State Economic Watch

The Florida Council of 100 is launching a new promotional campaign to attract business and investors to the West Palm Beach-Miami Florida Gold Coast region. The campaign, called “Ambition Accelerated”, is funded with $10 million in seed money from Steven Ross and Ken Griffin, and is scheduled to be unveiled tonight at the Wall Street Journal Invest Live conference being held in West Palm Beach.

A new report from the University of Hawaii Economic Research Organization (UHERO) takes a very dim view of the state’s economic profile. The report targets the state’s high cost of living and below average economic growth as drivers of its high levels of outmigration. It notes that the state shouldn’t be compared to high growth, gentrifying regions with high housing costs that experience outmigration, but rather to “economically distressed or “left-behind” regions—marked by stagnant productivity and limited opportunity, though typically with much lower costs of living”. Finally, the report concludes that policy prescriptions shouldn’t only focus on affordability, but also on the underlying causes of the state’s economic stagnation.

The state migration statistics reported this week by the Census Bureau have raised concerns about the long term vulnerability of the Massachusetts economy. The Census’ 2025 outmigration numbers for the state, combined with a significant reduction in foreign in-migration and federal funding cuts in education and life sciences, is raising some red flags. In addition, a recent poll by the Mass Opportunity Alliance found that “at least 1 in 3 Massachusetts voters say they are either personally considering moving out of the state next year or know someone who is considering leaving”. Boston University professor Mark Williams worries that outmigration “could push the state’s economy into a recession by the third quarter of this year”. One significant area of concern is the age distribution of those leaving. It’s not all retirees fleeing to lower cost states but younger age cohorts leaving the state as well.  

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes slipped again in December. The three-month diffusion index fell to 64 from a revised 68 in November. This is the lowest reading for the index since September 2024. Similarly, the volatile one-month diffusion index fell to 30 from a revised 54 in November, bringing the one-month index to its lowest point since June 2024. The most significant three-month declines were seen in West Virginia (down 2.08%) and Delaware (down 1.03%). West Virginia also posted the largest one-month decline, with its index falling 1.14%. On the plus side, Missouri posted the largest three-month index gain with a 1.20% increase in its index, followed by Idaho with a 0.99% improvement. The exhibit below is reproduced from the press release. 

Ontario Premier Doug Ford apparently made an unforced error last week when he encouraged Canadians to vacation in Michigan. During a press briefing he reportedly said “...if you’re ever in the summer and you want to go to a beautiful destination, go visit our friends in Michigan…” His comments created something of a backlash in Canada, including an op-ed piece in the Toronto Star. Michigan is one of a number of border states feeling the effects of a sharp drop in Canadian tourism. Passenger vehicle traffic into Michigan from Canada fell 16% in 2025. Based on the tempest created by Ford’s offhand comments, it seems unlikely that things will improve much in 2026.

The Federal Reserve Bank of Kansas City’s 10th District services index inched up in January. The m/m composite index rose to 2 in January from 1 in December and -6 in November. Most of the sub-index components improved m/m, but the employment measures remained in negative territory. The same was true for the 6-month forward expectations indexes. The composite expectations index increased to 14 in January from 11 in December, while the employment expectations measures were all negative.  The 10th District manufacturing index was flat with the January m/m composite index at 0 compared to the same reading in December and 7 in November. The employment indexes were slightly higher m/m with the employee count moving to 0 in January from -4 in December, and the average workweek index increasing to 4 from 3. The 6-month forward expectation measures were softer however, with the composite expectations index falling to 7 in January from 10 in December. The employment and capex expectation...