New and Updated Estimates of the Regional Economic Accounts

Results of the 2023 Comprehensive Update

By Ledia Guci and Nicholas Wetzler  |  December 14, 2023

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On September 29, 2023, the U.S. Bureau of Economic Analysis (BEA) released the first set of results of the comprehensive update of the Regional Economic Accounts (REAs) with the release of quarterly and annual state personal income and annual gross domestic product (GDP) by state statistics. These results were published, for the first time, concurrently with the initial results of the comprehensive update of the National Economic Accounts (NEAs), which include the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts. This release marked a culmination of a multiyear, agency-wide effort to harmonize the statistics and synchronize the release of these accounts. The release of updated data on annual personal consumption expenditures (PCE) by state followed on October 4, 2023.

BEA regularly updates its statistics through flexible annual updates and quinquennial comprehensive updates to ensure its economic accounts reflect the best available data and continue to accurately measure a dynamic U.S. economy. An important feature of the comprehensive updates is the benchmarking of BEA's statistics to the U.S. Census Bureau's quinquennial Economic Census. Comprehensive updates also provide an opportunity to introduce newly available and more detailed source data as well as to introduce comprehensive improvements to BEA's accounts. These include new and improved methodologies, updated definitions and classifications, and presentational changes to published tables.

With the 2023 comprehensive update, the REAs incorporated the results of the 2023 comprehensive update of the NEAs, which consisted of several methodology and classification changes. These include improved classification and measures of real estate investment trusts (REITs), improved measures of regulated investment companies (RICs), housing services, and own-account software investment, to mention a few.¹ The classification of industry measures was also updated to follow the 2017 North American Industry Classification System. In addition, the REAs incorporated more complete and detailed regional source data than those previously available as well as improvements to the estimation methods used to prepare the regional statistics.

The annual personal income by state statistics were revised from 1979 to 2022. Quarterly personal income by state statistics were revised from the first quarter of 1979 through the first quarter of 2023. Annual PCE by state statistics were revised from 1997 to 2021. The annual current-dollar measures of GDP by state and related components were revised from 2017 to 2022. In addition, the reference year for chained-dollar GDP by state measures was changed from 2012 to 2017. Additional results of the comprehensive update, including updated annual GDP by state statistics for the prior years, will be released later.

This article focuses on the annual state estimates for 2022 as well as summarizes some of the impacts of the comprehensive update on the REA estimates. Additional information on the comprehensive update, background materials, and results is available at “Information on 2023 Comprehensive Updates to the National, Industry, and State Economic Accounts.”

This section takes a closer look at the latest data on GDP by state, state personal income, and PCE by state.² These statistics 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 more complete and more nuanced picture of the variation in economic trends and outcomes across states.

GDP by state

Nationally, current-dollar GDP increased 9.1 percent in 2022, following a 10.7 percent increase in 2021 (table 1). Current-dollar GDP increased in all states and the District of Columbia in 2022. States with the largest increases were Wyoming (16.4 percent), Texas (15.1 percent), and North Dakota (14.9 percent). Nineteen other states had above-average increases in current-dollar GDP in 2022 that ranged from 9.3 percent in Arkansas to 12.6 percent in West Virginia.

Inflation-adjusted (or real) GDP showed a much more moderate picture of economic growth in 2022, both nationally and across states, largely a result of higher prices (chart 1). At the national level, real GDP grew 1.9 percent in 2022. Across states, real GDP growth ranged from −1.4 percent in Alaska to 4.6 percent in Florida.

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In 2022, real GDP growth was driven by a broad range of industries. Real GDP by industry (or real value added)—a measure of an industry's contribution to GDP—grew the fastest in arts, entertainment, recreation, accommodations, and food services (10.8 percent), followed by information (7.5 percent) and professional and business services (7.5 percent) (chart 2). These industries jointly contributed 1.7 percentage points to national real GDP growth (chart 3). Finance, insurance, and real estate was also a notable contributor to national real GDP growth, with 0.5 percentage points. In contrast, real GDP declined in several industries, with the largest declines in nonmanufacturing private goods-producing industries—agriculture, mining, and construction. The declines in these industries jointly subtracted 0.5 percentage points from national real GDP growth.

