The States With the Best and Worst Economies

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Source: Wikimedia Commons

25. South Dakota
> 2016 GDP: $41.61 billion (4th smallest)
> 5 yr. GDP annual growth rate: 1.0% (tied–16th smallest growth)
> Unemployment: 2.9% (6th lowest)
> 5 yr. annual employment growth: 1.3% (21st slowest growth)

Employment in South Dakota grew at a 1.3% annual pace over the five years since 2011, slightly below 1.9% employment growth nationwide. Still, only 2.9% of the state’s workforce are out of a job, one of the lowest unemployment rates of any state. Similarly, only 5.2% of workers in the state are underemployed, the smallest share of any state.

Construction was a major driver of GDP growth in 2016, as new housing starts were up 26.7% that year compared to 2015, the second largest increase of any state.

Source: Thinkstock

24. Delaware
> 2016 GDP: $60.61 billion (10th smallest)
> 5 yr. GDP annual growth rate: 0.9% (tied–12th smallest growth)
> Unemployment: 4.7% (13th highest)
> 5 yr. annual employment growth: 1.7% (19th fastest growth)

Delaware is one of many northeastern states where sluggish population growth and a struggling business services sector has hindered economic activity. While the national professional services sector was the second largest contributor to U.S. GDP growth in 2016, the industry detracted more from Delaware’s economic growth than any other sector.

Delaware’s manufacturing sector has also struggled. Chrysler closed its manufacturing plant in the state in 2008 and General Motors followed in 2009. In 2016, manufacturing detracted more from GDP growth than any sector other than professional services. Still, the state has a lower poverty rate and higher bachelor’s degree attainment rate than the nation as a whole.

Source: Ichabod / Wikimedia Commons

23. Kansas
> 2016 GDP: $136.59 billion (20th smallest)
> 5 yr. GDP annual growth rate: 0.9% (tied–12th smallest growth)
> Unemployment: 3.7% (17th lowest)
> 5 yr. annual employment growth: 1.0% (11th slowest growth)

An educated population often translates to a more talented and capable talent pool for employers. Across Kansas, 90.3% of adults have graduated high school, and 31.7% of adults have at least a bachelor’s degree, each higher than the corresponding shares nationwide. Economic outcomes also tend to be better in Kansas than in many other states. Only 3.7% of the state’s workforce are out of a job, and 13.0% of the population lives in poverty, slightly below the nationwide 4.3% unemployment rate and 14.7% poverty rate.

Still, annual GDP and employment growth have been relatively slow in Kansas over the last five years.

Source: Robstutz / Wikimedia Commons

22. Montana
> 2016 GDP: $41.03 billion (3rd smallest)
> 5 yr. GDP annual growth rate: 1.3% (tied–22nd smallest growth)
> Unemployment: 3.9% (20th lowest)
> 5 yr. annual employment growth: 1.5% (23rd fastest growth)

While relatively few workers in Montana are employed in fast-growing, high-wage industries such as information, financial activities, and professional services, 2.6% of the state’s workforce is employed in mining — twice the national share. Like the nation as a whole, Montana’s mining sector was the largest drag on GDP growth in 2016. Overall, Montana’s annualized GDP growth rate of 1.3% since 2011 was far slower than the 2.0% national rate.

Despite the slower economic growth, relatively few state residents struggle with poverty and unemployment. An estimated 14.6% of the state’s population lives in poverty, and 3.9% of the labor force is unemployed — below the 14.7% national poverty rate and the 4.3% unemployment rate.

Source: Wikimedia Commons

21. New York
> 2016 GDP: $1.28 trillion (3rd largest)
> 5 yr. GDP annual growth rate: 1.3% (tied–22nd smallest growth)
> Unemployment: 4.4% (20th highest)
> 5 yr. annual employment growth: 1.6% (20th fastest growth)

New York is the fourth largest state by population and the third largest by GDP. A relatively well-educated state, some 35.0% of adults in New York have at least a bachelor’s degree, one of the higher shares among all states. Still, economic growth in the Empire State has not been especially robust in recent years. New York’s economy grew at an annual rate of 1.3% between 2011 and 2016, slightly below the 2.0% GDP growth nationwide over the same period. The state’s finance and insurance sector is one of the largest by total employment of any state — and last year, the industry posed a 0.14 percentage point drag on total GDP growth.