Friday, September 28, 2007

The answer: $102 billion. What's the question?

Here is a question I really get once in a while: How ‘big’ is the Pittsburgh economy? A simple question without the clearest answer. The most common measure of a regional economy is the number of jobs. Personal income also tells you a lot. Though confusing, there are estimates for both the region’s output and it’s regional product, but those are different things. Regional output is a bigger number that measures, in a sense, the value of all products sold in a region. A better measure of the local economy is Gross Regional Product (GRP). GRP is often called Gross Metropolitan Product (GMP), or Gross Domestic Product (GDP), all of which are essentially the same thing. Why is GRP a better measure? GRP is a measure of value-added in the economy. Output is larger and measures the total $$ value of stuff sold by local firms, but local firms also buy a lot of their inputs from elsewhere and that does really add to the size of the local economy. GRP nets out the value of those intermediate goods 'imported' into the region and gives a fairer metric for how much is actually being produced here.

Enough caveats? All that because the Bureau of Economic Analysis just released new estimates of Gross Domestic Product for metropolitan areas in 2005. For Pittsburgh the number is $102 billion (and that is in 2005 dollars for sticklers). So for 2007 in 2007 dollars you are looking at a number around $110 billion.

2 Comments:

Anonymous Anonymous said...

How are the MSAs defined in this study? According to the link, Pittsburgh's economy is slightly larger than Cleveland ($99 MM), about 10 percent larger than Cincinatti ($91 MM), and Indianapolis ($87 MM) but 5 percent smaller than Charlotte ($106 MM). I would think Cleveland (with about 500 K more people) would be larger, Charlotte (with about 2/3 the population) would be smaller, and Cincy and Indy would be similar . . .

Monday, October 01, 2007 3:02:00 PM  
Blogger C. Briem said...

by current definitions.. Cleveland MSA is 2.1 million, so actually a little smaller than Pittsburgh which matches the GDP numbers. The old Cleveland CMSA (not the MSA) was bigger as it included Akron. So without looking further, I think these are current numbers matching the most recent MSA definitions.

but it is a good point always to get your region definitions straight. People do not realize how much has changed in recent years. I actually still get people asking me the definition of the SMSA which is a term that has not really been used in decades. Sometimes these changes are just semantics changing of the title, but there were a lot of conceptual changes as well of late.. things like the creation of micro-politan areas and the like.

Monday, October 01, 2007 4:34:00 PM  

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