Special Report

The States With the Best and Worst Economies

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31. Texas
> 5-yr. annualized GDP growth through Q4 2020: +1.7% (12th highest)
> 5-yr. annualized employment growth through March 2021: +0.6% (15th highest)
> March 2021 unemployment rate: 6.9% (12th highest)
> Poverty rate: 13.6% (11th highest)

A large segment of Texas’ economy includes industries that were hit hardest during the COVID-19 pandemic such as oil and gas extraction. Partially as a result, Texas’ economic output fell by 1.9% from the end of 2019 through the end of 2020. The contraction was not enough to offset gains of previous years, however. The state’s economy expanded at an average pace of 1.7% a year over the last half decade, faster than the comparable national expansion of 1.4%.

Texas also reported stronger than average employment growth over the last five years. However, much of that growth was attributable to population growth, and the state’s 6.9% unemployment rate is well above the 6.0% national average.

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32. California
> 5-yr. annualized GDP growth through Q4 2020: +2.4% (7th highest)
> 5-yr. annualized employment growth through March 2021: -0.6% (13th lowest)
> March 2021 unemployment rate: 8.3% (3rd highest)
> Poverty rate: 11.8% (25th highest)

The unemployment crisis in California is nearly the worst in the country. As of March 2021, 8.3% of the labor force in the state were out of work, well above the 6.0% national jobless rate and higher than in all but two other states. The state’s high unemployment is largely the result of the COVID-19 pandemic as there are nearly 1 million fewer people working in California today than there were a year ago.

Despite the weak job market, economic growth has been relatively strong in California. Over the last half decade, the state’s GDP grew at an average rate of 2.4% a year — well above the 1.4% national rate and faster than all but six other states — even after weathering a 2.8% contraction during the pandemic.

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33. Delaware
> 5-yr. annualized GDP growth through Q4 2020: -0.6% (4th lowest)
> 5-yr. annualized employment growth through March 2021: +0.4% (17th highest)
> March 2021 unemployment rate: 6.5% (16th highest)
> Poverty rate: 11.3% (22nd lowest)

Delaware has reported some of the weakest economic growth of any state in recent years. Due to sharp contractions in industries like arts and entertainment, education services, and wholesale trade, Delaware’s GDP fell at an average annual rate of 0.6% from late 2015 to the end of 2020. Delaware’s jobless rate, at 6.5%, is also slightly higher than the U.S. unemployment rate of 6.0%.

In some other key measures, however, Delaware compares favorably to much of the rest of the country. For example, the state’s poverty rate of 11.3% is a full percentage point below the national poverty rate.

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34. Nevada
> 5-yr. annualized GDP growth through Q4 2020: +1.9% (10th highest)
> 5-yr. annualized employment growth through March 2021: +1.5% (5th highest)
> March 2021 unemployment rate: 8.1% (6th highest)
> Poverty rate: 12.5% (21st highest)

Tourism is an economic pillar in Nevada, and the COVID-19 pandemic ground the state’s most important industry to a halt for much of last year. Partially as a result, Nevada’s economy contracted by 3.4% from the fourth quarter 2019 to the fourth quarter of 2020. While employment growth has been strong in the state in recent years, Nevada is now struggling with one of the worst unemployment crises in the country, as it is one of only six states where more than 8% of the labor force are out of work.

Going into the pandemic, Nevada’s economy was one of the fastest growing of any state. Even accounting for the COVID-19 recession, Nevada’s GDP increased at an average annual rate of 1.9% a year in the last half decade, faster than the comparable 1.4% national growth rate.

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35. Michigan
> 5-yr. annualized GDP growth through Q4 2020: +0.4% (15th lowest)
> 5-yr. annualized employment growth through March 2021: -0.6% (16th lowest)
> March 2021 unemployment rate: 5.1% (25th highest)
> Poverty rate: 13.0% (17th highest)

There are over a quarter million fewer people working in Michigan today than there were at this time last year. Job losses attributable to the pandemic contributed to a 2.7% decline in overall employment in the state from 2016 to 2021, one of the larger employment declines among states.

Economic growth has also been stagnant in Michigan in recent years. Due in part to a 4.2% economic contraction in the last year, Michigan’s five-year average annual GDP growth rate was just 0.4%, less than one-third the comparable 1.4% national growth rate.