PROTECTING SMALL BUSINESS, PROMOTING ENTREPRENEURSHIP

The Pandemic and GDP in the States

By at 28 March, 2021, 9:30 am

by Raymond J. Keating-

The main, overarching economic story of this pandemic has remained generally similar across the United States. But there have been some notable differences by state.

Overall, the U.S. economy suffered a serious decline in the first quarter of 2020, followed by a collapse in the second quarter. Then came a jump in the third quarter and a continuing struggle to regain ground in the fourth quarter 2020.

Comparing annual averages, U.S. real GDP shrank by 3.5 percent in 2020, which was the worst performance in the post-World War II era.

But when we look at matters state-by-state, according to the latest data from the U.S. Bureau of Economic Analysis, there were wide differences across the nation. In fact, real annual growth rates in the states ranged from -0.1 percent to -8.0 percent.

Consider that the worst scenarios played out in the following states:

Rank

State

Real GDP Change in 2020

41

Tennessee

-4.9%

42

Alaska

-4.9%

43

Michigan

-5.4%

44

Vermont

-5.4%

45

Louisiana

-5.5%

46

West Virginia

-5.5%

47

New York

-5.9%

48

Oklahoma

-6.1%

49

Wyoming

-7.0%

50

Hawaii

-8.0%

And while all states, again, suffered, the following states fared “least worst” from an economy standpoint.

Rank

State

Real GDP Change in 2020

1

Utah

-0.1%

2

Washington

-0.7%

3

Arizona

-0.9%

4

Idaho

-1.1%

5

Colorado

-1.5%

6

South Dakota

-1.7%

7

Nebraska

-2.1%

8

Iowa

-2.3%

9

Virginia

-2.5%

10

North Carolina

-2.5%

As for the largest states, as noted above, New York came in at 47th with a -5.9 percent change in GDP in 2020.  As for the others, California ranked 15th with a -2.5 percent change; Texas ranked 23rd with a -3.5 percent change; and Florida came in 18th with a -2.9 percent change.

Looking ahead, however, state and local officials will need to be pushing in the same direction to re-energize growth in their respective states and for the overall U.S. economy, that is, creating a policy environment that incentivizes entrepreneurship and private investment.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

 

 

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