Lately, we have seen good job growth numbers which has led to a reduction in the unemployment rate. At first glance, this is an encouraging sign for the economy. But when we have a closer look at data on business...
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2014 Rich States, Poor States Report Ranks States on Economic Performance and Outlook
The American Legislative Exchange Council today released their 7th annual Rich States, Poor States report, which ranks states in two metrics: historical performance based on economic indicators, and forecasted outlook based on policy variables. Here’s the top and bottom 10 breakdown this year:
|Economic Outlook Ranking, 2014||Economic Performance Ranking, 2002-2012|
|1. Utah||41. Rhode Island||1. Texas||41. Massachusetts|
|2. South Dakota||42. Oregon||2. Utah||42. Maine|
|3. Indiana||43. Montana||3. Wyoming||43. California|
|4. North Dakota||44. Connecticut||4. North Dakota||44. Wisconsin|
|5. Idaho||45. New Jersey||5. Montana||45. Connecticut|
|6. North Carolina||46. Minnesota||6. Washington||46. Illinois|
|7. Arizona||47. California||7. Nevada||47. Rhode Island|
|8. Nevada||48. Illinois||8. Arizona||48. New Jersey|
|9. Georgia||49. Vermont||9. Oklahoma||49. Ohio|
|10. Wyoming||50. New York||10. Idaho||50. Michigan|
It turns out that these policies matter. A quick look shows that Utah, North Dakota, Arizona, and Idaho appear in the top ten for performance and outlook, while Rhode Island, Connecticut, New Jersey, California, and Illinois appear in the bottom ten for both performance and policy.
The rankings are a valuable tool for understanding the impact of a variety of fiscal policies. The economic outlook ranking is determined in part by the quality of state tax systems (9 out of 15 variables), but also includes variables for debt service as a share of tax revenue, public employees per 10,000 residents, a variable for the quality of a state’s legal systems, and other fiscal measures.
North Carolina moved from 22nd to 6th in the outlook ranking, due in large part to beneficial tax reforms signed into law in 2013, and Indiana moved from 14th to 3rd, due in part to repeal of the state’s inheritance tax in 2013 and cuts to the corporate income tax rate that have been phasing in for the past few years.
The full report is here.
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