Only Louisiana had an expanding economy in January stemming from its large energy industry and the recent release of more federal money for hurricane rebuilding. Louisiana is also the only state while the economy is stronger in the last three months than in the prior year. the state may not continue to expand in the next few months but will continue to outperform the rest of the country.

The state economic growth indexes are calculated by the Philadelphia Federal Reserve Bank from state employment and income data and are benchmarked to approximately track national GDP growth.

The states with the deepest economic declines in the last three months are those mist dependent on the troubled housing, manufacturing and finance industries. This includes Washington, Oregon and Idaho in the Pacific Northwest plus Nevada and Arizona in the Rocky Mountains, the Great Lakes manufacturing states except Illinois and Wisconsin, The southern manufacturing centers in North Carolina, South Carolina and Alabama and the northeastern manufacturing centers in Pennsylvania and Delaware.

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Ranking States by Recent Economic Performance – January 2009

The state rankings are unlikely to change much into early spring as all three of the troubled industries continue to shrink. The gap between the best and worst performing states will widen. By late spring the gap between states should start closing and the economic activity indexes will begin to rise in some states. This will be the result of the initial spending of significant economic stimulus money and the end of the steep plunge in housing and manufacturing.

The first signals that the recession is ebbing in these two markets have now appeared. Both new and existing home sales rose in February and manufacturing durable goods orders increased after a six month decline. While credit conditions continue to improve slowly for borrowers, most of the layoffs by financial firms are still ahead except for mortgage brokers.