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LOGAN – Utah’s economy continues to score well despite some levels of uncertainty and difficulty caused by the COVID-19 pandemic. Personal finance site WalletHub recently compared the 50 states and the District of Columbia to provide an update on state economies, and Utah ranked 2nd overall. Washington is ranked first.
Other western states received strong marks, including California (3rd), Colorado (6th), Oregon (9th) and Idaho (13th). Other Utah neighbors finished lower: Arizona is ranked 17th, Montana 18th, Nevada 26th and Wyoming finished near the bottom at 45th.
The site scored all states across 28 key indicators of economic performance and strength, ranging from GDP growth to startup activity to the share of jobs in high-tech industries. Utah ranked 1st overall in Economic Health, 2nd overall in Economic Activity and 10th overall in Innovation Potential. Utah’s low unemployment rate (tied for 1st), startup activity (3rd) and median household income (2nd) were other factors that helped Utah see such a strong ranking. Idaho finished ranked 2nd in overall Economic Health.
In evaluating the states with the best economies, Gregory S. Burge, chair and professor of economics at University of Oklahoma, says there are a number of common factors that contribute to a state’s strong economy.
“I would like to give a nod to the power of innovation and the American Entrepreneurial spirit – so possibly start with something like patents per capita,” Burge says. “Then, I am a big believer in the idea that a strong economy should work for everyone – including middle income and lower-income workers – so I would say you want a low (cost of living adjusted) poverty rate. After that, maybe something general like the ratio of income per capita to a broad-based cost-of-living index.
“All the best models I have seen suggest people/workers like to move to places where that ratio is high and tend to move away from places where that ratio is low. We could round it out with two broad social indicators that families and children are doing well – maybe the lowest rates of incarceration for youth and young adults as well as something like high school graduation rates?”
Lawrence J. White, Robert Kavesh Professor of Economics and General Editor, Review of Industrial Organization at Stern School of Business New York University, adds that per capita income, unemployment rate and recent growth rate are common factors across the top performing states.
Another economic expert the site references, Robert Wyllie, Assistant Professor of Political Science, Director of Political Economy Program in the College of Arts & Sciences at Ashland University, is concerned about the direction the U.S. economy, in general, is headed.
“High inflation,” Wyllie states, “fueled in part by high energy prices, combined with slow growth points has drawn many comparisons to the 1970s.”
“Durables like cars/refrigerators/TVs, the sorts of things that were aggressively purchased over the last two years – those sorts of sales will drop off,” he states. “But service-related sectors, and travel, in particular, are heating up. At the end of the day, households have limited resources – so with $5 a gallon of gasoline and higher than ever costs for housing and food, there just is not going to be as many discretionary spending dollars left in the typical American budget over the rest of 2022 as there was looking backward. On net, my gut feeling is this means we have a good chance of heading into (or that we are already in) a small recession.”
The site examined the following information to determine its rankings:
- Change in GDP (2021 vs 2020)
- Share of Fast Growing Firms
- State Gross Public Debt as Percent of GDP
- Exports Per Capita
- Startup Activity
- Unemployment Rate
- Underemployment Rate
- Change in Nonfarm Payrolls (2021 vs. 2020)
- Change in Total Civilian Labor Force (2021 vs. 2020)
- Increase in Ratio of Full-Time Jobs to Part-Time Jobs (2020 vs. 2019)
- Median Annual Household Income Adjusted for Cost of Living
- Growth in State Personal Income (2021 vs. 2020)
- Government Surplus/Deficit per Capita
- Unfunded Public Pension Plans per Capita
- Share of Uninsured Population
- Share of Population in Poverty
- Foreclosure Rate
- Growth in Number of Businesses (2020 vs. 2019)
- Fiscal Health
- Building-Permit Activity
- Average Educational Attainment of Recent Immigrants
- Average Educational Attainment of Recent Migrants from Other U.S. States
- Share of Jobs in High-Tech Industries
- Share of Jobs STEM Employment
- Independent Inventor Patents per 1,000 Working-Age Population
- Industry Research and Development Investment Amount per Total Civilian Employed Population
- Nonindustry Research and Development Investment Amount as Share of GDP
- Entrepreneurial Activity
Data used to create this ranking were collected from the U.S. Census Bureau, Bureau of Labor Statistics, Bureau of Economic Analysis, Deloitte, United Health Foundation, American Legislative Exchange Council, Mercatus Center at George Mason University, Council for Community and Economic Research, ATTOM Data Solutions, United States Patent and Trademark Office, usgovernmentspending.com, National Science Foundation, and Ewing Marion Kauffman Foundation.