The 2022 Annual Update of the Regional Economic Accounts: New Statistics for 2021 and Updated Statistics for 2017–2020

Toward Regional Economic Recovery from the COVID–19 Pandemic

By Ledia Guci  |  Volume 102, Number 11  |  November 17, 2022

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The varying economic experiences across states precipitated by the financial crisis and the economic recession of 2007–2009 and, more recently, by the COVID–19 pandemic continue to emphasize the importance of regional economic statistics. On September 30, 2022, the U.S. Bureau of Economic Analysis (BEA) released the results of the 2022 annual update of the regional economic accounts. With this release, BEA published concurrently, for the first time, quarterly and annual statistics for gross domestic product (GDP) by state and state personal income.¹ The release of annual data on personal consumption expenditures (PCE) by state followed less than a week later, on October 6, 2022. This article focuses on the annual estimates for 2021 from these releases to tell a story of ongoing regional economic recovery from the COVID–19 pandemic.² It also provides an overview of the revised statistics for 2017–2020.

GDP by state, state personal income, and PCE by state are related economic measures that provide important and nuanced insights on various aspects of state economies. GDP by state is a comprehensive measure of production activities in each state. In addition to the value of goods and services produced, it shows industries' contribution to each state economy. One way to gauge how a state's economy is performing is to examine the change in state GDP from one period to another. Comparisons of states' GDP with pre-pandemic levels show, for instance, whether state economies are on a path to recovery and how that path varies across states.

Production of goods and services generates income for households. State personal income is a broad measure of the income received by households living in each state. It includes the income earned from production (e.g., wages), income earned from ownership of property (e.g., dividends), as well as transfer payments for government benefits (e.g., unemployment insurance benefits). Because the income that households receive plays an important role in determining their demand for goods and services, it is useful to examine the relationship between output and personal income. While these measures generally move together, there can be exceptions. For instance, as GDP declined during the COVID–19 pandemic, its impact on personal income was mitigated by various federal pandemic response programs including the economic impact payments, the Paycheck Protection Program, unemployment compensation and assistance, and the advanced child tax credit, among others.³

PCE by state shows how households use their personal income to determine their consumption and, like state personal income, it is an important indicator of the well-being of households in each state. It is a broad measure of household spending and includes direct spending by households as well as spending on behalf of households (e.g., health care services paid for by Medicare and Medicaid). Among other insights, these statistics show how households allocate their consumption between necessities and discretionary products and how they adjust their spending in response to changes in economic conditions.

In summary, while GDP by state, state personal income, and PCE by state statistics, individually provide important information on the value of goods and services produced by industries, the incomes earned by households, and the composition of household consumption in each state, together they provide a fuller picture of state economies and a better understanding of current and past regional economic conditions.

The newly released regional BEA data show how the state economies fared in 2021 following the impacts of the pandemic in 2020.⁴ Despite being the shortest economic recession on record dated by the National Bureau of Economic Research,⁵ the contraction in economic activity that marked this recession was severe, uneven, and widespread. The data show that while nationally the economy has generally recovered, the path to economic recovery has varied widely across states.

GDP by state

Nationally, real GDP grew 5.9 percent in 2021 after declining 2.8 percent in 2020 (table 1). Real GDP grew in all states and the District of Columbia in 2021 (chart 1). States with the highest real GDP growth were New Hampshire (9.3 percent), Tennessee (9.0 percent), Nevada (8.9 percent), Florida (8.4 percent), California (7.8 percent), and Michigan (7.4 percent). These states experienced below-average declines in real GDP in 2020, except for Michigan and Nevada, whose real GDP declined 4.0 percent and 6.7 percent, respectively. Twelve other states had above-average growth in real GDP in 2021 that ranged from 6 to 7 percent.

