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What is an MSA | Metropolitan Statistical Area

By September 12, 2016 No Comments

What is an MSA | And why should you care?

According to Wikipedia, “In the United States, a metropolitan statistical area (MSA) is a geographical region with a relatively high population density at its core and close economic ties throughout the area.”

However before we get going, an additional definition from Wikipedia is useful “Metropolitan and micropolitan statistical areas are defined as consisting of one or more adjacent counties or county equivalents with at least one urban core area meeting relevant population thresholds, plus adjacent territory that has a high degree of social and economic integration with the core, as measured by commuting ties. A metropolitan statistical area has at least one urban core with a population of at least 50,000. In a micropolitan statistical area, the largest urban core has a population of at least 10,000 but less than 50,000.”

In reading the above definition you can more easily visualize the importance of what an MSA is and how it can affect business planning and execution.  Think about it this way, San Diego is a City, a very large City.  It is the largest population City in the County of San Diego.  That makes it the urban core area as defined above.  However, when you are in the City of San Diego and you drive to La Jolla, you never see open space and you basically drive on one freeway between cities.  The boundaries between the two cities don’t seem to matter for a business in the area. Then on top of that, we need to think about adjacent areas that have ties or social and especially economic impact. Thus the San Diego MSA includes the entire County and all the cities within it.

This is an important concept to learn about, understand and then utilize in your business planning.  Fortunately, the government has tasked itself with defining and listing each MSA and then using the census (and much other data) to make these statistics accurate and reliable.  It makes sense that the United States Census Bureau tracks and publishes this data for all to view and utilize.

Map of MSA’s

If you look at the map below, you can see (mainly in the dark green) what most of us refer to as Metropolitan Statistical Areas.  In addition, where you see the darker shade of green is where most of the population resides.  Thus the west and east coasts are mostly green, etc.  It also allows you to visually see that the Northern border with Canada and the middle of the country is where there is little population, and of course that means little economic activity.

One of the main reasons you should care, and many economists and business people care, is that the MSA’s are one of the main ways that the government collects and then posts data.  For example, a widely used measure of housing prices, affordability and other economic statistics are published by the federal government as the Federal Housing Price Index.

Another extremely important one is the GDP by MSA and the change in GDP.  That allows users to visualize which areas are growing and which are retreating.  These statistics are published by the US Bureau of Economic Analysis.

Once you have the population information by MSA, almost any economic measure or activity can be layered on top of the map.

List of Economic Uses of the MSA

Here is a list of some of the most important types of economic data that are used and published by the various branches of the Government.  Remember all of these are based on the well understood element of the MSA.  If you take a look you can see how important each of these can be on their own, or when combined.

Type Description
Economic Census Sales, employment, payrolls
Survey of Business Owners Sales, employment, payroll for firms by sex and ethnicity of owner
Statistics of US Businesses Employment and payroll for firms by employment size
Statistics of US Businesses Births, deaths, expansions, contractions for establishments
Nonemployee statistics Receipts for establishments with no paid employers
Building permits Number of housing units authorized by building permits by size
Governments Federal, state, and local governments and government activities

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