U.S. GDP remarkably concentrated in a limited number of cities

We’ve been fed the information regularly about how the economy’s engine is based in large metropolitan areas but it’s even more concentrated than thought. Click thru to the charts in the article to see it visually. A few tidbits: the five counties comprising New York City produce 4.8% of the country’s GDP. This area also has 7.2% of the arts and entertainment industry — still less than Los Angeles, but increasing regularly.

Even people who don’t know the statistics by heart know that ambitions are easiest to achieve in just a few cities. That encourages continuing concentration which has endless consequences. For me, this is fascinating stuff.


A Third of America’s Economy Is Concentrated in Just 31 Counties

By Andre Tartar and Reade PickertDecember 16, 2019, 5:00 AM

While America’s economy has grown for over a decade, that growth is increasingly concentrated in 1% of the nation’s counties.

Just 31 counties, or the top 1% by share, made up 32.3% of U.S. gross domestic product in 2018, according to data released last week by the Bureau of Economic Analysis that included nearly 20 years of county-level GDP data. That’s despite these counties only having 26.1% of employed Americans and 21.9% of the population last year. Their combined GDP share is also up from a recession low of 30.1% in 2009.

The nation’s economy is becoming increasingly concentrated in large cities and by the coasts—and less so in rural counties—spurring the question of whether rural areas will be increasingly left behind. The growing concentration of the country’s economic activity could impact a variety of things from infrastructure spending to labor mobility, but it’s unclear how rural areas will fare as their share of economic output continues to dwindle.

Top 1% of Counties

The largest 31 county economies made up 32% of national GDP in 2018

Note: Includes Fairfax County, Virginia combined with two independent cities, Fairfax City and Falls Church.

Source: Bureau of Economic Analysis

Looking at the largest counties by output, Los Angeles County, which has a GDP equivalent to Saudi Arabia, added $395.2 billion to total U.S. GDP from 2001 to 2018. New York County, home to Manhattan, added $340 billion.

The top 1% of counties were spread across 16 states and the District of Columbia, and populous states like California, Florida and Texas each had multiple counties make the cut. But all 31 counties either included or were near major U.S. cities.

A large population and workforce is only part of the story. Last year, these counties represented $1.3 trillion more of nationwide GDP than the share of workers alone would account for. Looking at population, their combined share of GDP rose even as their share of overall population fell. The difference may stem from other aspects of a city, such as clusters of activity or networks, that improve productivity.

Squeezing More GDP Into Less Space

The top 1% of counties have a greater share of output than people

Source: Bloomberg analysis of Bureau of Economic Analysis data

The data also highlight differences in industry concentration. The information sector, dominated by West Coast tech giants like Apple Inc., Alphabet Inc.’s Google and Amazon.com Inc., is particularly consolidated, with nearly three-fifths of its output squeezed into just a few dozen counties.

Finance and the arts are also highly concentrated. While the New York City region still dominates national finance, Manhattan’s grip on the industry has eased since 2014. Los Angeles has held the top spot in the arts and entertainment space from 2001 to 2018, but New York has increased its share from 4.6% to 7.2% over the period.

Still most industries didn’t see that level of consolidation. Some businesses that need to be close to consumers like logistics, hospitality and retail are less concentrated.

Yet, some industries are decentralizing. Transportation and warehousing has become less concentrated since its peak in 2017, while agriculture, forestry, fishing and hunting, a sector that was already relatively dispersed, continued in that direction.

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