State Economic Watch

A new post by the economists at the Federal Reserve Bank of Kansas City looks at the impact of recent ag sector financial pressures on farmland values. They found that despite the deterioration in farm finances last year, land values in the Tenth District have generally held up well. Farm income was down overall in 2025 and liquidity remained stretched, with 45% of farm borrowers posting current ratios under 1.5. However, the economists found that farmland sales, demand, and land prices in the Tenth District have been fairly strong. Ranchland prices have been particularly resilient, thanks to the strength in cattle prices. The below graphic is reproduced from the Kansas City Fed’s post. Source: Federal Reserve Bank of Kansas City

The latest regional manufacturing survey from the Federal Reserve Bank of Minnesota reflects moderate optimism on the part of District Nine manufacturers. Of the 350 firms surveyed, 42% expected orders to increase in 2026 while 21% expected them to fall, for a diffusion index of 61. The question about production expectations produced a diffusion index of 58, while the employment and capex questions registered lower, but still expansionary readings of 52 and 51, respectively. By comparison, respondents reported that actual results for all these measures in 2025 produced diffusion indexes in the high 40s. Despite the renewed optimism, cost pressures remain a significant challenge with the diffusion indexes for selling prices and inflation coming in a 70 and 73, respectively.

Delinquency and foreclosure rates in most states moved higher in December according to the most recent ICE Mortgage Monitor . The national rate of total non-current mortgages ticked up to 4.1% as of December 31, 2025, from 3.8% as of October 31, 2025. The states with the highest non-current rates are still clustered in the south, with Louisiana at 8.6%, Mississippi at 8.4%, Alabama at 6.4% and Arkansas and Indiana at 6.0%, and all five were higher in December than in October. Idaho, Washington, Montana, and Colorado had the lowest non-current rates, all under 2.5%. The states seeing the greatest increase in non-current rates y/y were Maryland (+10.6%), Utah (+9.5%), and Arizona and Arkansas (+8.5%). Conversely, the states posting the largest declines in non-current rates were Florida (-8.8%), Hawaii (-5.7%), and South Carolina (-5.5%).

A new posting from the Federal Reserve Bank of Kansas City analyzes the health of the Oklahoma labor market. Its economists found that the state’s labor market remains healthy, as evidenced by continued low unemployment, but that its hiring dynamics are showing considerable weakness. Oklahoma’s unemployment rate remains below the national average at about 3.6%, but its hiring rate, which has traditionally been above the US average, fell below the US rate in 2H2025. Its hire rate fell from a peak of 5.5% in 2022 to 3.1% in 2H2025. The near term outlook isn’t encouraging with 70% of Oklahoma businesses in a recent KC Fed survey expecting employment to be flat or down in 2026. The firms cited “low growth expectations and economic uncertainty” as the principal reasons for the low pace of hiring.

Stateline takes a look at the recently released Census migration statistics and finds an ironic and overlooked element to the US immigration saga. It appears that the surge in immigration over the last few years may actually help some “red states” gain Congressional seats once the 2030 census is conducted. While current federal immigration policies have depressed the inflows since 2025, states like Texas and Florida are nevertheless still expected to pick up House seats in 2030 thanks, in part, to the 2020-2024 surge.

Governing has looked beneath the surface of California’s economy and has found some sobering statistics. While it ranks as one of the largest economies in the world in terms of GDP, California’s labor market is among the weakest in the US. The state’s rate of job growth ranked 37th in 2025, and its December unemployment rate of 5.5% was the highest in the country. Economists point to the Bay Area as a principal source of weakness, as the region lost 20,000 jobs in 2025.