Special Report

Ten States With the Slowest Growing Economies

4. Pennsylvania
> GDP growth: 0.7%
> 2013 GDP: $644.9 billion (6th highest)
> 1-yr. population change: 0.07% (3rd lowest)
> 2013 unemployment: 7.4% (19th highest)

While the U.S. has hardly been a model of consistent, sustainable growth in recent years, growth in Pennsylvania has been even more anemic. One of the largest drags on the nation’s sixth-largest state economy was educational services spending, which fell enough to lower GDP growth by 0.15 percentage points last year. Governor Tom Corbett has been criticized for cutting education spending by more than $1 billion in his first two budgets as part of plans to balance the state’s books. This year, however, Corbett’s has vowed to increase educational spending. Also not especially helpful for growth, Pennsylvania’s population barely grew last year, adding less than 10,000 residents to a state with nearly 12.8 million inhabitants.

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3. Virginia
> GDP growth: 0.1%
> 2013 GDP: $452.6 billion (11th highest)
> 1-yr. population change: 0.89% (18th highest)
> 2013 unemployment: 5.5% (13th lowest)

Virginia’s economy grew slower than that of the U.S. for the third consecutive year. Last year, both the professional scientific and technical sector, as well as the government sector, weighed down GDP growth. Still, these industries remain quite large in Virginia. The professional, scientific, and technical sector accounted for 13% of the state’s output last year, more than anywhere else in the U.S., while government accounted for nearly 19% of the state’s output, more than in all but three states. Much of the 2013 drop in growth may be the result of automatic federal budget cuts that went into effect last year. These have disproportionately hit Virginia, which is home to several major defense contractors, including Northrop Grumman and General Dynamics.

2. Maryland
> GDP growth: 0.0%
> 2013 GDP: $342.4 billion (15th highest)
> 1-yr. population change: 0.74% (23rd highest)
> 2013 unemployment: 6.6% (22nd lowest)

Despite its economy not growing in 2013, Maryland is one of the wealthiest states in the nation. Residents were exceptionally well off financially, with a typical household earning $71,122 in 2012, the most of any state in the country. As was the case in several other slow-growing state economies, a relatively high percentage of GDP came from the professional, scientific, and technical industries in Maryland — 10.0% last year, more than in all but two other states. Similarly, the government sector was also quite large, accounting for 21% of the state economy last year. As with Virginia, Maryland was significantly impacted by the federal government sequester in 2013.

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1. Alaska
> GDP growth: -2.5%
> 2013 GDP: $59.4 billion (8th lowest)
> 1-yr. population change: 0.66% (25th lowest)
> 2013 unemployment: 6.5% (tied-18th lowest)

Alaska had one of the fastest growing state economies in previous years. Real GDP grew 4.2% in 2011 and 3.5% in 2012, both among the highest growth rates in the U.S. Residents were also quite wealthy, with a typical household earning $67,712 in 2012, third most nationwide. Because of the state’s high oil revenue, Alaska has no income or property taxes, and is able to pay out annual dividends to all state residents. Such dependency on the energy sector, however, may be unsustainable. Crude production has fallen steadily since the 1980s. Alaska’s GDP growth wasn’t just slow last year. GDP actually declined by 2.5%, the only state in the nation with negative economic growth. The mining sector was the largest drag on output, lowering GDP growth by 2.55 percentage points.

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