While the U.S. continues to hold the spot for the largest economy in the world, each state's local economies were not created equal. In fact, with their different levels of specialties and concentrations, they tend to contribute differently to the country's gross domestic product.
More often than not, the states with the largest populations also contribute the most to a country's GDP. However, such indicators can be misleading. Which is why a new study from WalletHub seeks to gauge additional indicators of performance and strength from each state.
The analysis released Monday compared all 50 states and the District of Columbia based on their economic activity, economic health, and innovation potential using 28 metrics, including change in GDP, unemployment rate and fiscal health to determine which ones are pulling the most weight when it comes to pushing the U.S. economy upward.
Here are the top 5 states with the best economies in the U.S., according to WalletHub.
1. Washington
Washington topped WalletHub's list due to its "extremely high" amount of industry R&D investment per capita, which allows it to be at the forefront of new tech. Washington also has the second-highest share of jobs in high-tech industries and the second-higher share of STEM (Science, Technology, Engineering and Math) professionals.
The Evergreen State also has the fourth-highest percentage of firms that are listed on the Technology Fast 500 list, and the third-highest number of invention patents per capita.
2. Utah
The Beehive State occupies the second spot on this list, and at nearly $84,000, the median annual household income in the state is the second-highest in the country after adjusting for the cost of living. The average income in the state also grew 6.8% between 2022 and 2023.
According to WalletHub, the labor market in Utah is also very healthy. The state has one of the lowest unemployment rates in the country, at 2.8%, along with the second-most growth in the civilian labor force between 2022 and 2023.
3. Massachusetts
Massachusetts holds the third spot due to its high investment in both industry and academic R&D than most other states, which leads to big payoffs in economic growth, according to WalletHub.
The state also has the highest share of jobs in high-tech industries and the third-highest share of STEM professionals. It also has only a 3% unemployment rate.
4. Texas
The analysis found that Texas benefits from a diverse and large economy with significant GDP growth and strong export activity despite lower innovation potential. The state's economic activity index score was second-highest in the rankings, and it was seventh in economic health.
5. California
Finishing the top 5 is California. Despite facing challenges in economic health due to high living costs and income inequality, its numerous tech firms and substantial R&D investments makes it an economic powerhouse for the country.
States with the worst economies?
By contrast, states with the worst economies in the country are grappled by different challenges, including high unemployment rates, lack of innovation and low GDP growth. Here are the states that occupied the bottom 5 on the list.
Louisiana
The state occupies the 47th spot, as it struggles with high unemployment rates and low median household income, with minimal R&D investment hampering its economic growth prospects.
Arkansas
At 48th place is Arkansas, which faces high poverty rates and limited high-tech job opportunities, impacting both economic health and innovation potential.
West Virginia
West Virginia takes the 49th place due to its declining labor force and low GDP growth, compounded by the lowest innovation potential in the country.
Hawaii
Hawaii came in 50th place. Its economy relies heavily on tourism, but is burdened by high state debt and a lack of growth in key economic areas.
Mississippi
Mississippi came in dead last, as it struggles with low median household income, high poverty rate, and minimal entrepreneurial activity.
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