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The fastest growing industries nationally made large contributions to growth in the fastest growing states. In addition to Florida, Idaho (4.2 percent), Tennessee (3.9 percent), and Nevada (3.4 percent) were among the fastest growing states in real GDP (chart 1). Arts, entertainment, recreation, accommodation, and food services was the leading contributor to real GDP growth in Nevada and Tennessee and made sizable contributions to growth in Florida and Idaho (chart 3). Information made sizable contributions to growth in Florida, Idaho, and Tennessee. Professional and business services was the largest contributor to real GDP growth in Florida and the second-largest contributor to real GDP growth in Idaho, Tennessee, and Nevada. Finance, insurance, and real estate was the leading contributor to real GDP growth in Idaho and the second-largest contributor in Florida.

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Along with Alaska, the following states experienced overall declines in real GDP: Louisiana (−1.2 percent), North Dakota (−1.1 percent), Oklahoma (−1.0 percent), South Dakota (−0.3 percent), and Iowa (−0.3 percent). While real GDP grew for many industries in these states, the positive contributions by these industries were more than offset by large declines in other industries, most notably, agriculture, mining, and construction (chart 4).

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State personal income

Nationally, current-dollar personal income increased 2.0 percent in 2022, following a 9.1 percent increase in 2021 (table 1). Changes in state personal income ranged from −1.6 percent in New York to 8.8 percent in Delaware (chart 5). In addition to Delaware, North Dakota, Idaho, Montana, Colorado, South Dakota, Utah, and Texas were among states with the largest increases in personal income. These were also among the states with large increases in current-dollar GDP. In addition to New York, Louisiana, Mississippi, Rhode Island, Illinois, and California were the states with declines in personal income. Personal income also declined in the District of Columbia (−1.1 percent).

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At the national level, the 2.0 percent increase in personal income resulted from a sizable increase in net earnings and property income (6.2 percent and 7.0 percent, respectively) that was largely offset by a double-digit decline (−13.8 percent) in personal current transfer receipts (chart 6). A similar trend was observed across states, as net earnings and property income increased in all states and personal current transfer receipts declined in all but one state (chart 7). The decline in personal current transfer receipts was a result of the expiration of various COVID–19 pandemic relief programs including the extended state unemployment insurance benefits and enhanced child tax credits toward the end of 2021.

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Increases in earnings—comprised of compensation of employees and proprietors' income—were the leading contributor to the increase in personal income for many states. Net earnings increased across all states, with the increases ranging from 0.1 percent in the District of Columbia to 14.9 percent in Delaware (chart 7).

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Compensation of employees, the largest component of earnings as well as personal income, increased on average 7.1 percent and ranged from 3.9 percent in New Hampshire to 11.7 percent in Nevada. Across industries, compensation increased the most in arts, entertainment, recreation, accommodations, and food services (17.2 percent) and professional and business services (10.1 percent) (chart 8). These industries were also among the fastest growing industries in real GDP. Proprietors' income increased on average 2.1 percent (chart 9). Delaware and North Dakota were among the states with the largest increases in proprietors' income, whereas Louisiana was among the states with large declines in proprietors' income.

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Property income (dividends, interest, and rent) increased on average 7.0 percent in 2022. Property income increased in all states and the District of Columbia, with the increases ranging from 2.0 percent in New York to 14.9 percent in Idaho (chart 7). Lastly, personal current transfer receipts, the income component most affected by policy responses to the COVID–19 pandemic, declined on average 13.8 percent. Personal current transfer receipts declined in all but one state. In Alaska, transfer receipts increased by 2.9 percent because of a large permanent fund dividend payment in 2022. The largest decline in transfer receipts was in Nevada (−21.2 percent).

