U.S. Economic Growth, A Tale of Two Cities?

Guest Post by Director Greg Kyle

On Wednesday, September 2, the Commerce Department released quarterly GDP data by state for 2005-2014. Interestingly, the data portrays the U.S. economy as that of A Tale of Two Cities, with only 16 of the 50 states outperforming the U.S. economy as a whole. While the U.S. economy expanded at a pace of 2.2% in 2014, two-thirds of the country lagged behind the national average with GDP growth less than 2.2%. One third of the states actually experienced GDP growth less than 1% last year, highlighting the weakness of the current economic expansion. The economy in states such as New Jersey, Maine, Iowa, and Virginia grew just shy of 0.5%; while Alaska and Mississippi, experiencing a contracting economy in 2014, fell 1.3% and 1.2% respectively.

Texas, California, New York, and Florida were the largest states as measured by economic output. In total, these four states accounted for nearly 36% of the country’s GDP; with growth above the nation’s output, they helped lift the U.S. GDP to its rate of 2.2% last year. Being one of the states with the strongest economy, Texas grew at 5.2% in 2014 primarily due to its “strong growth in mining during the third quarter” of the year. California’s economy expanded at a rate of 2.8% in 2014. Having the largest state economy, much of California’s growth came in the last half of 2014, with a rate of 7.7% in the third quarter; this helped to reverse a 6.4% contraction in the first quarter of the year. New York, the country’s third largest state by GDP, grew 2.5%. Florida’s economy expanded at a rate of 2.7% last year.