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The Honolulu Advertiser

Posted at 9:47 a.m., Monday, June 10, 2002

Feds report Hawaii lags in economic growth

By MARTIN CRUTSINGER
AP Economics Writer

WASHINGTON (AP) ­ At the end of America's longest economic boom, Rhode Island and Idaho led all states in economic growth, the Commerce Department reported today.

At the other end of the spectrum, Alaska and Louisiana, where the recession started, finished dead last. Along with Mississippi, third from last, the states were all hurt by weakness in the oil and gas industry and manufacturing.

Hawaii finished eighth from the bottom of the economic recovery list.

The Commerce Department report on gross state product showed the 10-year economic boom was showering prosperity from coast to coast in 2000 but there were pockets of weakness, reflecting hard times in the oil and gas industry and manufacturing.

Residents of Rhode Island enjoyed the fastest growth pace, a gain of 10.7 percent in gross state product in 2000 compared to 1999. Idaho was not far behind with an increase of 8.3 percent, followed by an 8.1 percent rise in economic output in neighboring Oregon.

Economic output in Alaska fell by 2.9 percent in 2000 and was down 2.7 percent in Louisiana, the only two states where the economy shrank that year. Mississippi, third from the bottom, eked out a tiny 0.8 percent increase.

The performance in the various states compared to a nationwide increase of gross state product of 4.5 percent in 2000. That performance compared with an increase in the gross domestic product, the benchmark for the entire economy, of 4.1 percent for 2000.

The GDP and GSP figures are not directly comparable because the government subtracts some components from the state-by-state figures that are included in the overall GDP numbers. For instance, the gross state product excludes compensation paid for federal employees and members of the military stationed overseas.

The National Bureau of Economic Research has ruled that the country's longest period of economic growth ended in March 2001, exactly 10 years after the economic expansion began. The NBER has not determined when the recession ended, but many private economists believe the recovery began in January or February.

The Commerce report on the states showed that after Rhode Island, Idaho and Oregon, the states with the best growth performance in 2000 were New Hampshire, up 7.8 percent; California, 7.3 percent; Colorado, 7.3 percent; Massachusetts, 7.1 percent; New Jersey, 6.6 percent; Arizona, 6.5 percent; and New York, 6.1 percent.

All together the top 10 growth states accounted for more than half of U.S. economic growth in 2000.

The top-performing states in the West ­ Idaho, Oregon, California and Arizona ­ all enjoyed robust gains in high-tech manufacturing industries while Colorado had strong growth in business services and communications.

The top-performing Northeastern states ­ Rhode Island, New Hampshire, Massachusetts, New Jersey and New York ­ enjoyed strong growth in financial services, insurance and real estate.

After Alaska, Louisiana and Mississippi, the states with the weakest economic performance in 2000 were Delaware, up 0.9 percent; Wyoming, 1.2 percent; Alabama, 1.2 percent; West Virginia, 1.3 percent; Arkansas, 1.7 percent; Hawaii, 1.9 percent; and Oklahoma, 2.0 percent.

Economic weakness was widespread in many sectors in the slow-growing states with trouble in the mining sector, which includes oil and gas drilling, and manufacturing and construction.

The gross state product estimates are adjusted to remove the impact of inflation. Before those adjustments, the current dollar output as measured by the gross state product measured $9.9 trillion for the nation as a whole in 2000.

The largest share of that total was contributed by California, 13.5 percent. California's gross state product has exceeded $1 trillion since 1997. California was followed in 2000 by New York, which contributed 8.0 percent of the country's total economic output; Texas, 7.5 percent; Florida, 4.7 percent, and Illinois, 4.7 percent.

On the Net:

Commerce's Bureau of Economic Analysis: www.bea.gov/bea/rels.htm