PCE by state

Nationally, current-dollar PCE increased 9.2 percent in 2022, following a 12.9 percent increase in 2021 (table 1). The states with the largest increases in PCE were Idaho (11.8 percent), Nevada (11.4 percent), Utah (11.3 percent), Florida (10.9 percent), Arizona (10.3 percent), and Colorado (10.2 percent) (chart 10). The states with the lowest increases were Louisiana (6.4 percent), West Virginia (7.1 percent), North Dakota (7.1 percent), and Connecticut (7.3 percent).

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The PCE categories with the largest increases were transportation services (22.3 percent), food services and accommodations (17.6 percent), recreation services (14.5 percent), and nondurable goods (10.5 percent) (chart 11). This is consistent with a story of post-pandemic increases in travel and participation in entertainment and recreation activities, despite the lower increases in income, due to the financial buffer provided by the pandemic relief programs. The contribution of these categories to total PCE growth is evident across many states (chart 12).

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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 2022, population grew 0.4 percent nationally (chart 13). States with the highest population growth were Florida (1.9 percent) and Idaho (1.8 percent), which were also among states with the largest PCE increases. Population declined in 16 states, with New York (−0.9 percent), Louisiana (−0.8 percent), Illinois (−0.8 percent), and West Virginia (−0.6 percent) experiencing the largest population declines. Of these, Louisiana and West Virginia were among states with the lowest PCE increases.

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BEA released updated historical estimates for GDP by state, state personal income, and PCE by state measures. The updated estimates reflect the incorporation of the results of the 2023 comprehensive update of the NEAs as well as the incorporation of newly available and revised regional source data and improved estimation methods used to prepare these statistics. No presentational changes were made to the published REA tables. This section highlights the major regional source data that were updated and provides an overview of the main methodology changes and a summary of the impacts of these updates on the annual state-level measures.

Updates to source data

BEA incorporated several newly available and revised regional source data, including data from the Census Bureau's 2017 Economic Census and annual source data that became available since the last annual update of the REAs in September 2022. A summary of the annual major data sources for each of the statistics is provided in table 2. These data include Census Bureau Annual Survey of Manufactures and Annual Survey of State and Local Government Finances, U.S. Bureau of Labor Statistics Quarterly Census of Employment and Wages (QCEW), Internal Revenue Service (IRS) data, and U.S. Department of Agriculture farm statistics.

Updates to methodology

BEA also implemented several changes to the methodologies used to prepare the state statistics. More information on the regional methodology changes, including the improvements discussed below, are available in the August Survey of Current Business article “Preview of the 2023 Comprehensive Update of the Regional Economic Accounts.”

Housing services. With the 2021 annual update, BEA introduced a new methodology for estimating housing services using microdata on housing units from the Census Bureau American Community Survey (ACS). With this methodology, housing services for both tenant- and owner-occupied housing are estimated at the housing unit level based on observed rent expenditures (contract rent) and detailed housing characteristics (structure type, number of bedrooms, number of rooms, and age of structure), which are then aggregated at the state and national levels. When contract rent includes utilities, an adjustment is made to separate the rental value from the included utility costs. As part of the 2023 comprehensive update, BEA further improved the measures of housing services by using a more detailed adjustment for utilities included in the contract rent. The new utility adjustment accounts for expenditures on other fuels, such as heating oil and propane, in addition to electricity, gas, and water. The new adjustment was made to each housing unit where one or more utilities were included in the rent and excluded only the utilities that were included in any given unit. Housing estimates were revised from 1997 to 2021 and impacted regional measures of GDP, personal income, PCE, and regional price parities.

