State Economic Watch

In the most recent survey of business and nonprofit leaders by the Kentucky Chamber of Commerce, the shortage of skilled labor and the lack of affordable housing were cited as material impediments to growth. Nevertheless, survey respondents remain “cautiously optimistic about the state’s economy” with 44% anticipating revenue growth over the next year. Here’s a link to the press release from the Chamber’s The Bottom Line publication.

A new report from the Institute for Energy Economics and Financial Analysis provides an interesting perspective on the relationship between productivity/efficiency improvements in the oil and gas industry and total employment. The report points out that total industry headcount fell 20% from 2014 to 2024 and suggests that payrolls could fall to below pre-shale drilling (2006) levels by 2026. Unfortunately, the report doesn’t provide the corresponding data for production, although you can glean it from the employees per 1000 barrel ratio that is cited. According to the report, efficiency gains from “technological advances in equipment and processes” cut the number of employees needed to produce a barrel of oil by 50% from 2014 to 2024. Finally, the report references data from the Dallas Fed which indicates that regions with a high concentration in oil and gas extraction have underperformed the US both in terms of employment and wage growth.

The Federal Reserve Bank of Dallas conducts a monthly Texas Service Sector Outlook Survey . The Survey’s top line revenue index fell four points m/m in October 2025 to -6.4. This is the lowest reading for the revenue index since July 2020. Similarly, the employment index fell to -5.8 in October 2025 from -3.6 in September 2025, and was the lowest reading for this index since May 2020. Nevertheless, the future expectations (six months) revenue index remained in positive territory in October 2025 at 33.7. This was only slightly weaker than the prior month’s 35.3 and only modestly below its rolling 12-month average of 36.2.  The Texas Retail Outlook Survey , a component of the broader service sector survey, also contracted in October. The top line sales index fell to -23.5 in October from -17.2 a month earlier. The employment index fell sharply to -15.3 in October from -3.0 in September. While the October sales index reading was not as weak as it was in late Spring/early Summer 2025 p...

 As of this morning, there appears to be no resolution of the federal government shutdown. The SNAP benefits due November 1 are the latest focus of media attention. The below graphic from the USDA illustrates the percent of each state's population that received SNAP benefits in 2024. New Mexico had the highest percentage of residents receiving the benefits at 21.2%. Wyoming had the lowest at 4.5%.  Comprehensive SNAP data by state is available on USDA's Economic Research Service site. 

Creighton University economics professor, Dr. Ernie Goss conducts a monthly survey of community bank presidents in 200 rural communities of a 10-state region consisting of the states of Colorado, Illinois, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, South Dakota, and Wyoming. This Rural Mainstreet Index declined to 34.6 in October 2025, compared to 38.5 in September, and was the lowest reading for the index since May 2020. As is typical for these indexes, a reading below 50 indicated contraction. According to respondents, weak grain prices are “dampening economic activity” and generally lowering farm and ranch land values. Federal trade policies are having a significant negative impact. Exports of agricultural products in the first seven months of 2025 were down 10.3% compared to the same period last year, but exports to China during this period were down 85.7%.

A record corn crop in the farm belt is putting farmers there under significant financial pressure. This record corn production is depressing prices at a time when farm debt is also at record levels. According to this weekend’s Reuters article “Iowa corn farmers who rent land – a common practice – need $4.58 a bushel this year to break even…In August, the average cash price: $3.89”. Add to this the controversy over the Trump Administration's proposal to import beef from Argentina, and the result is growing concern over the economic health of the ag sector in the farm states.

A survey conducted by the Federal Reserve Bank of Minneapolis and Hospitality Minnesota indicated that customer traffic at the state’s hospitality businesses in the May through August 2025 period declined versus the comparable period in 2024. As has been reported by other states and regions, a marked decline in Canadian tourists was a contributing factor. Of the survey respondents, 65% reported a moderate to significant y/y decline in customers from Canada. Overall, respondents reported that price increases and economic uncertainty were deterring tourism customers.

A new report from the Maryland State Controller concludes that the state’s high housing costs are driving significant outmigration and that this could potentially have a negative impact on Maryland’s labor market and economy. The report finds that the state is losing a “net average of 40,000 people per year to states with lower housing costs and more housing options”. While the report doesn’t offer any policy recommendations, it does provide a comprehensive analysis of the factors that have contributed to the current condition of the state’s housing market.

 Moody's Analytics Chief Economist Mark Zandi is up on LinkedIn this morning with an update to his 50-state economic analysis. His latest tally: based on his model, 22 states and the District of Columbia are in recession, 16 states are currently in expansion, and 12 states are flat or "treading water" as he calls it. If you're subscribed to his Inside Economics,  the post is on your LinkedIn feed.

The most recent quarterly report from the University of Virginia’s Weldon Cooper Center for Public Service forecasts minimal state economic growth and declining employment through at least the first half of 2026. The forecast calls for Virginia’s real GDP to increase 0.6% in 2025 and 1.0% in 2026, before increasing to 1.9% in 2027. Similarly, employment in the state is projected to decline through the second quarter of 2026 before recovering modestly in the third quarter. Still, the Center forecasts that the state’s unemployment rate will increase from an estimated 4.1% in 2025 to 4.8% in 2026 but then decrease to 3.9% in 2027.

