North Dakota's oil economy.

Photographer: Daniel Acker/Bloomberg

Boom States and Bust States

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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The fourth quarter 2015 state gross domestic product numbers are out today! I know, you’re excited too. The headline: 41 states and the District of Columbia saw real GDP grow in the quarter.

That’s pretty old news, though. We can usually already tell from more-timely jobs data which states’ economies are growing and which aren’t. There are other ways to slice the state GDP data, though, that can be pretty enlightening. Did you know, for example, that the top three states accounted for 30.8 percent of U.S. GDP in 2015? That the top eight accounted for 50.5 percent? Here are the 10 states with the biggest GDPs in 2015:

This is almost the same as the list of the states with the biggest populations -- the exception is New Jersey, which is No. 11 in population (Michigan is No. 10). So New Jersey is punching well above its weight. So is New York, which has fewer people than Florida but a GDP that’s 63 percent bigger. That’s partly because Florida is poorer by pretty much every measure than New York, but it’s also because GDP measures production, not income -- and Florida’s many retirees tend to drag that down on a per capita basis.

These were the top 10 states in per capita GDP in 2015:

So that’s an intriguing list: some Eastern states, some resource-rich states from the West and Great Plains, and then California and Washington -- which are also resource-rich but owe their big GDPs more to tech and other industries.

I did not include the District of Columbia. If I had it would have topped the list at $182,211 in per capita GDP, which seems like a somewhat dubious honor for a city where the chief industry is a federal government funded by taxpayers around the country (and bond investors around the world).

Then there are the 10 states with the lowest per capita GDP:

Florida, West Virginia and Maine were the three states with the highest percentage of residents aged 65 and older in 2010, so that’s something of an excuse. For the most part, though, this is just a list of the poorest states.

A more interesting question may be which states have been improving their lot and which have not. There are many different time periods one can look at; I decided to take stock of the millennium so far. Here are the 10 states with the fastest growth in real GDP per capita since 2000:

How ’bout them Dakotas! In North Dakota, an oil boom drove a lot of the gains. South Dakota’s more balanced growth has been based on finance, biotech and manufacturing as well as, of course, agriculture.

The 10 states with the slowest per capita GDP growth (or outright contraction) since 2000 have been:

Nevada and Arizona were especially hard hit by the real estate bust. Georgia, after booming in the 1990s, has been struggling for a while, with mining, nondurable-goods manufacturing, utilities and construction all dragging GDP down.

One of my favorite things about these GDP growth rankings is that they seem so ill-suited to scoring easy political points. Red states take up six spaces on the top-10 list and five on the bottom 10. The state with the heaviest per capita tax burden, New York, is on the fastest-growing list along with the states with the second- and fifth-lowest tax burdens (South Dakota and Texas, respectively). State economic success is likely determined not just by tax rates but by a complex mix of taxes, luck, natural endowments, cultural traits, investment choices and educational quality. Though having “Dakota” in your state’s name clearly doesn’t hurt, either.

  1. That is, retirees have income, and by spending it add to the state's GDP. But in general they don't produce anything that people in Florida or elsewhere pay for.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
Susan Warren at susanwarren@bloomberg.net