John Norris: Alabama has two economies

John Norris | Columnist

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Over the years, readers have asked me to be more of a homer in my columns, meaning I should accentuate the positive to a much greater degree than I do. When I respond, I typically say I can rah rah with the best of them. However, in my opinion, we get enough of that already. Besides, ignoring problems doesn’t make them go away.

We know our state lags the national averages in a lot of economic measures. There is little reason to list all of them here. Still, the data suggests Alabama basically has two economies: one for our metropolitan areas and another for everyone else.

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If you happen to live in one of the five largest metro areas in our state, life is actually pretty good. These are: Birmingham, Huntsville, Mobile, Montgomery, and Tuscaloosa (the Big 5). According to the data I could glean from the Census Bureau and the Bureau of Economic Analysis, the Big 5 represented 53.9% of the state’s population and 67.8% of its economic output in 2015.

That year, if my math is correct, the Big 5 had a per capita Gross Domestic Product (GDP) of $46,238 in constant 2009 dollars. This would have ranked somewhere between Kansas and Wisconsin, which aren’t our normal comparisons, and be good enough for 28th place nationally. Further, it would be well above Georgia, Tennessee, Florida, and, as you might imagine, Mississippi. Rah rah, right?

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Well, I suppose if you live in one of those areas. However, the state, as a whole, had a per capita GDP of $36,773 in, again, those constant 2009 dollars, which puts us down with the usual suspects and comparisons. Since there is such a wide variance between the two numbers, you can intuit per capita GDP for the rest of the state was significantly lower than it was in the Big 5. It was.

My calculations suggest per capita GDP in Alabama outside of our 5 largest metro areas was around $25,710 in 2015. By comparison, Mississippi’s was $31,504, according to statista.com. Hmm. This would certainly seem to support my early contention: Alabama has two economies, one for the metro areas and another for everyone else.

Hey, Alabama is not alone in this. Large population centers will often skew state economic data. However, the pronounced difference in urban and essentially rural per capita GDP in Alabama should raise some eyebrows. Shoot, that $25,710 number only tells part of the story, because it includes smaller metro areas like Dothan, Decatur, Gadsden, Auburn, Florence, Anniston, and Baldwin County. When you take these out of the equation, per capita GDP falls to $22,557 in non-metro Alabama.

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To put that into perspective, that number would be roughly 45% of the national average, 45%. If that isn’t bad enough, it fell 3.9% between 2010 and 2015 from $23,463. Again, if my math is right, this would certainly suggest there just isn’t a lot economic activity in our state outside of our metropolitan areas. While a drive through many of our rural counties would imply as much, I actually went to the trouble to do the math.

We can choose the path of least resistance and ignore this, because there are no easy answers and quick fixes. However, I have found in my life education is ordinarily essential to both economic and personal well-being. What’s say we start there, and make a statewide, not just metro wide, commitment to increasing our commitment to education?

Rah!

John Norris is a managing director, and the head of wealth management, at Oakworth Capital Bank in Birmingham. He can be reached at john.norris@oakworthcapital.com.