Chained-dollar measures of GDP in the REAs. BEA uses the Fisher Price Index formula in the calculation of real GDP estimates. In the REAs, chained-dollar measures of GDP are computed using national chain-type indexes following the same processes used in the national accounts. The presence of zero and negative values in the regional estimates causes breaks in the chain-type indexes. As part of the 2023 comprehensive update, BEA improved the calculation of chained-dollar GDP measures in the REAs by implementing a rearrangement of the Fisher formula that uses the current-dollar estimates and ratios of prices in adjacent time periods (i.e., price relatives). Depending on the location and prevalence of the breaks in the price index series, BEA used geometric interpolation between two existing price relatives to impute the missing values or a price index value from the closest related series to complete the index. This methodology change had limited impact on the annual estimates of GDP by state, but it had a more widespread impact on the quarterly GDP by state estimates from the first quarter of 2005 forward and on the annual GDP by county estimates from 2001 forward.

Discount rate for private and state and local defined benefit pension plans. BEA raised the discount rate for privately sponsored defined benefit pension plans and state and local government defined benefit pension plans from 4 percent to 5 percent in 2022. This increase, largely guided by the recent rise in the AAA corporate bond rate, brought the discount rate more in line with the historical returns of AAA bonds from 1929 to 2008, which averaged 5 to 7 percent. Raising the discount rate lowers liabilities (benefit entitlements) and employers' normal cost. This change impacted supplements to wages, more specifically employer contributions to employee pension and insurance funds, which incorporate employers' normal cost and pension service charges. Thus, it lowered the regional compensation estimates. In addition, the lower liabilities increased the funded ratio in the transactions of state and local government defined benefit pension plans tables.

Summary of revisions

BEA released updated annual GDP by state statistics for 2017–2021. The revisions to the GDP by state statistics for this period are largely due to the incorporation of updated national values and state source data. At the national level, current-dollar GDP was revised upward for all 5 years: 2017 (0.7 percent), 2018 (0.6 percent), 2019 (0.7 percent), 2020 (1.3 percent), and 2021 (1.2 percent) (table 3). The revisions to current-dollar GDP by state were less than 2.0 percent each year for most states. In general, revisions to later years tend to be larger, as new and more complete source data are incorporated into the statistics.

The revisions to current-dollar GDP by state in 2017 ranged from an upward revision of 2.8 percent in South Dakota to a downward revision of 0.6 percent in Louisiana. Two other states had revisions of 2.0 percent: North Dakota and Utah. The revisions to current-dollar GDP by state in 2018 ranged from an upward revision of 2.2 percent in Idaho to a downward revision of 0.6 percent in Massachusetts. South Dakota also had a comparatively large revision (2.0 percent). In 2019, the revisions to current-dollar GDP by state ranged from an upward revision of 2.4 percent in Utah to a downward revision of 1.1 percent in Connecticut. Other states with revisions greater than 2.0 percent were Idaho (2.1 percent), North Dakota (2.2 percent), Delaware (2.3 percent), and Washington (2.3 percent). The revisions to current-dollar GDP by state in 2020 ranged from an upward revision of 2.9 percent in Tennessee to a downward revision of 0.2 percent in Connecticut. Other states with revisions greater than 2.0 percent were Florida (2.1 percent), Rhode Island (2.1 percent), Delaware (2.4 percent), Hawaii (2.5 percent), and Idaho (2.6 percent). In 2021, the revisions to current-dollar GDP by state ranged from an upward revision of 3.0 percent in Utah to a downward revision of 0.8 percent in Connecticut. In addition to Utah, 13 other states had revisions greater than 2.0 percent.

State personal income statistics were revised back to 1979. The revisions at the beginning of the period are primarily due to methodology changes, whereas for the most recent years, are primarily due to a combination of methodology changes and updated source data, including updated national estimates from the NIPAs. The range of state personal income revisions for the entire period are presented in chart 14. The revisions at the beginning of the period are due to the improved measures of RICs, which impacted state estimates of interest income starting in 1979. The improved utility adjustment for housing services impacted the rental income estimates starting in 1997. The classification changes and improved measures of REITs impacted estimates of dividend income from 2002 forward. These historical revisions are small, with personal income in most states being revised less than 1.0 percent each year.

