These States Have the Best Economies in 2018, Study Finds
This article originally appeared on GOBankingRates.com: States With the Strongest Economies in 2018
If you’re planning to relocate, for your career or any other reason, a state’s economy can be a big deciding factor in where you choose to live.
Economic strong points alone, however, don’t make a state one of the best economically. It’s the ability to overcome their weaknesses and emphasize their strengths that separate the states with the best economy from those with worst ones. In a recent analysis, GOBankingRates examined several series of economic data, including each state’s unemployment and change in unemployment rate, personal income and income growth, and total gross domestic product and GDP growth year over year, from 2017 to 2018. In the end, the study identified which states have the strongest economies.
20. North Dakota
GDP growth: 3.55 percent
Personal income increase: 4.02 percent
Unemployment rate increase: 0.1 percentage point
North Dakota kicks off the top 20 U.S. states with the strongest economies. The state ranks high for personal income growth — with a 4.02 percent year-over-year increase, it’s the second-highest increase in the U.S.
The state is especially attractive because of its relatively low taxes. North Dakota’s income tax rates run from just 1.10 percent at the lowest end, to 2.90 percent at the highest, making it one of the best states for taxes in the country.
19. New Jersey
GDP growth: 4.59 percent
Personal income increase: 2.51 percent
Unemployment rate decrease: 0.5 percentage point
New Jersey’s strong economy boasts falling unemployment rates: The 0.5 percentage-point decline ties for 6th-best. Moreover, New Jersey’s GDP growth over the last year is better-than-average, surging from $581 billion to more than $607 billion.
18. Montana
GDP growth: 3.55 percent
Personal income increase: 3.80 percent
Unemployment rate decrease: 0.5 percentage point
Montana’s overall No. 18 ranking is largely driven by its personal income growth of 3.8 percent from 2017 to 2018, the fourth-highest among the states. Another major contributor to its rank is Montana’s employment record. Year over year, Montana’s unemployment rate fell from 4.1 percent (already fairly low) down to 3.6 percent by Q2 2018.
Click to See: Best and Worst States for the Middle Class
17. Rhode Island
GDP growth: 5.32 percent
Personal income increase: 2.20 percent
Unemployment rate decrease: 0.6 percentage point
Rhode Island comes in at No. 17 on the strength of its GDP growth more than anything. This tiny state boasts a GDP of over $61 billion, and it has grown by an impressive 5.32 percent from 2017 to 2018. The state just above it in this regard is the much more massive California, whose GDP grew 5.45 percent.
In more good news, Rhode Island’s unemployment rate is down 0.6 percentage points year-over-year, dropping below 4 percent. In September 2017, it stood at 4.5 percent. These factors combined, along with low crime rate and comparatively low property and income taxes, also make Rhode Island one of the best states to be rich in America.
16. Idaho
GDP growth: 5.03 percent
Personal income increase: 2.65 percent
Unemployment rate decrease: 0.3 percentage point
Idaho’s economy appears to be thriving. Its 5.03 percent growth in GDP ranks among the top 15 biggest increases in the study. Idaho’s personal income growth of 2.65 percent ranks 28th, but it ranks near the top of the list for unemployment rate.
In 2017, Idaho’s unemployment rate was already quite low at 3 percent. But by 2018, the unemployment rate dropped even more, to just 2.7 percent. Among the states with the best economy, Idaho also benefits from a lower cost of living, which means your dollar goes much further here.
15. Georgia
GDP growth: 4.24 percent
Personal income increase: 2.57 percent
Unemployment rate decrease: 0.8 percentage point
Georgia rounds out the top 15 states for of our state economy rankings study. Many southern states have been experiencing robust economic growth in recent years, and Georgia is among them. Perhaps Georgia’s most impressive data point is the decline in unemployment.
Five years ago, Georgia’s unemployment rate stood at 7.9 percent. By September 2018, unemployment had been cut in half, with only 3.7 percent of people unemployed.
Read More: Best and Worst States for Jobseekers
14. Connecticut
GDP growth: 4.97 percent
Personal income increase: 2.66 percent
Unemployment rate decrease: 0.3 percentage point
Connecticut comes in at No. 14 on the list of strongest state economies because it puts up strong numbers across all categories. This state, with a population of just under 3.6 million, managed to increase its GDP by nearly 5 percent from 2017 to 2018, for a total GDP of $268.5 billion, ahead of states like Louisiana and Oregon that have many more people.
13. Wisconsin
GDP growth: 4.52 percent
Personal income increase: 2.90 percent
Unemployment rate decrease: 0.3 percentage point
Wisconsin’s unemployment rate dropped by 0.3 percentage points — better than 21 other states. The state’s GDP of $333.8 billion is big enough to rank among the 20 largest states by GDP. Besides those benefits, Wisconsin offers affordable home prices, low crime rates and other features that make it one of the best states to live a richer life.
12. Washington
GDP growth: 5.98 percent
Personal income increase: 3.42 percent
Unemployment rate decrease: 0.3 percentage point
Washington claims the No. 12 spot for the states with the best economy thanks to excellent GDP and personal income scores. The unemployment rate dropped 0.3 percentage points, but its GDP growth of nearly 6 percent year-over-year is even more impressive, as is its growth in personal income, which now exceeds $60,000.
11. South Carolina
GDP growth: 3.90 percent
Personal income increase: 2.40 percent
Unemployment rate decrease: 0.6 percentage point
South Carolina’s dramatic drop in unemployment propel it to No. 11 in our list of the strongest state economies. However, South Carolina lagged well behind most states in the other two categories.
