State Economic Watch

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes declined notably in January. The three-month diffusion index fell to 48 from a revised 68 in December. This is the lowest reading for the three-month index since the Covid era. The more volatile one-month diffusion index also fell in January to 42 from a revised 84 in December, but it’s still higher than the revised 24 level posted in November. Similar to December, the states with the most significant three-month declines were West Virginia, Delaware, and Montana, while California and Kentucky posted the largest increases. The exhibit below is reproduced from the press release.

The National Taxpayers Union Foundation has come up with a unique and attention-getting way to look at domestic migration data. Its report, Migration in Minutes , calculates state domestic migration rates in terms of relocations per minute. It’s admittedly a lot more fun to read than the gimmicky annual moving company studies or the dry-as-dust Census migration tables, despite the fact that it uses somewhat stale 2022 IRS data. Similar to the Rich States, Poor States report this blog commented on a few days ago, the analysis in the report reflects the Foundation’s views on state tax policy. Not surprisingly the report finds Florida and Texas as the top net domestic migration states and estimates that each state welcomed a new resident about every 4.5 minutes in 2022. California and New York brought up the rear, with California losing a resident about every 2 minutes and New York about every 3 minutes, according to the calculations. The report also breaks down domestic migration by age...

In a new report , the group Common Sense Institute Iowa has estimated that the state’s weakening rate of natural population growth and historic domestic outmigration, together with a recent decline in foreign immigration, will result in a reduction in Iowa’s GDP of almost $330 million this year. Using US Census Bureau data, the report analyzes Iowa’s declining trend of net births and its long term trend of domestic outmigration and concludes that the state’s economy is highly dependent on foreign immigration. However, current federal immigration policy has caused a significant decline in foreign immigration to Iowa over the last year, resulting in an estimated $231 million loss of economic activity in 2025. The study projects the potential impact to the state’s GDP to increase to -$329 million in 2026, -$321 in 2027 and -$299 million in 2028.

New Jersey’s acting commissioner of the Department of Labor and Workforce Development told a state legislative committee this week that the state’s economy was “strong and stable”. The state’s residents however, have a different view. The latest Rutgers-Eagleton Poll indicates that “three-quarters of residents rate the state’s economy negatively, with 29% rating it as “poor” and 46% as “only fair”. According to Rutgers, this negativity rating is six points higher than it was when the last poll was taken in October.

It’s hard to believe that this is still a thing, but the Arthur Laffer-affiliated think tank, American Legislative Exchange Council, is out with another edition of its Rich States, Poor States publication. The report ranks the states in terms of economic competitiveness using an index of 15 variables, most of which are related to tax policy. For the 19th year in a row, Utah came out on top, with Tennessee, Idaho, North Carolina, and Arizona rounding out the top five. Connecticut, California, Vermont, New Jersey, and New York make up the bottom five. Presumably, a high ranking gives the “top tier” states some bragging rights and marketing material to leverage, but once one realizes that this is essentially a Reaganomics/supply side exercise, it starts to look more like a tax policy race to the bottom than an informative analytical study.

  The April Business Leaders Survey from the Federal Reserve Bank of New York reflects continued weakness in the New York-Northern New Jersey service sector. While some indices improved slightly m/m, most remained in contraction territory. Additionally, optimism about future business conditions continued to weaken. The headline current business activity index firmed slightly m/m but remained in negative at -14.0, while the business climate index fell 3.1 points to a resoundingly negative -49.3. Employee count improved slightly from -8.5 to -2.4, and capex moved to a barely positive +2.9 from-2.5. However, prices paid moved higher to +73.8 while supply availability sank to -20.0. The six-month forward expectations indices all declined, with the headline business activity index declining to +2.9 from +12.7.