The GDP of Ames, Iowa, USA

As we have discussed, estimates of gross domestic product are used by economists to track and compare the creation of wealth and economic growth. However, not all economists who use GDP values have the same focus. Broadly speaking, we can divide the economists who work with GDP estimates into two categories: international economists and domestic economists.

International economists examine the wealth produced by various countries, comparing them to one another. Such economists may also look at large regions of the world consisting of multiple countries, such the European Union or all of North America.

Domestic economists focus on the wealth produced within a specific country, both the country as a whole, as well as the various parts of the country. As such, domestic economists require more granular GDP values. For this reason, government statisticians estimate more than just the national GDP. They also calculate GDPs for the major regions of the country, including states or provinces and even cities.

In the United States, the Bureau of Economic Analysis divides the county into eight economic regions: New England, Mideast, Great Lakes, Plains, Southeast, Southwest, Rocky Mountain, and Far West. Several times a year, the BEA publishes GDP estimates for the entire country and for each of these eight regions. At the same time, it also estimates GDPs for all 50 states and for many U.S. cities.

As an example, let’s take a look at the GDP for the city of Ames (population 59,042) in the state of Iowa. Iowa is part of what the BEA refers to as the Plains Region, consisting of seven states: Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota.

According to the BEA, in 2011, the GDP for the entire United States was $15.075 trillion = $15.075 billion. The GDP for the eight-state Plains Region was $1.015 billion; for the state of Iowa, $149.5 billion. Within Iowa, the city of Ames had a GDP of $4.24 billion, which was an increase of 5.8 percent over the 2010 GDP (good for Ames!).

We can compare the GDP values for the region, state, and city to the GDP for the country as a whole by calculating percentages. To do so, all we need to do is take the various GDPs, divide them by the national GDP, and multiply by 100. In billions of U.S. dollars, we get:

United States: $15.075 = 100 percent

Plains Region: $1.015 / $15.057 x 100 = 6.7 percent

State of Iowa: $149.5 / $15.075 x 100 = 1.0 percent

City of Ames: $4.24 / $15.057 x 100 = 0.03 percent

Thus, we can say that according to the U.S. Bureau of Economic Analysis, in 2011, Ames, Iowa (population 59,042) was responsible for 0.03 percent of the gross domestic product of the entire United States. At the same time, the state of Iowa was responsible for 1.0 percent of the U.S. GDP.

This is one of a multi-part series on Understanding Gross Domestic Product appearing biweekly at independent.com. Next time: “Why Is GDP So Important?”

Harley Hahn has a degree in mathematics and computer science from the University of Waterloo in Canada, a graduate degree in Computer Science from UC San Diego, and has studied medicine at the University of Toronto Medical School. Hahn is a writer, philosopher, humorist, and computer expert. In all, he has written 30 books that have sold more than 2 million copies, and his work is archived by the Special Collections Department of the UC Santa Barbara library. Hahn has written widely about money and economics, and is also an accomplished abstract artist and a skilled musician. See more at www.harley.com.