The States With the Best and Worst Economies

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1. Colorado
> 5 yr. GDP annual growth rate: +2.7% (4th largest increase)
> 2017 GDP: $302.9 billion (18th largest)
> June 2018 Unemployment: 2.7% (tied — 3rd lowest)
> 5 yr. annual employment growth: +2.4% (5th largest increase)

As was the case last year, Colorado’s economy ranks as the best in the country, due largely to its GDP and job growth, which each ranks among the top five nationwide. The state economy has expanded by an average annual rate of 2.7% over the last five years, and employment has increased by an annual average of 2.4% over the same period, compared to national growth rates of 1.7% and 1.5%, respectively. Nationwide, many of the jobs in the fastest growing industries require a postsecondary education, and in Colorado, nearly 40% of the adult population has a bachelor’s degree, the second highest share in the country. College-educated adults are more likely to have greater job security, which may help explain Colorado’s relatively low 2.7% unemployment rate.

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2. Utah
> 5 yr. GDP annual growth rate: +2.8% (3rd largest increase)
> 2017 GDP: $141.1 billion (20th smallest)
> June 2018 Unemployment: 3.0% (11th lowest)
> 5 yr. annual employment growth: +2.7% (the largest increase)

Utah’s economy grew at an average annual rate of 2.8%, the third highest annual growth rate of all states. The state’s information sector was the largest contributor to this growth, likely due in large part to the expansion of the tech sector in the Salt Lake City, Provo, and Park City region of the state, an area known collectively as the Silicon Slopes. The information sector added jobs at a 3.4% annual growth rate over the last five years, the fastest job growth of any state’s information sector. Across all sectors, employment in Utah grew at an annual rate of 2.7%, the largest overall employment growth of any state.

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3. Massachusetts
> 5 yr. GDP annual growth rate: +1.6% (20th largest increase)
> 2017 GDP: $456.2 billion (11th largest)
> June 2018 Unemployment: 3.5% (tied — 17th lowest)
> 5 yr. annual employment growth: +1.4% (15th largest increase)

Massachusetts has the most highly educated population in the country. Among state adults, 42.7% have at least a bachelor’s degree, more than 10 percentage points above the national share. The highly educated population has a positive effect on the state economy in several ways. Those with a college degree tend to earn higher incomes, which then means more disposable income spent on local businesses. The state’s median annual household income of $75,297 is the fourth highest among states. College-educated adults are also more likely to have stable employment and health insurance, which in turn translates to more financially stable households. Just 2.5% of the state’s residents lack health insurance, the lowest share of any state.

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4. New Hampshire
> 5 yr. GDP annual growth rate: +1.6% (21st largest increase)
> 2017 GDP: $70.5 billion (12th smallest)
> June 2018 Unemployment: 2.7% (tied — 3rd lowest)
> 5 yr. annual employment growth: +1.1% (24th largest increase)

New Hampshire’s state economy ranks fourth best in the nation, not as much for economic growth — its GDP growth was slightly slower than national average over the last five years — but rather due to general prosperity and stability. The state has a nation-lowest poverty rate at 7.3%, which is just over half the national poverty rate. Unemployment is one of the major drivers of poverty, and the state’s unemployment rate of 2.7% is among the lowest of any state.

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5. Washington
> 5 yr. GDP annual growth rate: +3.0% (the largest increase)
> 2017 GDP: $439.4 billion (14th largest)
> June 2018 Unemployment: 4.7% (tied — 4th highest)
> 5 yr. annual employment growth: +2.2% (7th largest increase)

Washington state’s economy is not perfect across all measures included in this index. Notably, the state’s unemployment rate as of June 2018 of 4.7% is tied for the fourth highest among states. However, the state economy makes up for the less than ideal labor market by ranking well in other key factors. Specifically, the state’s average annual GDP growth of 3.0% over the last half decade is the highest of any state and nearly double the comparable national pace.