Gross Domestic Product (GDP), calculated by the Bureau of Economic Analysis (BEA), is a commonly used economic indicator that measures the market value of all goods and services produced by a country over a specified period, typically one year. A good is a tangible item that someone can purchase or own, such as a car, while a service is an intangible activity provided, such as a haircut. Along with inflation and unemployment, GDP is the most widespread indicator for the health of the economy. That said, it is also an imperfect means of measurement because it does not adequately reflect the actual well-being of individual people in an economy and excludes factors like income distribution, health, and security (i.e. an increase in GDP does not necessarily mean the population is better off).
GDP is typically presented in two ways: real GDP, which accounts for inflation, and nominal GDP, which does not. The simple calculation for GDP is the sum of consumption (consumer spending on goods and services), government spending, investment (business spending on assets), and the value of exports less the value of imports.
GDP can be calculated at the regional level and this indicator can be equally useful to analyze. Regional GDP, sometimes called Gross Regional Product (GRP), can measure the growth of a specified region such as the Cincinnati MSA or the Northern Kentucky region. In December 2024, the BEA released the 2023 GRP data by county. In 2023, Northern Kentucky, which includes Boone, Campbell and Kenton counties, had a cumulative nominal GRP of $32.7 billion and real GRP of $25.8 billion chained to 2017, which means the dollars are weighted to the GRP in 2017 to give a more accurate representation of actual spending. This was a 7.1% increase from the previous year and a 1.9%-inflation-adjusted increase, which shows the major impact that inflation has had on growth.
In real terms, Northern Kentucky represented 11 percent of Kentucky’s total GDP, while accounting for approximately 9 percent of the state’s population. At $63,575, Northern Kentucky’s GRP per capita ranked third among regions in the state, behind only the Louisville MSA at $64,685 and Paducah MSA at $66,445. Since 2013, Northern Kentucky real GRP has increased at an average annual rate of 3.4 percent, which is the third fastest of all metros in Kentucky behind Bowling Green and Paducah.
GRP is just one indicator that can be used to track the health of a regional economy. At BE NKY, we are looking at ways of measuring quality of life, entrepreneurship, labor force upskilling and educational success to evaluate the region’s economy and prosperity. These measures will allow us to track improvements over time and create regional strategies that address our region’s needs.