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For the more recent years, 2017–2021, the revisions are larger because of source data including updated and new QCEW and IRS data. At the national level, personal income was revised downward for 2017 (−1.1 percent), 2018 (−0.9 percent), 2019 (−1.2 percent), and 2020 (−1.0 percent) and revised upward for 2021 (0.5 percent) (table 3). The revisions to state personal income for these years were less than 2.0 percent for most states.

The revisions to state personal income in 2017 ranged from a downward revision of 2.0 percent in Colorado to a downward revision of 0.3 percent in Georgia. In 2018, the revisions to state personal income ranged from an upward revision of 0.1 percent in Idaho to a downward revision of 2.1 percent in Wyoming. The revisions to state personal income in 2019 ranged from 0.0 percent in Idaho to a downward revision of 3.5 percent in Wyoming. Vermont also had a downward revision larger than 2.0 percent (−2.1 percent). In 2020, the revisions to state personal income ranged from an upward revision of 0.5 percent in Idaho to a downward revision of 2.8 percent in the District of Columbia. Other states with downward revisions greater than 2.0 percent were Vermont (−2.2 percent) and New York (−2.6 percent). In 2021, the revisions to state personal income ranged from an upward revision of 3.6 percent in Idaho to a downward revision of 2.6 percent in Connecticut. Other states with comparatively large revisions were Arkansas (2.1 percent), Nebraska (2.4 percent), North Dakota (2.5 percent), Oklahoma (2.5 percent), and Montana (2.6 percent).

PCE by state statistics were revised back to 1997. The revisions to PCE by state are largely due to the improved utility adjustment, which impacted PCE for housing services, and updated source data including QCEW, data from the Centers for Medicare & Medicaid Services on outpatient and hospital services, and updated national PCE estimates from the NIPAs. The range of PCE by state revisions for the entire period are presented in chart 14. For 2017–2021, national PCE was revised upward for all 5 years: 2017 (0.4 percent), 2018 (0.2 percent), 2019 (0.2 percent), 2020 (0.6 percent), and 2021 (0.9 percent). The revisions to PCE by state for these years were less than 2.0 percent for most states.

The revisions to PCE by state in 2017 were less than 2.0 percent for all states and ranged from an upward revision of 1.9 percent in Nevada to a downward revision of 1.9 percent in South Dakota. In 2018, the revisions to PCE by state ranged from an upward revision of 1.8 percent in Maine and Nevada to a downward revision of 2.2 percent in South Dakota. In addition to South Dakota, Idaho was revised downward by more than 2.0 percent (−2.1 percent). The revisions to PCE by state in 2019 ranged from an upward revision of 2.2 percent in North Dakota to a downward revision of 2.7 percent in South Dakota. Idaho (−2.0 percent) and Alaska (−2.4 percent) also had downward revisions of 2.0 percent or more. In 2020, the revisions to PCE by state ranged from an upward revision of 4.1 percent in Wyoming to a downward revision of 2.3 percent in Alaska. Other states with absolute revisions larger than 2.0 percent were South Dakota (−2.2 percent), Vermont (2.1 percent), Massachusetts (2.3 percent), Connecticut (2.4 percent), Utah (2.5 percent), Maine (2.6 percent), North Dakota (3.7 percent), and Rhode Island (4.0 percent). In 2021, the revisions to GDP by state ranged from an upward revision of 4.0 percent in Rhode Island to a downward revision of 3.7 percent in South Dakota. Other states with absolute revisions larger than 2.0 percent were Wyoming (2.3 percent), Arizona (2.4 percent), North Dakota (2.5 percent), Maine (2.7 percent), Utah (2.8 percent), California (3.1 percent), and Nevada (3.1 percent).