Every year in December, the United States Bureau of Economic Analysis reports the economic performance of Metropolitan Statistical Areas (MSAs) around the United States from the previous year. An MSA consists of one or more counties with a total population of at least 100,000 people while also containing a city of 50,000 or more residents (U.S. Census Bureau).
Of all the macroeconomic performance indicators supplied, regional Gross Domestic Product (GDP) is the most well-known. The regional GDP is the summed market value of all finished goods and services produced within the MSA during the year. With 2021 regional GDP figures having been released in December, the BBER wanted to know how the GDP performance of the Duluth MSA compared to other similarly sized MSAs around the state. For this analysis, the BBER compared GDP performance for the Duluth, Fargo, St. Cloud, and Rochester MSAs.
Figure 1 shows that each of the four MSAs has seen a steady increase in GDP (as measured in billions of dollars) over the past twenty years. Throughout the first decade, Duluth was the largest of the four MSAs (as measured by GDP) and experienced strong economic growth in 2011. But in 2015, Fargo surpassed Duluth as the largest of the four cities and has since outperformed Duluth and its peers.
With many communities still recovering from the economic downturn caused by COVID-19, a more recent analysis (shown in Figure 2) helps demonstrate how each MSA was impacted and to what extent the regions have recovered economically.
Over the past five years, all MSAs in Figure 2 have shown positive GDP growth—increasing, on average, 4.5% annually. But from 2019 to 2020, COVID-19 resulted in weak GDP performance in all four MSAs. While St. Cloud (0.30%), Rochester (0.45%), and Fargo (0.63%) saw relatively flat GDP growth, Duluth saw a decline in GDP during that period (-2.76%). Of these losses, the industries in the Duluth MSA hit hardest were mining; and the arts, entertainment, recreation, accommodation, and food services industry.
The 2021 GDP numbers reflect a recovery from the economic downturn seen in the prior year. The top GDP performer, Fargo, grew 11.3% from 2020 through 2021, reaching $17.7 billion. Meanwhile, St. Cloud (9.0%), Duluth (8.6%), and Rochester (8.4%) saw slightly lower GDP growth than Fargo, but still experienced higher growth than combined average for the four cities during the five-year period (4.5% annual average growth from 2017-2021). For Duluth, the rebound in 2021 (to $15.9 billion) was spearheaded by the arts, entertainment, recreation, accommodation, and food services industry and the finance, insurance, real estate, rental, and leasing industry. Data for the mining industry, the hardest hit industry during the prior year, was suppressed for 2021. Regardless, the figures reported show that the same industries hit hardest from 2019 through 2020 were also the largest to rebound from 2020 through 2021.
Overall, the recent GDP figures suggest that, while Duluth’s total GDP is still higher than some Minnesota MSAs, the Duluth MSA may have been hit harder and is now recovering slower than other similar-sized MSAs in Minnesota since the start of the COVID-19 pandemic (U.S. Bureau of Economic Analysis).
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