Special Report

The States With the Best and Worst Economies

Source: Thinkstock

31. New York
> 5 yr. GDP annual growth rate: +0.8% (13th smallest increase)
> 2017 GDP: $1.3 trillion (3rd largest)
> June 2018 Unemployment: 4.5% (tied — 9th highest)
> 5 yr. annual employment growth: +1.3% (18th largest increase)

New York is one of many Northeastern states suffering from economic decline as many of its younger, more educated residents relocate to warmer states in the South and West Coast. New York’s population grew at less than one-third the U.S. growth rate from 2012 to 2017 — it was surpassed by Florida as the fourth most populous state in 2014. Just 1.7% of U.S. adults who moved to New York in 2016 had a bachelor’s degree, the second smallest share of any state. Slow population growth has likely hindered economic activity. New York’s GDP grew at an average annual rate of just 0.8% from 2012 to 2017, less than half the 1.7% national GDP growth rate over that time.

Source: Thinkstock

32. Illinois
> 5 yr. GDP annual growth rate: +0.8% (12th smallest increase)
> 2017 GDP: $705.4 billion (5th largest)
> June 2018 Unemployment: 4.3% (tied — 13th highest)
> 5 yr. annual employment growth: +0.9% (15th smallest increase)

While population change was not one of the measures included in this index of state economic health, declining populations are usually a sign of weak job markets and of places generally unattractive to new business. Illinois is one of just three states where the population has declined since 2010. Both employment and overall economic growth tend to mirror population changes, as has been the case in Illinois. Between 2012 and 2017, both the state’s GDP and employment have increased at an annual average rate roughly half that of the comparable U.S. figures.

Source: Thinkstock

33. South Dakota
> 5 yr. GDP annual growth rate: +1.1% (17th smallest increase)
> 2017 GDP: $41.7 billion (3rd smallest)
> June 2018 Unemployment: 3.2% (tied — 14th lowest)
> 5 yr. annual employment growth: +0.8% (12th smallest increase)

South Dakota’s population is growing rapidly. Over the last five years, the state’s population expanded by 4.5%, faster than the U.S. population growth of 3.7%. Economic growth, however, was not as rapid. The state’s five-year average annual GDP growth rate of just 1.1% trails the 1.7% average annual national economic expansion over that time. Over the last year, the agriculture, forestry, fishing, and hunting industry, as well as the finance and insurance industry, were substantial drags on economic growth.

Currently, South Dakota’s economy appears to be doing relatively well. Due in part to rapid hiring in the construction industry over the last half decade, just 3.2% of workers in the state are out of a job, well below the 3.8% U.S. unemployment rate.

Source: Thinkstock

34. North Dakota
> 5 yr. GDP annual growth rate: +0.4% (3rd smallest increase)
> 2017 GDP: $49.0 billion (6th smallest)
> June 2018 Unemployment: 2.6% (2nd lowest)
> 5 yr. annual employment growth: +0.1% (the smallest increase)

North Dakota’s economy is largely dependent on the mining sector. While thanks to an oil boom the state boasted the largest GDP growth in the country in 2014, falling oil prices from mid-2014 to 2016 caused the economy to contract the following two years. Over the past five years, North Dakota’s economy grew at an annual average rate of 0.4%, the sixth slowest rate of any state — including those with contracting economies.

Despite slow economic growth, North Dakota leads much of the country in measures of wealth and labor utilization. Just 10.7% of the state’s population lives in poverty, and 2.6% of the workforce is unemployed — the 10th lowest poverty rate and second lowest unemployment rate of any state.

Source: Thinkstock

35. Indiana
> 5 yr. GDP annual growth rate: +1.6% (19th largest increase)
> 2017 GDP: $309.5 billion (16th largest)
> June 2018 Unemployment: 3.3% (15th lowest)
> 5 yr. annual employment growth: +1.1% (22nd largest increase)

Apart from its unemployment rate, which at 3.3% is slightly better than the national rate of 3.8%, Indiana compares worse than average across most measures of economic health. A highly educated population is often a sign of good economic health as a highly skilled workforce is more likely to attract new businesses. In Indiana, barely one in four adults has a bachelor’s degree, one of the lowest shares in the country. Those with college degrees are also more likely to find steady, higher paying work and have more disposable income. The median household income in Indiana of $52,314 a year is roughly $5,300 below the national median household income.