“48 States Up” Meets “8 Sectors Down”: Parsing the BEA’s Two-Track Growth Story

On the BEA’s own timeline — the official press release dated 2025-09-26 — the headline is triumphal: real GDP rose in 48 states in Q2 2025. The subtext is less cheerful: only 15 of 23 industry groups expanded. Add that personal income “up everywhere” was powered more by transfer receipts in 29 states (thanks in part to retroactive Social Security payments) than by earnings, and the “broad-based” growth narrative starts looking top-heavy, commodity-tilted, and policy-assisted.

- Breadth without depth: 48 states posted real GDP growth, but only 15 of 23 industry groups expanded — a narrow base carrying a wide map.
- Policy-driven income: Personal income rose in all states and DC, but transfer receipts were the largest contributor in 29 states; earnings led in only 21 states and DC.
- Earnings cracks: Earnings declined in Arkansas and Mississippi; Arkansas’ real GDP fell −1.1% and Mississippi also declined; DC was flat.
- Commodity tilt: Mining increased in 45 states, leading growth in 8; four of the top five growth states were energy-heavy (North Dakota first; Texas second; New Mexico fourth; Wyoming fifth).
- Consumption quality: 2024 PCE rose 5.6% (current dollar), led by health care and housing/utilities; gasoline/energy goods and motor vehicles subtracted from growth in 49 states and DC.

The Numbers Behind the Narrative

Breadth Without Depth
“Real GDP increased in 48 states” sounds pervasive until you read the footnotes: only 15 of 23 industry groups grew. That’s breadth on a map, not across sectors. The lift was driven by a handful of heavyweights—mining, finance and insurance, information, and nondurable manufacturing—while 8 industry groups contracted. This is the classic ensemble billed as “broad-based” while a few leads carry the show.

Income Growth That Isn’t Earnings
Personal income rose everywhere, but the dominant engine in 29 states was transfer receipts, not paychecks. The release explicitly cites retroactive Social Security payments under the Social Security Fairness Act of 2024—a one-off policy kicker. Earnings led in 21 states and DC, but that still leaves most states leaning on transfers. The veneer cracks in the laggards: earnings fell in Arkansas and Mississippi, with Arkansas’ GDP contracting −1.1% in Q2 and Mississippi also declining.

The Commodity Tilt
This quarter’s leaders are energy-flavored. Mining increased in 45 states and was the leading contributor in 8. Four of the top five growth states—North Dakota (first), Texas (second), New Mexico (fourth), Wyoming (fifth)—are tethered to commodity cycles. That’s great when the cycle cooperates; it’s a cliff-edge when it turns. Agriculture delivered a split-screen: the leading contributor in six states (including Kansas, third overall), but the leading drag in six states, notably Arkansas and Mississippi—both with GDP declines.

Nominal vs Real: The Mixing Bowl
The release mixes real GDP (+3.8% annualized in Q2 2025) with current-dollar personal income (+5.5%) and current-dollar PCE (+5.6% in 2024). Without deflators, nominal spending and income get mistaken for real strength. Investors should resist the urge to conflate price-level buoyancy with volume gains—especially when necessities are doing the heavy lifting.

Consumption Quality: Necessities Carry the Day
2024 PCE growth skews toward stickier, non-discretionary categories: health care and housing and utilities led. Meanwhile, gasoline and other energy goods and motor vehicles and parts declined and were the largest subtractions in 49 states and DC. That’s not a consumer splurge; it’s households prioritizing fixed costs while trading down on big-ticket and fuel-intensive spending.

Presentation Drift and Revision Risk
This release consolidates state GDP, personal income, and PCE into a single announcement and pushes detail to the Interactive Data Application—less in-release transparency just as the BEA announces sweeping revisions to 2020–2024 annuals and Q1 2020–Q1 2025 quarterlies, aligned with national updates (9/25/2025). It also pre-announces that Q2 2025 will be superseded on December 22, 2025. Translation: treat the current state rankings and sector shares as provisional.

Market Implications
- Equities:
- Energy/Materials benefit from the current mining-led breadth, but that raises beta to commodity swings; quality balance sheets and low-cost basins matter.
- Discretionary looks soft relative to staples/health care given the necessity-led PCE pattern.
- Regional exposure: Dakotas/Texas/New Mexico/Wyoming play well in a firm-commodity tape; Arkansas/Mississippi caution flags for local lenders and consumer names.

• Rates and Inflation:

• Credit and Munis:

Looking Ahead
- Watch the handoff from transfers to earnings: If earnings don’t pick up in the fall, expect softer discretionary outlays—even if nominal aggregates look fine.
- Track commodity sensitivity: Rig counts, wellhead productivity, and spreads in energy-heavy states will tell you how durable Q2 “breadth” really is.
- Mind the revisions: The Dec 22, 2025 supersession could reshuffle state leaders, sector contributions, and even the extent of “breadth.” Keep models revision-aware.
- CPI pass-through: Necessity-heavy PCE combined with energy volatility suggests uneven inflation prints—more sticky services, choppier goods.
- Discretionary barometer: Autos and energy goods subtracted in 49 states and DC—any reversal here would be the clearest sign of consumer re-acceleration.

Conclusion
The 2025-09-26 release tells two stories. The headline says breadth—48 states up. The footnotes say concentration—only 15 of 23 industries grew, with mining doing outsized work and transfers powering much of the income gains. Add a 3.8% national real GDP print alongside current-dollar income and spending, and it’s easy to overread nominal buoyancy as real momentum.