Special Report

The States With the Best and Worst Economies

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26. Alabama
> 5 yr. annualized GDP growth rate through Q1 2020: +1.5% (22nd highest)
> 5 yr. annualized employment growth rate through June 2020: +0.0% (12th highest)
> June 2020 unemployment rate: 7.5% (11th lowest)
> Poverty rate: 16.8% (7th highest)

Alabama is one of only 12 states where employment has not declined in the last five years. Still, due in large part to COVID-19, there are about 142,000 fewer people working in the state now than there were in June 2019. Despite those job losses, Alabama’s 7.5% unemployment rate is lower than in the vast majority of states and well below the 11.1% national rate.

While Alabama’s labor force are more likely to be employed than the typical American worker, many jobs in the state are not well paying. Per capita income in Alabama is just $42,240 per year, well below the comparable national figure of $54,526. The lower incomes in Alabama likely contribute to the state’s higher poverty rate. A staggering 16.8% of Alabama residents live on poverty level incomes, a larger share than in all but six other states.

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27. Iowa
> 5 yr. annualized GDP growth rate through Q1 2020: +0.5% (9th lowest)
> 5 yr. annualized employment growth rate through June 2020: -1.6% (13th lowest)
> June 2020 unemployment rate: 8.0% (18th lowest)
> Poverty rate: 11.2% (18th lowest)

June employment in Iowa hit a five year high in 2019, when there were nearly 1.7 million people working in the state. Due in large part to COVID-19, there were only 1.5 million people working in the state as of June 2020, a 10.7% decline from last year and a 7.6% decline from five years ago.

With falling employment, economic growth has also been sluggish in Iowa. Since 2015, Iowa’s GDP increased by only 2.7% for an annualized rate of just 0.5%. Meanwhile, the U.S. economy expanded by 9.8% for an annualized rate of 1.9%.

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28. Connecticut
> 5 yr. annualized GDP growth rate through Q1 2020: +0.4% (7th lowest)
> 5 yr. annualized employment growth rate through June 2020: -1.1% (20th lowest)
> June 2020 unemployment rate: 9.8% (21st highest)
> Poverty rate: 10.4% (10th lowest)

Over the last five years, economic growth has been slower in Connecticut than in all but half a dozen other states. Connecticut’s GDP increased by only 2.0% since 2015, for an annualized rate of just 0.4%. Meanwhile, the U.S. economy expanded by 9.8% for an annualized rate of 1.9%. One explanation for the sluggish economic growth is slow population growth. About 64,000 more people left Connecticut between 2010 and 2019 than moved in.

Several industries were a drag on the Connecticut economy in the last five years. Arts and entertainment contracted at an annualized rate of 1.7%, and the output of the state’s wholesale trade trade industry fell by an average of 1.3% per year.

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29. Nevada
> 5 yr. annualized GDP growth rate through Q1 2020: +2.8% (8th highest)
> 5 yr. annualized employment growth rate through June 2020: -0.6% (20th highest)
> June 2020 unemployment rate: 15.0% (4th highest)
> Poverty rate: 12.9% (23rd highest)

Before the pandemic, Nevada had one of the fastest growing economies in the country. The state’s GDP grew at an annualized rate of 2.8% over the last five years. This was likely related to the high net migration in the state. Nevada’s population grew by 9.5% from net migration over the last decade, the second highest such growth of any state.

Nevada has been one of the most severely affected by COVID-19 due to its large tourism industry. Prior to the pandemic over a third of workers were in jobs that were at a high risk of being lost amid the pandemic, nearly double the national rate. More than 40% of the Nevada labor force filed for unemployment since mid-March, and the state now has the fourth-highest unemployment rate in the nation.

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30. North Dakota
> 5 yr. annualized GDP growth rate through Q1 2020: -1.2% (the lowest)
> 5 yr. annualized employment growth rate through June 2020: -1.4% (15th lowest)
> June 2020 unemployment rate: 6.1% (4th lowest)
> Poverty rate: 10.7% (12th lowest)

No state economy contracted more than North Dakota’s over the past five years. While the U.S. GDP grew at an annualized rate of 1.9% from 2015 to 2020, North Dakota’s economy shrank at an annualized rate of 1.2% each year.

Still, members of the North Dakota labor force are more likely to have a job than those in almost any other state. The state has consistently had one of the lowest unemployment rates over the past five years, and even in June of 2020, after the pandemic hit, North Dakota’s 6.1% unemployment rate was lower than all but three other states.

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