State Economic Watch

Food for thought from the Canada’s Fraser Institute. Its recently released report, Economic Freedom of North America , measures “the degree to which governments in North America permit their citizens to make their own economic choices”. The study uses data from 2023, incorporating government spending, tax, and labor market regulation statistics to formulate its rankings. It finds that the more “economically free” states enjoy higher incomes and faster population growth than their economically “less free” counterparts. The study gives New Hampshire the highest score of the 50 US states, and New Mexico the lowest.

A minor state economic story, but still highly symbolic. The Campbell’s Company has announced that it will close the Cape Cod Potato Chip production facility in Hyannis, Massachusetts, bringing an end to its 40 year operating history. The company cites efficiency and supply chain optimization as reasons for the closure. Production will move to the company’s other facilities in  Beloit, Wisconsin, Charlotte, North Carolina, and Hanover, Pennsylvania.

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.