As rampant inflation and high interest rates keep the US economy in a state of flux, some areas are weathering the storm better than others.
A new study by GoBankingRates analyzed local economies across the country to establish the top 15 states which were thriving versus those that are failing.
Its findings showed that the South appeared to be struggling most to rebound from several years of uncertainty triggered by the pandemic.
Southern states to feature in the 15 ‘failing’ economies included: Louisiana, Mississippi, Arkansas, Kentucky, West Virginia, Oklahoma and Tennessee.
A handful of Midwestern states also made the bottom 15 economies including: Illinois, Michigan, Ohio, Iowa and Indiana. California, New Mexico and Oregon were also listed.
As rampant inflation and high interest rates keep the US economy in a state of flux, some states appear to be weathering the storm better than others
Contrastingly, the top thriving economies were more spread out. Utah, Idaho, Virginia, Colorado, Washington, Alaska and Arizona were among those to feature.
The study also included D.C. as it is a ‘sizeable economy’ despite not being a state. D.C. featured on the list of ‘thriving’ local economies.
To ascertain how well a state was faring, researchers looked at four data sets: unemployment rates from March 2024, GDP growth between the third and fourth quarters of 2023, average weekly wages in the first three months of 2023 and the percentage of population below the poverty line in 2022.
Some areas have struggled to ever properly rebound from the pandemic, experts say.
For example, Louisiana has consistently come out as one of the worst performing US economies in recent years.
Economics professor Jose Bautista from Xavier university, told Axios last summer: ‘Bottom line, the state really hasn’t recovered from the pandemic. And No. 2, the hurricane seasons since the pandemic haven’t helped either.’
The state is also vulnerable to catastrophic weather after being battered by Hurricanes Ida, Laura, Delta and Zeta among others.
Meanwhile Utah has been a poster child for recovery since the pandemic thanks to multiple factors including its relative stability before the health crisis and the diversity of its economy.
It comes after the national economy received a boost Thursday when the Dow Jones Industrial Average hit a milestone high.
The index breached 40,000-point for the first time ever, surpassing a previous record set on Wednesday.
The other two major indices – the S&P 500 and Nasdaq – also hit record highs on Wednesday.
Investors were responding positively to the news that the rate of annual inflation cooled slightly to 3.4 percent in April, down from 3.5 percent. The figures, released by the Bureau of Labor Statistics, sparked hope the Federal Reserve will begin cutting interest rates in September.
Inflation must cool in order for the Fed to cut interest rates, which are currently at a 23-year-high of between 5.25 and 5.5 percent.
Southern states to feature in the 15 ‘failing’ economies included: Louisiana , Mississippi, Arkansas , Kentucky , West Virginia, Oklahoma and Tennessee. Pictured: the New Orleans skyline in Louisiana
Contrastingly, the top thriving economies were more spread out. Utah, Idaho , Virginia , Colorado , Washington, Alaska and Arizona were among those to feature. Pictured: Salt Lake City, Utah
Higher rates are intended to reign in consumer spending by lowering demand thereby causing prices to fall.
The Fed has a clear target of bringing the annual rate of inflation to 2 percent.
At the start of the year, economists had predicted officials would slash rates up to four times.
But consistently hotter-than-expected inflation readings have thrown that plan into doubt.
| State | March 2024 unemployment rate | GDP growth Q3 2023 – Q4 2023 | Average weekly wages Q1 2023 | % of population below poverty line in 2022 |
|---|---|---|---|---|
| FAILING | ||||
| Louisiana | 4.40% | 3.20% | $1,107 | 18.70% |
| Mississippi | 3% | 4.20% | $927 | 19.20% |
| Illinois | 4.80% | 3.60% | $1,346 | 11.80% |
| Arkansas | 3.50% | 3.10% | $1,036 | 16.20% |
| Kentucky | 4.50% | 4.10% | $1,092 | 16.10% |
| Michigan | 3.90% | 3.80% | $1,228 | 13.10% |
| West Virginia | 4.30% | 5.90% | $1,044 | 16.80% |
| Ohio | 3.80% | 4.30% | $1,185 | 13.30% |
| Oregon | 4.20% | 4.30% | $1,301 | 11.90% |
| Oklahoma | 3.50% | 4.10% | $1,052 | 15.20% |
| Tennessee | 3.20% | 4.80% | $1,199 | 14% |
| New Mexico | 3.80% | 6.10% | $1,096 | 18.30% |
| Iowa | 2.90% | 1.10% | $1,112 | 11.10% |
| Indiana | 3.50% | 5.00% | $1,115 | 12.30% |
| California | 5.30% | 4.80% | $1,613 | 12.10% |
| THRIVING | ||||
| Utah | 2.80% | 6.70% | $1,195 | 8.50% |
| Idaho | 3.30% | 7.70% | $1,068 | 11% |
| District of Columbia | 5.20% | 3.80% | $2,159 | 15.10% |
| Virginia | 2.90% | 5.50% | $1,383 | 10% |
| Colorado | 3.70% | 5.10% | $1,431 | 9.60% |
| Washington | 4.80% | 5.90% | $1,682 | 9.90% |
| Alaska | 4.60% | 6.30% | $1,328 | 10.50% |
| Arizona | 3.80% | 6.80% | $1,248 | 13.10% |
| New Hampshire | 2.60% | 5.60% | $1,350 | 7.30% |
| Wyoming | 2.80% | 3.70% | $1,111 | 10.70% |
| Massachusetts | 2.90% | 5.00% | $1,643 | 9.90% |
| North Dakota | 2.00% | 2.00% | $1,205 | 10.80% |
| South Carolina | 3.10% | 6.80% | $1,086 | 14.40% |
| Maine | 3.30% | 5.90% | $1,129 | 10.90% |
| Florida | 3.20% | 7.00% | $1,218 | 12.90% |