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Real GDP growth in 2021 was driven by a broad range of industries: industries that were severely affected at the onset of the pandemic as well as those that showed some resilience as part of the pandemic response (table 2). Arts, entertainment, accommodations, and food services were among industries most notably affected by the lockdowns and social distancing measures,⁶ as was manufacturing by factory closures and supply chain disruptions.⁷ Professional, business, and information services supported various aspects of the pandemic response, including the coronavirus research, the transition to remote work and online learning, and the digital delivery of health care services.⁸

Across industries, GDP by industry, or value added—a measure of an industry's contribution to GDP—grew the fastest in arts, entertainment, recreation, accommodations, and food services (28.3 percent), information (13.9 percent), professional and business services (11.7 percent), and manufacturing, particularly durable goods manufacturing (9.7 percent) (chart 2). In contrast, real GDP declined in non-manufacturing other private goods-producing industries driven by declines in agriculture and mining.

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Professional and business services were the leading contributor to real GDP growth in 2021 in New Hampshire, Florida, and California and a large contributor to growth in all other fastest growing states (chart 3, table 3). Finance, insurance, real estate; and arts, entertainment, recreation, accommodation and food services were the next largest contributors to growth in Florida. Information was the second largest contributor to growth in California.

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Arts, entertainment, recreation, accommodation and food services were the leading contributor to real GDP growth in Nevada. Manufacturing, particularly durable goods manufacturing, was the largest contributor to growth in Michigan. These two industries also made sizable contributions to real GDP growth in Tennessee.

States with the slowest real GDP growth in 2021 were Alaska (0.3 percent), North Dakota (0.3 percent), Oklahoma (0.4 percent), and Wyoming (0.4 percent) (table 1). These states experienced sizable declines in real GDP in 2020 that ranged from 4.3 percent in Oklahoma to nearly 5.7 percent in Wyoming. While real GDP grew for many industries in these states, the positive contributions by these industries were almost entirely offset by large declines in other private goods-producing industries: agriculture and mining (chart 4, table 3).

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Overall, in 2021 production in all states was on a path to recovery from the pandemic recession.⁹ This recovery, however, has been characterized by both supply- and demand-specific challenges including pandemic-related supply chain disruptions, tight labor markets, and strong demand stemming from federal relief and recovery measures.¹⁰

Ten states had yet to reach their pre-pandemic real GDP levels in 2021 (chart 5). Among these, Louisiana, Hawaii, Wyoming, Alaska, North Dakota, and Oklahoma had real GDP levels in 2021 that were nearly 4 to 7 percent lower than in 2019. In contrast, real GDP levels in Utah, New Hampshire, Idaho, and Washington were about 8 percent or more higher than in 2019. The national average real GDP growth from 2019 to 2021 was 3 percent.

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State personal income

Next, statistics on personal income and personal consumer spending provide insights into how households fared in 2021. Specifically, how much income households received in each state and how they adjusted their spending in response to the relatively more favorable economic conditions in 2021 compared with 2020.

Nationally, current-dollar personal income increased 7.5 percent in 2021, accelerating from 6.7 percent in 2020 (table 1). Increases in state personal income ranged from 9.8 percent in Florida to 4.9 percent in Alaska and Vermont (chart 6). In addition to Florida, Nevada and Tennessee were among states with the largest increases in personal income that were also among the fastest growing states in real GDP. In contrast, Alaska and North Dakota were among the states with lowest increases in personal income and slowest growing states in real GDP. The District of Columbia had the lowest increase in personal income in 2021 (4.4 percent).

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Across states, variations in personal income increases are largely attributable to a combination of industry-specific increases in earnings and variation in changes in personal current transfer receipts, which continued to increase in 2021 but at a slower pace compared with 2020. These general trends—the increase in income earned from current production and the deceleration in current transfer receipts (chart 7)—are consistent with the growth in production observed in the real GDP statistics.

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Substantial increases in earnings—comprised of compensation of employees and proprietors' income—were the leading contributor to the overall increase in state personal income. Compensation of employees, the largest component of personal income, increased on average 8.2 percent in 2021, up from 1.2 percent in 2020 (table 4). The percent change in compensation across states ranged from 3.3 percent in North Dakota to 13.9 percent in New Hampshire and accelerated in all states and in the District of Columbia.

