The recession came late to the Northeast but arrived with a fury in February. The state activity indexes fell about a full point in both New York and Massachusetts led by layoffs and earnings reductions in finance and professional service firms. New York has quickly fallen from nearly the top of the state economic growth rate list to near the bottom. The severity of the recession in New York State is now similar to Nevada, Ohio and Pennsylvania.

Only three energy states — Louisiana, Alaska and Wyoming had an expanding economy in the three months ending in February. Louisiana is also enjoying a boom in hurricane rebuilding following long delays in releasing federal appropriations. Five of the other ten best performing states also have substantial energy industries, including Texas and Oklahoma. Two farm states, Iowa and Nebraska, complete the top ten list. Both have a very small share of their employee in manufacturing or finance.

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 recession remains most severe in the Pacific Northwest (lumber aircraft, electronics) and in Michigan and Ohio (motor vehicles). More layoffs are yet ahead in the Great Lakes motor vehicle centers in the next few months as GM and Chrysler restructure by laying off salaried staff and making tens of thousands of temporary hourly layoffs permanent. The production worker callbacks will begin as vehicle sales rebound from about 60% of the normal trend.

Income in the huge California economy is holding up better than in most states. The 5.6% decline in economic growth in California in the last three months is less than Illinois (-6.0%), Florida (-7.1%), Georgia (-8.3%) or North Carolina (-10.9%).

Four states led off the recession with the collapse of their overheated housing markets. Nevada is still one of the states with the most rapidly declining economy because its huge gambling industry is so sensitive to income and confidence. But the others have moved in recent months from very high income losses to about average. Florida, Arizona and California have relatively little exposure to the motor vehicle, industrial equipment and securities industries and are enjoying a recovery in home sales as bargain hunters buy distressed properties.

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Ranking States by Recent Economic Performance – February 2009