(This column first ran in the Richmond Times Dispatch on March 4, 2013.) Gross regional product in the Richmond metro area grew 2.9 percent in 2011, according to newly released figures from the U.S. Bureau of Economic Analysis.
That ranks the region as the 208th fastest growing among 366 metropolitan statistical areas in the country.
But the 2.9 percent result is not quite as good as the average 3.8 percent growth of all MSAs in the country. It is better than the 2.3 percent growth in Virginia.
The gross regional product is the regional counterpart for gross domestic product, which is the value of all goods and services produced in a given period in the United States.GDP is considered the most comprehensive measure of U.S. economic activity, and it serves as a yardstick for economic recession and expansion.
Similarly, gross regional product measures the size and the productive capacity of the regional economy.
In terms of size — that is, the amount of final output created — Richmond ranked 45th in the country behind Hampton Roads at 41st and the Washington, D.C., region, which is the fifth largest.
On a per capita basis, however, the Richmond economy produces $45,321 gross regional product per person, which ranks it above Hampton Roads and puts the Richmond area at 57th in the country, reflecting a more productive labor force.
On the other hand, the per capita gross regional product for the Washington region, which includes parts of Northern Virginia, is $66,746.
From a growth perspective, the Richmond area outpaced the Washington region. That area grew 2.7 percent in 2011.
Hampton Roads, the state’s largest region excluding Northern Virginia, grew 1.3 percent in 2011.
It’s likely that when gross regional product is released for 2012, the Richmond area’s growth will again outpace that of the two largest MSAs in Virginia.
The reason: Those regions have a high dependence on federal contracting.
Only 2 percent of Richmond’s gross regional product came from federal contracts in 2011, compared with 18 percent in the Washington metro area and 13.4 percent in Hampton Roads.
These two metro areas have benefited greatly from the ballooning federal deficit and certainly will feel some of the nation’s pain as that balloon slowly deflates even more. Federal contract awards in Virginia fell to $54.6 billion in the 12 months that ended September 2012 from $60 billion in the previous period.
The majority of the reduction will fall on Northern Virginia and Hampton Roads.
Moreover, not included in the federal contracts is federal payroll for the tens of thousands of government who live in Northern Virginia and Hampton Roads.
With impending furlough days (as much as 20 percent for some federal agencies) or potential layoffs associated with sequestration, industries not typically associated with federal contracts, such as retail, restaurants and other services, also might take a hit.