The Bureau of Economic Analysis recently released preliminary 2011 GDP data for all 366 metropolitan statistical areas (MSAs) in the nation. In general, these metropolitan areas account for 90 percent of the nations GDP. Metro-area real GDP increased 4.7 percent between 2009 and 2011--the first two years of the recovery. However, the growth of GDP during the recovery varies widely across metropolitan areas.
On one end of the distribution are MSAs that continued to struggle with the effects of the housing boom and the subsequent bust. Metropolitan areas in the "sand states" of Florida, Nevada, California, and Arizona populate this lower end of the growth distribution. The upper end of the GDP growth distribution tends toward MSAs associated with natural resource extraction or high-tech industries. In addition, several metros associated with automobile assembly also showed significant growth, as production of vehicles picked up markedly over this period.
One can disaggregate GDP growth at the metropolitan level into two components: the contribution due to changes in output-per-employee (labor productivity) and the contribution due to expansion in the number of employees. Both factors contribute to the changes that we observe in overall GDP growth. For the top 100 metros (by population), GDP grew on average by 4.4 percent from 2009 to 2011. About 43 percent of that growth was due to increases in GDP per employee and 57 percent was due to growth in employment. For the fastest-growing metros, output-per-employee accounts for the majority of GDP growth, with the exception of Austin, Texas, where employment growth exceeded output-per-employee growth. For slow-growing MSAs, there is actually a decline in output-per-employee over the 2009 to 2011 period. Combined with very slow (and sometimes negative) employment growth, this yields a set of metro areas where real GDP contracted over the early phases of the recovery.
Fourth District metro areas also experienced considerable variation in real GDP growth between 2009 and 2011. Pittsburgh had the highest growth rate over period, experiencing both solid growth in employment and labor productivity. Pittsburgh was followed closely by Toledo and Youngstown in terms of growth during the recovery However, it is important to note that Toledo and Youngstown suffered severe contractions during the Great Recession, while Pittsburgh had a much milder recession. The net result is that Pittsburgh's real GDP in 2011 had risen above its pre-recession (2007) level, whereas Youngstown and Toledo's economic activity remained well below their 2007 levels.
Over the 2009-2011 period, there was little correlation between employment growth and growth in output-per-employee at the metropolitan level. …