Across industries, compensation of employees increased the most in arts, entertainment, recreation, accommodations, and food services (23.7 percent), followed by information (18.9 percent) and professional and business services (10.9 percent) (chart 8). Across states, the increase in compensation in arts, entertainment, recreation, accommodations, and food services ranged from 37.1 percent in Hawaii to 15.6 percent in Louisiana (chart 9). The increase in compensation in information services ranged from 47.5 percent in Nevada to 7.3 percent in Alaska, while in the professional and business services sector, compensation increases ranged from 44.2 percent in New Hampshire to 2.4 percent in Alaska. Changes in compensation of employees for detailed industries are shown in table 5.

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Proprietors' income—the income earned by unincorporated businesses that is received by persons—increased on average 7.3 percent in 2021, up from 2.3 percent in 2020 (table 4). This income component continued to be supported by the Coronavirus Food Assistance Program and the Paycheck Protection Program loans to businesses. Iowa, Arkansas, Mississippi, Illinois, South Dakota, Delaware, Alabama, and Colorado were among states with double-digit increases in proprietors' income. Proprietors' income declined in three states: Idaho, Montana, and Utah.

Personal current transfer receipts was the category most affected by policy responses to the pandemic, which included various increases and extensions of unemployment benefits, increases in Medicare reimbursements, economic income payments, and other programs. Personal current transfer receipts continued to increase in 2021 but decelerated, pointing to waning support from these programs. Current transfer receipts increased on average 9.1 percent in 2021 compared with 34.5 percent in 2020 (table 4). Personal current transfer receipts increased in all states and the District of Columbia in 2021, ranging from 1.6 percent in Vermont to 18.1 percent in Utah (chart 7).

Lastly, property income (dividends, interest, and rent) increased 2.9 percent in 2021, up from a negligible decline in 2020 (table 4). Dividends, interest, and rent increased in all states and the District of Columbia and ranged from 0.5 percent in Alaska to 6.8 percent in Wyoming.

PCE by state

Consistent with the overall increase in personal income received in 2021, households increased their consumption spending. Nationally, current-dollar PCE increased 12.7 percent after declining 1.9 percent in 2020 (table 1). The states with the largest increases in PCE were Utah (16.3 percent), Idaho (16.0 percent), Florida (15.6 percent), and Montana (14.9 percent) (chart 10). The states with the lowest increases were New York (9.4 percent), Minnesota (10.1 percent), West Virginia (10.3 percent), Vermont (10.4 percent), North Dakota (10.4 percent), and the District of Columbia (10.6 percent).

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Increases in PCE were driven by large increases in food services and accommodations, durable and nondurable goods, transportation and recreation services, and health care (chart 11). This is consistent with a story of increased socialization and partaking in recreation, entertainment, and travel activities following a year of pandemic-induced lockdowns and social distancing. The increases in health care spending reflect, in part, recovery of parts of the health care system that shut down in ambulatory care settings such as physician and dental offices.¹¹

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Food services and accommodations were the largest contributor to PCE increases in 20 states, including Florida, the state with the third largest increase in PCE (table 6). Health care was the largest contributor to increases in 29 states and the District of Columbia, including Idaho, the state with the second largest increase. Recreational goods and vehicles were the leading contributor to the increase in Utah, the state with the largest PCE increase.

In addition to personal income, regional trends in population growth help explain some of the regional differences in PCE growth. Typically, states with the largest increases in PCE tend to have faster-growing populations, while states with slower increases or declines in PCE tend to have slow-growing or declining populations. In 2021, population grew 0.1 percent nationally (chart 12). States with the highest population growth were Idaho (2.9 percent), Utah (1.7 percent), and Montana (1.7 percent), which were also among states with the largest PCE increases. Population declined in 18 states, with District of Columbia (−2.9 percent) and New York (−1.6 percent) experiencing the largest population declines. These were also among states with the lowest PCE increases.

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BEA will release price-adjusted statistics on personal income and consumer spending in December of 2022. Until these statistics become available, consumer spending as a share of personal income is a useful way to assess how households responded to pandemic-induced changes in personal income as personal income—specifically, the after-tax (disposable) personal income—is a key determinant of consumption. This share also provides a rough indication of personal saving as personal consumption expenditures are typically the largest personal outlays.¹²

In 2021, households spent on average 85 percent of their disposable personal income on consumption (chart 13). This compares with 88 percent in 2019 and 80 percent in 2020. Despite the increase in income in 2020 due to supplementation by various government programs, the decline in this share is consistent with consumers experiencing economic uncertainty. As the economy started to recover in 2021, this ratio increased, but has yet to reach pre-pandemic levels. Because consumer spending accounts for a large part of the economy (about 70 percent at the national level), it is an important driver of economic growth.

