In this article, we will take a look at the 20 U.S. States with the Fastest-Growing Economies. You can also check out 20 Most Powerful Countries in the World by Economy for our discussion on the economic power and which countries lead in terms of it.
Navigating Global Economic Challenges Post-COVID-19: Insights and Trends
Post the COVID-19 pandemic, the global economy is currently in a recovery phase after the unprecedented declines that incurred between 2019 and 2022. However, this recovery is not as smooth as one would have hoped for. Factors like geopolitical tensions, supply chain disruptions, high inflation, and tightened monetary conditions have been slowing down the recovery process. One of the biggest problems that the world is battling with currently is inflation. However, a few recent developments hint towards a brighter future with headline inflation levels declining to prepandemic levels in some economies. By the end of 2023, global inflation fell to around 2.3% which was a significant decrease from the peak of 9.5% witnessed in the second quarter of 2022. But this progress is limited to a few developed economies like the U.S., China, and Germany. These are the most powerful countries in the world by economy, with GDP levels of $28.8 trillion, $18.5 trillion, and $4.6 trillion, respectively, as of 2024 – we have discussed them in detail in 20 Most Powerful Countries in the World by Economy.
One of the countries that have led this post pandemic recovery is the United States. The country has been capable of preserving its status as the leading global economy. According to the IMF, the GDP of the US was $26.95 trillion in 2023. The value for real gross domestic product (GDP) increased at an annual rate of 1.3 percent in the first quarter of 2024, according to the Bureau of Economic Analysis. The United States is expected to continue climbing at this trajectory as the country is projected to have a real GDP of $32 trillion by the year 2040. For developing countries, however, it is a completely different story. These economies have been recovering but the recovery is quite slow, with inflation in the last quarter of 2023 standing at 9.9%. You can refer to 25 Countries with Developing Economies but Slow Growth Rates, to read about some of these economies in depth. Saudi Arabia and Poland are two of such economies with slowest growth rates amongst the developing economies with GDP levels of $1.07 trillion and $842.2 billion, as of 2023.
While these macroeconomic trends provide us with a broader picture of the economy, the role of major corporations and industry giants in the rebuilding of the economy cannot be overlooked. Among other factors, businesses across major economic regions are driving the growth globally. Companies such as Apple Inc. (NASDAQ:AAPL), and Microsoft Corporation (NASDAQ:MSFT) are two of the most valuable companies in the US. With a market capitalization of $3.311 trillion, as of 13th June 2024, Apple Inc. (NASDAQ:AAPL) is the biggest player in the technology sector. As of 2024, Apple Inc.’s (NASDAQ:AAPL) installed base of active devices has exceeded 2.2 billion globally. Apple reported its financial results for the first quarter of 2024 on February 1, 2024. The revenue came in at $119.58 billion, surpassing estimates by $1.31 billion while earnings per share of $2.18 beat the consensus estimates by $0.08 per share.
Microsoft Corporation (NASDAQ:MSFT) is another leading global technology firm with a market capitalization of $3.283 trillion, as of 13th June 2024. According to the quarterly financial reports released on January 30, 2024 for the second quarter of 2024, Microsoft Corporation (NASDAQ:MSFT) reported earnings per share of $2.93, surpassing estimates by $0.16. Microsoft Corporation’s (NASDAQ:MSFT) revenue was $62.02 billion for Q2 2024, ahead of market consensus by $888.19 million.
Also see: 25 Largest Economies in the World by 2040 and 25 Countries with Developing Economies but Slow Growth Rates.
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Methodology
For the purpose of this ranking, we acquired data from the Bureau of Economic Analysis on the real GDP for each US state. From the values of the latest year, 2023 and the base year, 2022, percentage change in real GDP was calculated. The states were then arranged in ascending order based on their GDP growth rates and 20 states with the highest percentage changes in GDP were picked.
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20. Nevada
Percentage Change in GDP: 2.67%
Real GDP 2023: $192,216 million
Real GDP 2022: $187,226 million
Nevada had a population of roughly 3.2 million in 2023 with an annualized growth of 1.4%. Out of this total population, businesses in Nevada employ a total of 1,887,878 people, with an impressive average annual employment growth over the past five years of 1628.0%, according to IBIS World. The unemployment rate however stood at 5.5% in 2023.
