Economic activity expanded in twenty-seven states in the three months through March January which is persistent enough to assure that a sustained recovery is underway. The economic activity index increased in forty-one state in March from February with the declines in the nine remaining states very marginal, says Reed Construction Data chief economist Jim Haughey.
Economic activity expanded in twenty-seven states in the three months through March January which is persistent enough to assure that a sustained recovery is underway. The economic activity index increased in forty-one state in March from February with the declines in the nine remaining states very marginal. The rise in the state economic activity indexes is consistent with March national data for jobs, consumer spending and factory production which all improved. A broader and stronger expansion likely occurred in April based on early reports for jobs and consumer spending.
The growth rates are the state economic growth indexes calculated by the Philadelphia Federal Reserve Bank from state employment and income data which are benchmarked to approximately track national GDP growth. State growth rates are well below the national growth rate. Most of the 4th quarter gain in GDP and a large share of expected GDP growth in the first quarter were due to reduced inventory absorption. This data is not available at the state level.
State economic activity indexes remain below the 2007-08 peak level in every state. The gap ranges from 2% in Alaska and New York to over 15% in Rhode Island, Idaho, Nevada and West Virginia and 30% in Michigan. Among larger states, the smallest gaps are about 5% in Louisiana, Massachusetts, Texas, Minnesota and Virginia.
New England is again the strongest regional economy as it has been for much of the last few years. The large technology and professional services sectors are leading the recovery from a relatively mild recession. Metro Boston is the strongest part of the regional economy with Rhode Island the weakest part.
The second fastest growing region is now the Great Lakes states which had experienced the slowest economic growth of any region for much of the last few years. The rebound is being driven by the region’s highly cyclical manufacturing industries which are now expanding much faster than the rest of the economy. The fastest growth is in durable goods industries, especially capital goods, which is getting a big boost from booming exports. The two most cyclical states, Indiana and Michigan are now the fastest growing states, except for New Hampshire, also a cyclical manufacturing state, and North Dakota. Recent economic growth is also very strong in Ohio but is very weak in Illinois. The constraints in Illinois are weak coal and corn prices, a large dependence on slow growing non-durables manufacturing plants and one of the most serious state budget deficits in the country.
|State Economic Activity Index
Annual Growth Rate – last 3 months
The Pacific, Mid-Atlantic and Gulf regions are all growing only slightly slower than the Great Lakes region. Growth is above average now in both New York and California. Financial industries coped with the recession better than expected in New York. California is getting a boost from the rapid recovery in technology industries which export most of their production.
Growth in the Plains states has now slipped relative to the rest of the country because of the sluggish recovery in the farm economy and relatively little durables manufacturing, professional services and finance jobs.
The recession continues in the South Atlantic and Rocky Mountain regions. Only Arizona is now growing in the Rocky Mountain Region. In the South Atlantic region, both Maryland and Virginia have slipped into the decline category because federal hiring has paused recently. West Virginia now has the weakest economy in the country with the coal market again in decline.
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Ranking States by Recent Economic Performance – March 2010