A Really Gross Domestic Product

The following graphic represents Michigan’s per capita state Gross Domestic Product ranking among the 50 states between 1986 and 2006. State GDP represents the value of all goods and services produced within the geographical borders of a state. Economists use GDP as a measure of economic health. Customarily, Michigan’s rank among the 50 states climbs during economic booms and declines during recessions. Unfortunately, something has changed.

Michigan’s current economic problem is not simply a cyclical event. The United States emerged from its last recession in November 2001, yet Michigan’s economy has not improved as it should have. The state’s GDP ranking has continued to drop and precipitously so. Since its peak in 1999, Michigan’s rank has tumbled from 16th to 39th place among the states. It was ranked 22nd in the country when the last recession officially ended.

The Great Lake State must get its economic house in order soon, lest the next national recession drag the state farther down the list of states with the most economic opportunity. It can do that by passing right-to-work legislation and eliminating the Michigan Business Tax in favor of spending cuts.

(Note: The state GDP used in this graphic is not adjusted for inflation. The dotted line between 1995 and 1998 recognizes a change in the data collection and reporting methodology used by BEA.)

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Michael D. LaFaive is director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy, a research and educational institute headquartered in Midland, Mich. Permission to reprint in whole or in part is hereby granted, provided that the author and the Center are properly cited.