Solutions Economic and Market Watch

Antony Davies: 00:03

Welcome to the Economic & Market Watch podcast for the week of September 01, 2025.

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This is Antony Davies.

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A map has been circulating on social media showing how economic activity is distributed across the 3,000 counties in the U.S. According to the map, half of our country's GDP is produced by just 72 counties. That's two percent of U.S. counties accounting for half of U.S. economic output. Among the top producing areas are Los Angeles County, New York City, Harris County, Texas, and Cook County, Illinois. Those four alone produce over 10% of our economy.

Antony Davies: 00:47

The map suggests that rural America can be safely ignored as an economic engine, but the truth is quite different.

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First, some background. GDP measures economic activity by totaling the value add that occurs within a given geographic area.

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For example, suppose a new washing machine sells for $500, and that the price tag includes...

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$75 worth of sales services provided by the retailer, plus

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$125 worth of R&D, branding and warranty coverage provided by the brand-name owner, plus $50 worth of assembly provided by the manufacturer, plus

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$150 worth of parts provided by various parts suppliers, plus

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$50 worth of extraction and processing provided by mines, petrochemical plants and other raw materials producers, plus

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$50 worth of transportation services provided by the companies that moved all these pieces and parts around.

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Those value-adds sum up to the $500 price tag. Out of this list, whichever value adds occur within a certain geographic area are counted toward that area's GDP. For example, if the retailer is located in Illinois and the brand-name owner is located in Ohio, then the $75 worth of retail services counts toward Illinois' GDP and the $125 worth of branding services counts toward Ohio's.

Antony Davies: 02:31

Breaking out GDP this way, we find that eight states — California, Texas, New York, Florida, Illinois, Pennsylvania, Ohio, and Georgia — comprise half of U.S. GDP. If they were a country, those eight states together would be the second largest economy on the planet.

Antony Davies: 02:54

But production and productivity aren't the same.

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GDP measures production. That tells us how much stuff was made. Per capita GDP measures productivity. That tells us how efficiently it was made.

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A geographic area could have a large GDP because its people are productive or it could have a large GDP because its people are numerous.

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It turns out that the map that's making the rounds tells us much more about which counties have the most people than it does which county's people are the most productive.

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For example, depending on how we convert currencies to U.S. dollars, China's economy is either the first or second largest on the planet (the U.S. economy is the other). But China's economy is not huge because the Chinese are productive. It is huge because they are numerous. China produces around the same GDP as does the U.S., but requires five times the number of people to do it. And that means that while China's economy is first or second in terms of production, it is seventy-fifth in terms of productivity.

Antony Davies: 04:16

Back to that map showing the U.S. counties by GDP: If we tweak the map to show not GDP but per-capita GDP, something interesting emerges. The largest swath of the most productive counties actually runs up the middle of the U.S. — from West Texas to North Dakota. Half of the U.S. economy's production is due to 72 urban counties, but half of its productivity is due to 331 rural counties.

Antony Davies: 04:53

So when you hear statistics that paint rural America as an afterthought, don't buy it. Greater GDP can mean people are more productive, but it might simply mean that they are more numerous. In many cases, rural America produces more output per person, often under tougher conditions and with less fanfare than does urban America. That's productivity.

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Rural America isn't a sideshow in the U.S. economy. It's a backbone.

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This is AnThank you for listening. Download the weekly Economic & Market Watch intelligence brief and dashboard where you can see graphs that I have described in this episode. And send us email at economicresearch@nrucfc.cop.