10. Texas
GDP growth: 6.91 percent
Personal income increase: 3.33 percent
Unemployment rate decrease: 0.2 percentage point
Texas rounds out the top 10 states with the best economy, boasting the second-largest economy in the U.S. with a GDP of $1.77 trillion in 2018 — on par with Canada’s GDP. Over the last year, its GDP surged nearly 7 percent, which is second-best, behind Wyoming’s 7.39 percent increase.
Texas’ economic strength no longer depends solely on oil like back in the old days. The energy sector is still a massive component, but nowadays Texas has one of the most diversified state economies in the U.S., which is a key factor that’s luring more people and businesses to the state each year.
Click to Find Out: Which State Is Richer Than Most Countries?
9. Pennsylvania
GDP growth: 5.16 percent
Personal income increase: 2.54 percent
Unemployment rate decrease: 0.7 percentage point
In our state economy rankings, Pennsylvania comes in at No. 9 due mainly to its GDP and improvement in employment. With a GDP of $775.6 billion, Pennsylvania has the nation’s sixth-largest economy. Plus, its GDP expanded well over 5 percent since last year, while state unemployment dropped from 4.8 to 4.1 percent, the fourth-biggest decline overall.
8. Oklahoma
GDP growth: 4.51 percent
Personal income increase: 3.15 percent
Unemployment rate decrease: 0.6 percentage point
From 2017 to 2018, Oklahoma’s unemployment rate dropped by a cool 0.6 percentage points, the fifth-biggest decline in unemployment in the study. GDP growth was above-average as well, jumping from less than $186 billion in 2017, up to $194 billion in 2018. Oklahoma’s biggest private sector is mining, quarrying, and oil and gas extraction, which contributes $23.7 billion to the state’s overall economy.
7. Colorado
GDP growth: 6.56 percent
Personal income increase: 3.16 percent
Unemployment rate increase: 0.1 percentage point
Colorado is booming as a real estate market. So much so that Colorado’s biggest private sector industry is real estate and rental and leasing, contributing a massive $50.9 billion to the state’s $365 billion overall GDP.
Colorado’s economy grew 6.56 percent from 2017 to 2018, the third largest increase year-over-year in the study. Although unemployment rose 0.1 percent, it stands at just 3.1 percent, which is low either way. Incomes have increased healthily, which helps Colorado clinch the No. 7 spot for the states with the best economy.
6. New Mexico
GDP growth: 4.32 percent
Personal income increase: 2.52 percent
Unemployment rate decrease: 1.4 percentage point
New Mexico boasts the biggest decline in unemployment in the study. It was much needed considering the state’s unemployment rate fell from 6 percent in 2017 to 4.6 percent in 2018. But economic signs for New Mexico are positive, with industries like construction, healthcare and social assistance and education services all experiencing robust growth over the last three years.
5. California
GDP growth: 5.45 percent
Personal income increase: 3.33 percent
Unemployment rate decrease: 0.4 percentage point
California’s economy is the biggest in the country, with a GDP of $2.8 trillion — more or less equal to the GDP of the United Kingdom. The best way to appreciate the strength and dynamism of California’s economy is to compare it to the economies of foreign countries.
4. New York
GDP growth: 2.86 percent
Personal income increase: 3.96 percent
Unemployment rate decrease: 0.6 percentage point
Although New York’s year-over-year GDP growth could be better, the state witnessed a good drop in unemployment from 2017 to 2018. More importantly, incomes in the Empire State are high and have grown faster than the vast majority of states. In just a year, the median income grew by nearly 4 percent, from $63,847 to $67,264 as of Q2 2018.
3. Wyoming
GDP growth: 7.39 percent
Personal income increase: 4.56 percent
Unemployment rate decrease: zero
Wyoming takes the No. 3 spot for strongest state economies thanks to some very impressive numbers. Wyoming topped all states with its GDP growth from 2017 to 2018, as well as with its personal income growth: 4.56 percent, which pushed Wyoming’s income per capita above $60,000 for the first time.
See: Cities With the Fastest-Growing Incomes
2. Virginia
GDP growth: 4.71 percent
Personal income increase: 2.74 percent
Unemployment rate decrease: 0.7 percentage point
Virginia takes the No. 2 spot among the states with the best economy. In terms of employment, Virginia’s record is stellar, experiencing one of the biggest declines in unemployment year-over-year. The state’s 2018 unemployment rate is a mere 2.9 percent, the fifth-best in the study. And when it comes to GDP, Virginia boasts the 13th largest ($523.8 billion), and still increased it by 4.71 percent, which is better than the average of all 50 states.
1. Illinois
GDP growth: 4.54 percent
Personal income increase: 3.96 percent
Unemployment rate decrease: 0.9 percentage point
Illinois takes the top spot in the overall rankings of states with the best economy. The state experienced nearly 4 percent growth in personal income, the third best in the study. In terms of GDP, Illinois is a powerhouse, not surprising since it’s home to Chicago. Its GDP was over $806 billion in 2017, and it still managed to grow by more than 4.5 percent, to $843 billion in 2018.
On top of that, Illinois’ unemployment dropped close to a full percentage point in just one year. That’s good enough for the second-best decline in the country.
Click through to see the most profitable industry in every state.
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Methodology: GOBankingRates examined at the unemployment rate and rate change, personal income and income growth, and GDP and GDP growth for each state, as a percentage change between 2017 and 2018. After giving each state a score for its performance in each category, the scores were added up to determine the states with the strongest economies the most in 2018. Percentage growth in YoY state GDP from Q2 2017 to Q2 2018, via the Bureau of Economic Analysis; percentage growth in YoY state personal income per capita Q2 2017 to Q2 2018, via the Bureau of Economic Analysis; percentage change in YoY state unemployment rate Sept. 2017 to Sept. 2018, via the Bureau of Labor Statistics.
