The state has the worst economy – 24/7 Wall St.
The COVID-19 pandemic has sent an economic shockwave through the U.S. economy, tripling monthly unemployment to nearly 15% and leading to a quarterly drop of more than 30% in gross domestic product, by far the biggest economic contraction in the history of the United States.
No corner of the country has been spared the economic consequences of the pandemic, but some states have come out better than others. A range of factors, including industrial diversity, educational levels of the workforce, household income, and long-term GDP growth, affect a state’s overall economic strength and its economy. ability to withstand the impact of the pandemic.
To determine the states with the worst economies, both in the years leading up to and during the pandemic, 24/7 Wall St. created an index of five measures: economic growth over five years, growth in the economy. five-year employment, poverty rate, unemployment rate and proportion of adults with a bachelor’s degree or above.
Many states with economies in the lower end of the 50 depend on industries hit hard by the COVID-19 pandemic. States like Hawaii and Nevada, where tourism is an economic mainstay, as well as states like Wyoming and Alaska, which depend on resource extraction, have been badly affected.
GDP growth, one component of the index, is commonly used to measure the relative economic vitality of a given geographic area. Economic growth is often fueled by population growth, and many states with the fastest growing economies (in fact, many of the states with the best economies) also have rapidly growing populations. Americans move to many of the top-ranked states on this list, and those same states often have much higher than average birth rates.
To determine the state with the worst economy, the average annual GDP growth rate from Q4 2015 to Q4 2020 came from the Bureau of Economic Analysis (BEA) and was included in the index at full weight. The average annual employment growth rate from March 2016 to March 2021 was taken from the Bureau of Labor Statistics (BLS) and was included in the full weight index. The seasonally adjusted unemployment rate in March 2021 was also taken from the BLS and was included in the full weight index. The share of the population living below the poverty line and the share of adults with a bachelor’s degree or above were taken from the 2019 American Community Survey (ACS) of the US Census Bureau and were included in the index as a total weight.
In addition to index items, 24/7 Wall St. took into account additional condition data. Real GDP and contributions to real GDP growth by industry came from the BEA. Median household income, baccalaureate graduation rate, and proportion of workers commuting out of state to work were from ACS 2019. The Median Housing Value to Median Income Accessibility Ratio of Household is a 24/7 Wall St. calculation based on ACS data. Data on regional price parity, a measure of the cost of living, is from the BEA and is for 2019. Population changes due to natural causes and net migration from 2010 to 2020 are from the US Census Bureau. All data relate to the most recent periods available.
The state with the worst economy is Louisiana. Here are some details:
- Five-year annualized GDP growth in the fourth quarter of 2020 was + 0.3%, the 12th lowest.
- The five-year annualized employment growth to March 2021 was −0.8%, the eighth lowest.
- The unemployment rate for March 2021 was 7.3%, the eighth highest.
- The poverty rate was 19.0%, which was the second highest.
Louisiana’s economy is the worst in the United States. The state cut nearly 114,000 jobs during the pandemic and employment is down 4.1% from what it was five years ago. Currently, 7.3% of the workforce in Louisiana is out of work, one of the highest unemployment rates among states, and well above the national unemployment rate of 6.0%.
An estimated 19.0% of the state’s population live below the poverty line, the second largest share of any state and well above the national poverty rate of 12.3%. Widespread financial difficulties in Louisiana indicate deep-seated economic problems.
Click here to learn more about the states with the best and worst economies.