The Wall Street Journal‘s Eric Morath deserves lots of credit for deciding to write up new U.S. government state-by-state economic growth figures and identifying one of the most important stories they tell – about how geographically concentrated such growth was last year. So I decided to see whether concentration had increased or decreased during the recovery, and there’s no doubt that more and more of (what’s left of) the nation’s economic vigor has been concentrated in fewer and fewer states during this period.
As Morath noted, in 2014, just 16 states registered inflation-adjusted growth as fast or faster than that of the economy as a whole (a hardly scintillating 2.2 percent). And in fact, only 15 truly outperformed, as South Carolina matched that national figure. As I discovered, using the Commerce Department’s on-line database, that’s a big change from the pre-recession era.
Between 2008 and 2009, when the U.S. economy shrank in real terms by 2.7 percent, 28 states recorded better performances. During the first year of recovery, that number dwindled to 21 out of 50 (with Pennsylvania and South Carolina matching the economy-wide after inflation-expansion rate of 2.2 percent). From 2010 to 2011, nation-wide growth slowed to 1.4 percent – and 21 out of 50 states bettered these results. (Georgia grew by the same rate.) But the following year, when growth sped up to 2.1 percent, only 11 of 50 states beat that rate, with Colorado matching it.
Overall U.S. growth fell back to 1.9 percent in real terms between 2012 and 2013 (see a pattern here?), and 16 states bettered that. (Arkansas and Rhode Island kept pace.) And as Morath pointed out, last year, 15 states qualified as above-average growers – just a little more than half the number in 2008-2009.
These state-by-state figures are also valuable for confirming some of this sorely inadequate recovery’s main characteristics. For example, the list of its fastest growers is dominated by energy states (like North Dakota, Texas, Louisiana , Oklahoma, and Alaska), and automotive states (like Michigan and Indiana, which suffered from the sector’s dizzying downward spiral during the recession). The laggards, however, also often belong in these categories, attesting to the highly cyclical nature of these businesses.
No one will be surprised to learn that states with the biggest housing bubbles (chiefly Arizona, Florida, and Nevada) took some of the biggest growth hits. But perhaps more surprising is how they’ve continued to struggle. For the six years studied, Florida was among the five slowest-growing states in 2008-2009, 2009-2010, and 2010-2011. It never appeared among the fastest growers. Nevada was another three-time loser, and so far hasn’t even enjoyed a dead-cat bounce.
A final – for now – surprise: Maryland, Virginia, and the District of Columbia (which I didn’t include in the state totals) are thought to have been major beneficiaries of the federal spending growth that has slowed in the second half of the recovery, but has clearly remained at historically lofty levels. Although their location in the national capital area surely insulated these jurisdictions from recession, they’ve been anything but economic dynamos.
Even Virginia, which is widely considered a business-friendly, high tech state, has only managed real annual growth of more than one percent once – in 2009-2010 (2.4 percent). Last year, when national growth was 2.2 percent after inflation, Virginia didn’t grow at all. To my surprise, my (current) home state of Maryland actually fared better, but its annual growth topped one percent only twice (with a 2.5 percent expansion in 2009-2010, followed by a 1.3 percent gain in 2010-2011).