The COVID-19 pandemic sent economic shockwaves through the U.S. economy, tripling the monthly unemployment to nearly 15% and leading to a more than 30% quarterly decline in GDP — by far the largest economic contraction in U.S. history.
No corner of the country was untouched by the pandemic’s economic consequences — but some states have emerged better off than others. A range of factors, including industrial diversity, labor force education levels, household income, and long-term GDP growth, have an effect on a state’s overall economic strength — and its ability to withstand the impact of the pandemic.
To determine the states with the best and worst economies, both in the years leading up to the pandemic and during it, 24/7 Wall St. created an index of five measures — five-year economic growth, five-year employment growth, the poverty rate, unemployment rate, and share of adults with a bachelor’s degree or higher.
Many of the states with economies that rank on the lower end of this list depend on industries that were hit hard by the COVID-19 pandemic. States like Hawaii and Nevada, where tourism is an economic pillar, as well as states like Wyoming and Alaska that depend on resource extraction, rank lower on this list than they perhaps otherwise would if not for the pandemic. Here is a look at the states where people gave up looking for jobs during the pandemic.
GDP growth, one of the index components, is commonly used to gauge the relative economic vitality of a given geography. Economic growth is often fueled by population growth, and many of the states with the fastest growing economies — indeed, many of the states with the best economies — also have rapidly growing populations. Americans are relocating to many of the higher-ranked states on this list, and these same states also often have far higher than average birth rates. Here is a look at how every state’s population has changed since 2010.
Click here to see the states with the best and worst economies.
To determine the states with the best and worst economies, 24/7 Wall St. ranked states based on an index comprising five measures: GDP growth, job growth, unemployment rate, poverty rate, and the bachelor’s degree attainment rate among adults. The average annual GDP growth rate from Q4 2015 to Q4 2020 came from the Bureau of Economic Analysis and was included in the index at full weight. The average annual employment growth rate from March 2016 to March 2021 came from the Bureau of Labor Statistics and was included in the index at full weight. The seasonally-adjusted unemployment rate as of March 2021 also came from the BLS and was included in the index at full weight. The share of the population living below the poverty line and the share of adults with a bachelor’s degree or higher came from the U.S. Census Bureau’s 2019 American Community Survey and were included in the index at full weight.
In addition to the components in the index, we considered additional state data. Real GDP and contributions to real GDP growth by industry came from the BEA. Median household income, bachelor’s degree attainment rate, and the share of workers commuting outside of the state for work came from the 2019 ACS. The affordability ratio of median home value to median household income is a 24/7 Wall St. calculation based on ACS data. Data on regional price parity, a measure of cost of living, came from the BEA and is for 2019. Population change due to natural causes and net migration from 2010 to 2020 came from the U.S. Census Bureau. All data are for the most recent period available.
Sponsored: Find a Qualified Financial Advisor
Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.