Special Report

The States With the Best and Worst Economies

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21. Texas
> 5 yr. GDP annual growth rate: +2.5% (5th largest increase)
> 2017 GDP: $1.5 trillion (2nd largest)
> June 2018 Unemployment: 4.0% (tied — 23rd highest)
> 5 yr. annual employment growth: +1.9% (12th largest increase)

Unlike many other U.S. states with substantial exports, the economy of Texas is relatively diverse. Despite weak oil prices for most of the last five years, state GDP still increased at an annual average rate of 2.5%, fifth best in the nation.

Having the fifth fastest economic growth was not enough to push Texas into the ranks of the 20 best economies, largely because it has a below average adult educational attainment rate and one of the higher poverty rates among states.

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22. South Carolina
> 5 yr. GDP annual growth rate: +2.1% (9th largest increase)
> 2017 GDP: $189.1 billion (25th smallest)
> June 2018 Unemployment: 3.8% (tied — 21st lowest)
> 5 yr. annual employment growth: +1.9% (11th largest increase)

Like many of the states that rank close to the middle of this list, South Carolina has both positive and negative characteristics. The state GDP and job market have both improved substantially in the past half decade. From 2012 through 2017, state GDP increased at an annual average rate of 2.1%, while employment rose at a 1.9% annual pace, compared to national figures of 1.7% and 1.5%, respectively.

However, the state economy suffers from a less affluent and less educated population. The state’s adult college attainment and poverty each ranks worse than the majority of states.

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23. Nevada
> 5 yr. GDP annual growth rate: +2.0% (10th largest increase)
> 2017 GDP: $134.3 billion (18th smallest)
> June 2018 Unemployment: 4.7% (tied — 4th highest)
> 5 yr. annual employment growth: +2.7% (2nd largest increase)

Nevada’s economy is improving faster than most states — it ranks 10th among states for GDP growth over the last five years and second for employment growth over the same period.

Nevada is one of a number of states on this list that have shown signs of economic improvement but remain with underlying consumer base that is far from ideal. A highly educated population is more likely to attract businesses looking for more skilled workers, and are also more likely to have disposable income to feed the economy. In Nevada, just 23.5% of the adult population has a bachelor’s degree, the sixth lowest share and far less than the national share of 31.3%.

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24. Montana
> 5 yr. GDP annual growth rate: +1.3% (21st smallest increase)
> 2017 GDP: $41.8 billion (4th smallest)
> June 2018 Unemployment: 3.8% (tied — 21st lowest)
> 5 yr. annual employment growth: +1.2% (21st largest increase)

Ranked as the 24th best economy, Montana is comparatively average in most measures of economic quality considered. The state ranks between 20th and 30th overall in each of the components of our index — GDP growth, adult educational attainment, employment growth, and unemployment. The state’s June unemployment rate of 3.8% is the same as that of the United States as a whole.

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25. Kansas
> 5 yr. GDP annual growth rate: +0.9% (14th smallest increase)
> 2017 GDP: $138.2 billion (19th smallest)
> June 2018 Unemployment: 3.4% (16th lowest)
> 5 yr. annual employment growth: +0.6% (7th smallest increase)

In measures of prosperity and educational attainment, the population of Kansas is slightly above average. The state’s unemployment rate of 3.4% is slightly better than the U.S. rate of 3.8%. The state’s poverty rate of 12.1% also falls below the national rate of 14%. However, Kansas’ economy has grown relatively slowly over the past few years. From 2012 through 2017, the state’s GDP rose at an average annual rate of 0.9%, a smaller increase than in most states, and well below the comparable 1.7% average annual growth nationwide over the same period.