This same pattern is also observable at the state level, although the consumption-to-income ratio itself and the adjustment to consumption in response to changes in income vary across states. Chart 13 shows this ratio for the states with the fastest and slowest rates of real GDP growth in 2021. For these states, the consumption-to-income ratio in 2019 ranged from 74 percent in Wyoming to 95 percent in Michigan. In 2020, this ratio declined and ranged from 72 percent in Wyoming to 86 percent in Florida. In 2021, the consumption-to-income ratio increased compared with 2020, ranging from 77 percent in Wyoming to 92 percent in Florida, but for most of these states remained below the 2019 ratio.

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Each fall, with the annual release of GDP by state, state personal income, and PCE by state, BEA also updates previously released statistics. Previously released statistics are generally updated to incorporate the results of the annual updates of the National Income and Product Accounts (NIPAs) and GDP by industry statistics; to incorporate state source data that are more complete and more detailed than those previously available; as well as to incorporate any methodology improvements.

This year, there were no major methodology improvements incorporated in these state statistics as BEA is preparing for a comprehensive update of its economic accounts in the next year, including the comprehensive update of the regional economic accounts. The GDP by state, state personal income, and PCE by state statistics, however, were updated from 2017–2020 to incorporate the 2022 annual update of the NIPAs and GDP by industry statistics and updated state source data. A few of the major data sources that were updated for each of the statistics are summarized in table 7.¹³

In general, revisions to later years tend to be larger as new and revised data are incorporated across the national and regional statistics. The NIPA estimate of U.S. real GDP was revised downward for 2017 (−0.01 percent) and upward for 2018 (0.01 percent), 2019 (0.02 percent), and 2020 (0.68 percent) (table 8). For 2017–2019, the revisions to real GDP by state were less than 1 percent for all states. For 2020, the revisions to real GDP by state ranged from an upward revision of 2.25 percent in Tennessee to a downward revision of 1.74 percent in Louisiana.

In addition to Tennessee, Colorado (2.12 percent), Utah (2.09 percent), Arizona (2.07 percent), Arkansas (2.02 percent), and Idaho (2.02 percent) had the largest upward revisions in real GDP for 2020. Sizable upward revisions to gross operating surplus and taxes on production and imports less subsidies were the leading contributors to the upward revision in GDP for these states (table 9). After Louisiana, North Dakota (−1.70 percent), Indiana (−0.78 percent) and Hawaii (−0.73 percent) had the largest downward revisions to real GDP for 2020. For these states, sizable downward revisions to gross operating surplus were the leading contributors to the downward revision in GDP.

The NIPA estimate of U.S. personal income was revised downward for 2017 (−0.06 percent) and 2018 (−0.13 percent) and upward for 2019 (0.88 percent) and 2020 (1.04 percent) (table 8). For 2017–2018, state personal income was revised less than 1 percent for all states. Revisions for 2019 and 2020 were larger and reflect, in part, the introduction of new 2019 and 2020 data from the Internal Revenue Service, Statistics of Income. These data affect primarily proprietor's income and property income (dividends, interest, and rent) components of personal income.

For 2019, revisions to state personal income ranged from an upward revision of 4.13 percent in Wyoming to a downward revision of 1.58 percent in Arkansas. For 2020, the revision to state personal income ranged from an upward revision of 5.43 percent in Wyoming to a downward revision of 1.0 percent in Alaska. For most states, dividends, interest, and rent was the component that contributed the most to the revision in state personal income for 2020 (table 10). The upward revision in Wyoming was driven by upward revisions to dividends, interest, and rent and proprietors' income. The downward revision in Alaska was driven by the downward revision in compensation of employees, specifically supplements to wages and salaries, as a result of newly updated source data for health insurance.