19. Arizona
Percentage Change in GDP: 2.68%
Real GDP 2023: $414,273 million
Real GDP 2022: $403,474 million
The sectors that contributed the most to the state’s GDP are Real Estate and Rental and Leasing, Manufacturing and Healthcare and Social Assistance. These sectors contributed to 38.2% of Arizona’s GDP. According to IBIS World, State of Arizona, Walmart and Banner Health are the largest companies in Arizona in terms of employment with each of them employing 40,240, 36,843 and 28,310 people respectively in 2023.
18. North Carolina
Percentage Change in GDP: 2.73%
Real GDP 2023: $625,682 million
Real GDP 2022: $609,058 million
According to USA Facts, North Carolina has a lower unemployment rate than the United States. As of November 2023, the unemployment rate in North Carolina stood at 3.5%. The manufacturing industry in North Carolina reported the highest GDP of $109.6 billion in the state for the third quarter of 2023.
17. Colorado
Percentage Change in GDP: 2.87%
Real GDP 2023: $428,040 million
Real GDP 2022: $416,114 million
The largest industries on the basis of revenue in the state are Oil Drilling & Gas Extraction, Tourism, and New Car Dealers that generated $37.4 billion, $26.9 billion and $21.5 billion respectively, in 2022. In terms of GDP, the Real Estate and Rental and Leasing, Professional, Scientific and Technical Services and Information sectors contributed the most to Colorado’s GDP in 2022, amounting to 38.2% of state GDP, according to IBIS World.
16. Louisiana
Percentage Change in GDP: 3.00%
Real GDP 2023: $238,196 million
Real GDP 2022: $231,262 million
Louisiana’s economy is mostly weak due to the state’s complicated tax system, high regulations, and excessive government spending that have resulted in a poor business tax climate, and one of the highest poverty rates in the country. However, on the brighter side, personal income grew by 3.2% in the fourth quarter of 2023 and 4.4% in the full year, according to Pelican Policy.
15. Tennessee
Percentage Change in GDP: 3.23%
Real GDP 2023: $425,410 million
Real GDP 2022: $412,101 million
Tennessee’s 2023 GDP surpassed the national average, but growth is not equally distributed throughout the state. The state’s gross domestic product grew by 3.2% in 2023 compared to the national average of 2.5%. According to Tennessee Lookout, 30 counties within Tennessee grew faster than the state average.
14. Idaho
Percentage Change in GDP: 3.52%
Real GDP 2023: $94,914 million
Real GDP 2022: $91,684 million
According to a report by Idaho Department of Labor, Idaho’s labor market and economy are expected to witness healthy growth between now and 2032. One-third of these jobs will stem from health care, construction, and manufacturing sectors. This labor growth is extremely essential given that over the next decade, Idaho’s population is projected to grow at a rate of 1.4-1.5% per year compared to the country’s population growth rate of just 0.6% for the same period, according to Idaho Press.
13. Kentucky
Percentage Change in GDP: 3.52%
Real GDP 2023: $225,235 million
Real GDP 2022: $217,568 million
While the unemployment rate in Kentucky stood at 4.1% in 2023, the state also has its employment growing at an annualized rate of 1.6% over the five years to 2023. With this Kentucky over-performed the national average, according to IBIS World.
12. South Carolina
Percentage Change in GDP: 3.61%
Real GDP 2023: $259,930 million
Real GDP 2022: $250,873 million
As of 2023, the state of South Carolina had a population of roughly 5.4 million, with people moving to the state for the low taxes, warm weather, a good quality of life, and reasonable housing prices. In December 2023, there were nearly 2.3 jobs in South Carolina for every resident job-seeker whereas, the national ratio stood at 1.4, according to CNN.
11. New Mexico
Percentage Change in GDP: 4.09%
Real GDP 2023: $105,463 million
Real GDP 2022: $101,315 million
In 2022, New Mexico had the highest poverty rate in the nation at 17.6 percent, and since at least 2000, New Mexico has persistently ranked as one of the poorest states in the country, according to US News. However, the Healthcare and Social Assistance, Retail Trade and Accommodation, and Food Services sectors contributed the most to state’s employment, representing a combined 45.7%, as given in IBIS World, helping the state achieve GDP growth rate of 4.1%.
10. Kansas
Percentage Change in GDP: 4.32%
Real GDP 2023: $182,350 million
Real GDP 2022: $174,795 million
According to Kansas Policy, in April 2024, Kansas gained 1,700 private-sector jobs, representing an increase of 0.1% of Kansas’s existing 1.2 million private-sector jobs. In Kansas, personal income growth was also among the highest in the nation at 4.9% in the third quarter of 2023.
