When economists discuss the economy, they often focus on the national numbers. But state-level data are just as important to understanding the drivers of growth.
As we turn the corner into August and peak vacation season, let’s take a data-driven road trip with three main stops – economic growth, unemployment, and wages.
Stop 1: High-speed and low-speed roads
At the start of 2023, all 50 states and the District of Columbia were reporting growing economies.
Within that growth, however, there was a big range. North Dakota’s economy expanded by 12.4 percent in the first quarter of this year. South Dakota and Nebraska also saw double-digit growth.
The slowest-growing states were Rhode Island and Alabama, each at 0.1 percent – basically treading water. Arkansas, Illinois, West Virginia, and Vermont also expanded at tortoise-like annual rates of less than 1 percent.
Stop 2: The Unemployment Lowlands
The national unemployment rate leveled off at 3.6 percent in June. That’s close to historic lows, but some state unemployment rates are even lower.
In fact, 38 states had lower unemployment rates than the national average in June. And six posted their lowest unemployment on record – Arkansas, Mississippi, Oklahoma, Pennsylvania, Ohio, Massachusetts, and Maryland.
All told, about half of U.S. states have unemployment rates at or near their lowest levels on record.
And most states continue to create even more jobs. Only Vermont and Rhode Island shed jobs in June compared to a year ago.
The fastest-growing states for hiring are in the western half of the United States and Florida. Texas, Washington, New Mexico, Nevada, Idaho, and Wyoming all had better than 3 percent employment growth compared to a year ago.
Stop 3: The High-Pay Altitudes
The highest-paying state isn’t a state at all, but it is a popular tourist destination and, of course, our nation’s capital.
A typical worker in Washington, D.C., makes $95,700 annually. The median salary in the next highest-paying state, Massachusetts, is a distant $70,700, according to ADP payroll data
For more income altitudes, head to the mountain West. In Wyoming and Montana, the pace of pay growth is above 9 percent from a year ago.
Delaware might be the nation’s first state, but its growth rate – at a still-solid 4.8 percent – is the slowest.
Last week, we learned that the U.S. economy again defied some economists’ expectations of a recession this year, coming in at 2.4 percent growth in the second quarter.
Next week, we’ll get a new bundle of data that will signal the pace of U.S. growth in the second half of the year.
Inside those macro numbers, however, are states, regions, and communities with their own growth stories, which are unlikely to be in lockstep with the national numbers.
As economists continue to debate whether the country is heading toward a soft economic landing or a recession, Main Street businesses and consumers will be shaping the trajectory of the national economy within their own communities – and on their summer vacations.
And with that, MainStreet Macro is hitting the road. I’m on vacation and will see you in a couple weeks.