The NIPA estimate of current-dollar national PCE was revised downward for 2017 (−0.04 percent), 2018 (−0.06 percent), and 2019 (−0.25 percent), and upward for 2020 (0.49 percent) (table 8). For 2017–2019, the revisions to PCE by state were less than 1 percent for all states. For 2020, PCE was revised upward for all states and the revisions to PCE by state ranged from 2.76 percent in the District of Columbia to 0.15 percent in Michigan and New Mexico. In addition to the District of Columbia, Hawaii (0.95 percent), Utah (0.85 percent), and Nevada (0.79 percent) had the largest upward revisions to PCE.

The upward revision to other services category was the leading contributor to the upward revision to PCE in the District of Columbia (table 11). For Hawaii, upward revisions to durable goods, food services and accommodations, and other services categories were the leading contributors to the upward revision in PCE. Upward revisions to durable goods, recreation services, and food services and accommodations were the leading contributors to the upward revision to PCE in Nevada, while upward revisions to durable goods and other services categories were the leading contributors to the upward revision to PCE in Utah.

This report covered annual estimates for 2021 from the GDP by state, state personal income, and PCE by state releases to tell a story of ongoing regional economic recovery from the COVID–19 pandemic. The data show that while nationally the economy has generally recovered, the path to economic recovery has varied widely across states. Each state's path has been shaped differently depending on many factors including its industry composition and how households in each state respond to changes in economic conditions. The upcoming release of price-adjusted state personal income and PCE by state statistics in December 2022 will provide additional information on how households fared in 2021 and whether real personal income and real consumer spending in 2021 reached pre-pandemic levels.

The report also provided an overview of the updates to previously released statistics. The GDP by state, state personal income, and PCE by state statistics were revised from 2017–2020 to incorporate the 2022 annual update of the NIPAs and GDP by industry statistics and updated available state source data. The revisions were generally small in the earlier years and a bit larger in the later years as new and revised data were incorporated across the national and regional statistics.

Bacher-Hicks, A., J. Goodman, and C. Mulhern. 2020. Inequality in Household Adaptation to Schooling Shocks: COVID-Induced Online Learning Engagement in Real Time. National Bureau of Economic Research Working Paper 27555 (November). Available at https://www.nber.org/system/files/working_papers/w27555/w27555.pdf. Accessed October 27, 2022.

Bokolo, A. 2020. “Use of Telemedicine and Virtual Care for Remote Treatment in Response to COVID–19 Pandemic.” JOURNAL OF MEDICAL SYSTEMS 44(7):132 (June).

Brynjolfsson, E., J.J. Horton, A. Ozimek, D. Rock, G. Sharma, and H. TuYe. 2020. COVID–19 and Remote Work: An Early Look at U.S. Data. National Bureau of Economic Research Working Paper 27344 (June). Available at https://www.nber.org/system/files/working_papers/w27344/w27344.pdf. Accessed October 27, 2022.

Dunn, A., K. Hood, and A. Driessen. 2020. Measuring the Effects of the COVD-19 Pandemic on Consumer Spending Using Card Transaction Data. BEA Working Paper Series, WP2020-5 (April). Available at https://www.bea.gov/system/files/papers/BEA-WP2020-5_0.pdf. Accessed October27, 2022.

Dunn, J. 2021. COVID–19 and Supply Chains: A Year of Evolving Disruption. Federal Reserve Bank of Cleveland. Available at https://www.clevelandfed.org/en/newsroom-and-events/publications/cfed-district-data-briefs/cfddb-20210226-covid-19-and-supply-chains.aspx. Accessed October 27, 2022.

Rhyan, C., A. Turner, and G. Miller. “Tracking the U.S. health sector: the impact of the COVID–19 pandemic.” BUSINESS ECONOMICS. 2020;55(4):267–278 (November). doi: 10.1057/s11369-020-00195-z.

Shapiro, A. 2022. FRBSF Economic Letter: How Much Do Supply and Demand Drive Inflation? Federal Reserve Bank of San Francisco, 2022-15 (June). Available at https://www.frbsf.org/wp-content/uploads/sites/4/el2022-15.pdf. Accessed on October 27, 2022.