9. West Virginia
Percentage Change in GDP: 4.72 %
Real GDP 2023: $80,135 million
Real GDP 2022: $76,526 million
West Virginia’s economy has depended heavily on its mineral resources, and declining coal production in recent years has hurt the state economically. Today, mining safety and ecological concerns are major challenges to West Virginia.
8. Washington
Percentage Change in GDP: 4.83%
Real GDP 2023: $672,125 million
Real GDP 2022: $641,144 million
Washington’s economy has been slowing as the U.S. Federal Reserve raises interest rates, hoping to slow down inflation. The largest industries by revenue in Washington as of 2022 are Software Publishing, Hospitals and New Car Dealers, which generated $64.4 billion, $33.5 billion and $27.1 billion, respectively, according to IBIS World.
7. Florida
Percentage Change in GDP: 4.98%
Real GDP 2023: $1,279,119 million
Real GDP 2022: $1,218,430 million
Florida’s quarterly GDP movements have generally performed better than the nation, as a whole, since the beginning of the pandemic. The personal income grew at a rate of 6.6% in the fiscal year 2022 and is expected to show a growth of 6.3 percent in fiscal year 2023-24, followed by a nearly matching year at 6.4 percent growth, according to Economic and Demographic Research.
6. Nebraska
Percentage Change in GDP: 5.18%
Real GDP 2023: $144,183 million
Real GDP 2022: $137,078 million
The largest industries by revenue in Nebraska are Meat, Beef & Poultry Processing, Corn, Wheat & Soybean Wholesaling and Natural Gas Distribution, with accumulated revenues of $26.4 billion, $21.9 billion and $16.8 billion, respectively, in 2023. On the other hand, the Manufacturing, Agriculture, Forestry, Fishing and Hunting and Finance and Insurance sectors contributed the most to Nebraska’s GDP in 2023, representing a combined 34.9% of state GDP, as given by IBIS World.
5. Oklahoma
Percentage Change in GDP: 5.26%
Real GDP 2023: $201,659 million
Real GDP 2022: $191,583 million
According to OCPA, Oklahoma’s state gross domestic product (GDP) growth is stronger than all but eight states. Oklahoma recorded 6 percent GDP growth, annualized, in the third quarter of 2023, based on U.S. Bureau of Economic Analysis data. However, the governor recently said that many states are now cutting their income-tax rates and Oklahoma could fall behind.
4. Alaska
Percentage Change in GDP: 5.35%
Real GDP 2023: $53,006 million
Real GDP 2022: $50,315 million
The oil & gas industry is the largest component of Alaska’s economy. Nearly 85 percent of the state budget is supplied by oil revenues. Tourism is also a major sector of Alaska’s economy and the second largest primary employer, attracting over 1.1 million visitors annually, according to The Great State of Alaska.
3. Wyoming
Percentage Change in GDP: 5.44%
Real GDP 2023: $39,322 million
Real GDP 2022: $37,294 million
Wyoming’s economy is heavily tied to mining and agriculture, primarily the marketing of beef cattle and sheep. The state also has an important and growing tourist industry, serving millions of visitors to the state’s parks and historic sites. Wyoming’s total personal income increased 5.9 percent in the fourth quarter of 2023 compared to the fourth quarter of 2022, according to Wyoming Economic Analysis Division.
2. Texas
Percentage Change in GDP: 5.66%
Real GDP 2023: $2,032,933 million
Real GDP 2022: $1,924,007 million
In Q4 2023, real gross domestic product (GDP) for Texas grew at an annual rate of 5.0%, well ahead of the U.S. for the sixth quarter in a row, according to Office of Texas Governor. In fact, if it were a country, Texas would be the 8th largest economy in the world, ahead of Australia, Italy, Mexico, Russia and Spain.
1. North Dakota
Percentage Change in GDP: 5.87%
Real GDP 2023: $58,015 million
Real GDP 2022: $54,799 million
North Dakota has been enjoying a robust economy, characterized by a flourishing energy development sector, in addition to strong agriculture, real estate, and government sectors. North Dakota experienced the highest growth in real GDP among all 50 states in the first quarter of 2023, surging by 12.4%, according to North Dakota Governor’s Office. In 2023, the real gross domestic product (GDP) of North Dakota was 58.02 billion U.S. dollars.
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