The mining industry boosts economic growth in several states in the third quarter

Two workers in helmets and protective suits at drilling machines in an underground environment

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Many economists are predicting a recession in 2023 due to the Fed raising interest rates to slow inflation, less fiscal stimulus and weaker overseas consumer spending that will reduce US exports. But for now, economic growth remains positive. US real GDP growth for the third quarter was revised to 3.2% in the latest Bureau of Economic Analysis (BEA) estimate, driven by growth in 47 of the 50 states and Washington DC according to the BEA’s latest release .

As the map below shows, the annual real GDP growth rate in the third quarter was over 5% in Alaska, Texas, Oklahoma, Wyoming and North Dakota. The mining industry made a significant contribution to the strong growth in these states.

Real GDP growth by state

Bureau of Economic Analysis https://www.bea.gov/news/2022/gross-domestic-product-state-and-personal-income-state-3rd-quarter-2022

It is good to see that the mining industry is doing well as we will need a lot more mining if we want to increase our use of battery power. As Mark Mills has explained, dramatically expanding the use of battery power will require a 700% to 4,000% increase in mining of rare earths, nickel, cobalt and other minerals. Fossil fuels will always be needed to deal with surge and interruption issues, but any significant conversion to battery power will still require hundreds of new mines and significant mining industry expansion.

Meanwhile, growth was negative in Mississippi (-0.7%), South Dakota (-0.5%) and Indiana (-0.3%). The construction industry was the biggest drain on the Mississippi and Indiana economies.

The Fed has aggressively raised interest rates to curb inflation, and this has pushed up mortgage and other home loan rates and reduced demand for new buildings. Housing starts for single-family homes have fallen sharply in recent months, as have house prices. The construction industry is likely to remain weak as businesses and consumers adjust to the new interest rate environment.

The information services sector – which includes publishing, telecommunications, broadcasting, computing and other information services – grew in all 50 states and Washington, DC, and was the largest contributor in 14 states, including California, Massachusetts and New York.

A recession may be likely in 2023, but recent GDP data shows almost all states are growing. Fourth quarter numbers may tell a different story, but for now, economic growth is generally positive despite the significant headwinds on the horizon.