NC State Economist Dr. Mike Walden – Economic Measures
Data drives today’s society. In terms of economic data, when you look beyond the national numbers and focus on a state like North Carolina and even communities within our state, what are the best types of measures? N.C. State University economist Mike Walden responds.
“Well … the gold standard for economists of economic measures is what we call GDP, or gross domestic product. It’s a measure that captures the aggregate production of a state, of a community. So, that’s the one that I look at first.
“The problem that is not usually available for sub-state areas, like counties or regions. It is available for states, but with a lag on this measure. For example, for 2012, North Carolina was one of the fastest growing states in GDP.
“Now, of course, there are a lot of job data out there, and people understand jobs. They look at jobs. I tend to focus more on the job growth rate rather than the unemployment rate. The unemployment rate can be influenced by people moving in and out of the labor force. So I think that job growth, with the percentage growth in jobs, is actually a better measure.
“Now retail sales is a very broad measure. It’s readily available. We have it for states. We have it for counties. The problem there, though, is that it does exclude spending on services. And services, of course, are a growing part of retail sales. So you have to keep that in mind.
“Average employee compensation: I like that measure because it really tells us what an average employee in the state is earning and how that’s changed over time. I like that better than per capita income, because per capita income can be influenced by, for example, retirees coming into the state, and perhaps the retirement pay is lower. That’s going to pull down per capita income.
“And lastly a measure that is getting a lot of attention – housing starts and housing sales. Very, very important in this economic recovery.”