic activity was nearly triple the decline experienced by the region’s Plains states over the same time period.

The decline in one industrial sector stood out the most: the manufacture of durable goods.

Michigan, Indiana, Ohio and Wisconsin (in that order) had higher percentage-point declines of economic activity in this sector than any other states in the nation. Hard-hit states in the West and Southwest were impacted most by declines in the construction industry, the bureau notes in its November report on state GDP statistics.

A look at longer-term federal data shows that the Great Lakes region also entered the recession on relatively weak economic footing: For at least a decade prior to the national economic downturn, GDP growth in the Great Lakes states was lagging behind that of the nation’s. For example, between 2003 and 2007, GDP in the Great Lakes region grew by 1.0 percent, compared to a U.S. increase of 2.8 percent.

For the seven-state Plains region of the Midwest, economic decline has either been less severe or nonexistent in recent years. Nebraska, North Dakota and South Dakota were three of only 10 U.S. states where GDP rose between 2008 and 2009.

All three of these states’ economies have been bolstered by strong economic activity in agriculture; South Dakota also has benefited from robust growth in its finance and insurance sector.

Trends in states’ per capita GDP

Another way to measure recent economic trends is to look at per capita real GDP in each state.

Between 2006 and 2009, this figure fell in Illinois, Indiana, Michigan, Minnesota, Ohio and Wisconsin.

Minnesota still continues to have the highest per capita GDP in the Midwest ($45,392 in 2009, 14th highest in the nation). Over the past four years, North Dakota’s U.S. ranking on this measure of economic wealth and activity jumped from 28th to 15th. Indiana, Iowa, Kansas, Nebraska, Ohio and South Dakota also have made gains relative to other U.S. states.