Reports show Alabama and the Southeast region trailing behind the overall nation for growth and development.
The Bureau of Economic Analysis found that gross domestic product rose in 48 states and the District of Columbia in 2014, with some states faring much better over the year than others.
Alabama’s GDP rose just 0.7 percent in 2014, well below the national GDP of 2.2 percent, the BEA found. Compared with last year, Alabama’s GDP plummeted, from 2.5 percent growth in 2013.
“Business owners are still coming out of the recession, not expanding their businesses, not borrowing money and not expanding their employee base,” says Rosemary Elebash, NFIB/Alabama state director. “It’s not a state issue, but more of a federal issue.”
GDP is a good measure for economic health, which the BEA calls its “featured and most comprehensive measure of U.S. economic activity.” GDP measures the sum of all goods and services, including incomes for individuals and commercial entities. The largest contributors to GDP in 2014 were professional, scientific and technical services, the report found.
Elebash says a slow-growing GDP has varying effects on the state’s economy and small businesses. Part of the reason the economy has been sluggish to grow could be a result of a punitive regulatory environment, Elebash says.
“Business owners are cautious about hiring with the number of federal regulations required to comply with for each employee,” Elebash says. “According to NFIB research, federal regulations cost about $10,000 annually per employee.”
These added costs keep employers from expanding their businesses and reinvesting in themselves. Regulations can also prohibit a growing job market. Reducing regulatory burdens on small businesses, which make up 96.8 percent of all employers in Alabama, could significantly free up small business owners to make investments and grow.
The southeastern region’s GDP increased 1.7 percent in 2014, slightly higher than the previous three years for the region. Neighboring Mississippi was one of only two states with a declining GDP, falling 1.2 percent.
