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new jersey department of environmental protection  


Living with the Future in Mind
Goals and Indicators for New Jersey's Quality of Life
First Annual Update to the Sustainable State Project Report 2000

Indicator 5

Additional  Economic Vitality Indicators

1 - Income

2 - Unemployment

3 - Productivity

4 - Poverty

6 - Energy efficiency increasing

Gross State Product (GSP)

In dollars per year: Increasing

  Things to think about

New Jerseyans produce more than $260 billion in goods and services a year. This is usually much more than many countries, including Denmark, Thailand, Turkey, Argentina, South Africa, Greece, Austria, and many others.


The Gross State Product (GSP) measures the goods and services that our economy produces. New Jersey’s GSP has increased sharply since the mid-1970s, even after adjusting for inflation. GSP has long been considered by many to be the most important measure of the state’s well-being. However, GSP is flawed in that it does not differentiate between the desirable and undesirable things we spend our money on. For instance, Florida’s GSP for 1992 suggests a state in the middle of a wonderful spending boom. In fact, this boom was caused by the high expense of rebuilding after Hurricane Andrew. Some people have proposed alternative measures of well-being that add the value of economic production, as measured by the GSP, but subtract such costs as natural resource depletion, crime, and accidents. These alternative measures show less improvement than GSP and often suggest that we are less well off now than we were in past years. In any consideration of state production, it is important to ask careful questions. How has such production been distributed among our population? How much better off has it made us? What have we given up? And most importantly, how long can we sustain it?


GSP is the traditional measure of basic economic activity. When it grows rapidly, we are considered to be in good times. When the growth slows, we may be in a recession or depression. Although GSP tells us how much is being produced by our economy, it does not tell us how fairly it is distributed or what environmental or social costs we pay for growth.


If we look only at the GSP to find out how we are doing, then we miss much of what is happening in New Jersey. We may see the GSP rise, but we may not see the forests and farms that have vanished, the pollution that has entered our rivers and coastal areas, or the animals that have disappeared. Depending on the reason for the change in GSP, the environmental impact could be positive or negative.


GSP shows that our state has become richer, but it does not tell who among us has received that wealth. It is possible for GSP to paint a rosy picture of our state even during times when the crime rate is rising, when poverty is spreading, and when many people have no health insurance.

Knowledge Gaps

GSP tells us how much has been produced, but it does not tell us what has been produced. Recent research suggests that many people find themselves paying for things that they wish they did not have to pay for, such as security systems and divorce proceedings. It is important to have a measure that distinguishes between the positive and negative contents of the GSP.

Data Source: US Department of Commerce, Bureau of Economic Analysis

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Copyright © State of New Jersey, 1996-2006
Department of Environmental Protection
P. O. Box 402
Trenton, NJ 08625-0402

Last Modified: April 25, 2007

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