A new research  report by the Federal Reserve Bank of Dallas analyzes some of the employment data from a recent Texas Business Outlook Survey (TBOS) and concludes that federal immigration policies are contributing to the weak employment growth in the state. The Survey found that increased enforcement, slow legal immigration processing, and the elimination of temporary protection status is negatively impacting the ability of one in five Texas businesses to hire and retain foreign workers. The Dallas Fed analysts conclude that less immigration will ultimately result in lower GDP growth. Here are a few notable quotes from the piece - the fourth one being the most interesting: “TBOS likely understates the extent of such impact on Texas firms because the survey does not include some sectors that heavily rely on immigrant workers, such as construction and agriculture” “Nearly 60 percent of impacted companies reported they were unable to hire qualified workers because such individuals of...

New research from the Federal Reserve Bank of Kansas City finds that while Oklahoma has less exposure to international trade than other states, it’s not fully insulated from trade issues. The report points out that the state’s exports are concentrated in durable equipment, metals and machinery - the bulk of which are aerospace parts going to Europe, Asia and the Middle East. While the state has a lower percentage of exports going to Mexico and China than the US as a whole, it has more exposure to Europe and Canada. On the import side, the Kansas City Fed points out that Canada accounts for half of the state’s imports, the vast majority of which are heavy crude, and that  this makes the state’s energy prices vulnerable to currency movements, commodity prices, and tariffs. Overall, while the percentage of Oklahoma’s GDP from both imports and exports is about half the national average, the Kansas City Fed found that the product concentration in the state’s trade profile represents a ...

The Federal Reserve Bank of New York’s October Business Leaders Survey reflected a dour business climate. The Survey, a monthly polling of service firms in New York, northern New Jersey and southwestern Connecticut, indicated that the region’s service sector business activity declined “substantially” in October according to the NY Fed. The business activity index declined to -23.6 in October from -19.4 in September. This is the lowest level for this index since January 2021. Similarly, the business climate index fell to -42.9 from -40.7. The employment and wage indexes moved slightly lower and the prices paid index increased 3 points to 66.4, while the prices received index fell six points to 26.4. The only glimmer of hope in the October release was the business activity expectations index (six months forward-looking), which ticked up to -3.4 from -5.8 in September.

The October 15 Federal Reserve Beige Book noted that most of the Federal Reserve Districts are either e xperiencing little to no economic growth or modest declines. Of the twelve Districts, only Boston, Philadelphia and Richmond reported some degree of economic expansion or increase in business activity. Several Districts noted that employers were beginning to institute headcount reductions because of a decline in economic activity and/or efficiencies brought about from AI. There were a few consistent themes across most, if not all of the Districts. The construction sector is struggling with employment pressures because of federal immigration policies, consumer spending is generally K-shaped with higher income consumers spending freely but mid-to-lower consumers cutting back, the agriculture sector is facing headwinds and uncertainty from China trade issues, and the hospitality and tourism industry is experiencing a drop in international tourists, especially from Canada. There wasn’t ...

The Federal Reserve Bank of Cleveland has released the results of its latest Survey of Regional Conditions and Expectations , which was administered September 18-25. Cost pressures continue to impact companies in the Cleveland Fed’s district, with these firms reporting an average increase in nonlabor costs of 6.8% over the last 12 months, and an increase in wages and salaries of 4.8%. In response to these cost pressures, 65% of the firms reported increasing prices while 21% reduced payrolls . Finally, the survey respondents expected nonlabor prices to increase an additional 5.3% over the next 12 months, and wages and wages and salaries to increase 4.6%.

The Federal Reserve Bank of New York’s Empire State Manufacturing Index came in better than expected in October. The General Business Conditions component increased to 10.7 from the prior month’s -8.7. New orders also moved into positive territory, coming in at 3.7 from September’s -19.6, and shipments followed suit, moving from -17.3 in September to 14.4 in October. Employment was up modestly, but the average workweek measure declined. Pricing pressure increased somewhat, with both prices paid and prices received indices moved higher. Overall though, business optimism increased, with the general conditions expectations index increasing 15.5 points m/m in October to 30.3.

In its latest report on New England Economic Conditions , the Federal Reserve Bank of Boston notes that the region’s employment growth is slowing more rapidly than that of the US, with nonfarm payrolls increasing only 0.2% y/y in August 2025 in New England compared to 0.6% in the US. The Boston Fed attributes much of the sluggish regional growth to significant slowdowns in both the health and education services and government employment sectors. The report also notes that consumer confidence in the New England region, as measured by The Conference Board’s Consumer Confidence Index, is dropping, with the future expectations component falling to its lowest level since March 2013 in September 2025. 

At a meeting of the state’s Finance Advisory Committee last week, economists warned that Arizona was becoming increasingly dependent on spending by the top 10% of its residents to generate sales tax revenue. According to these economists, the bottom 90% of consumers, as measured by income, are curtailing their spending due to economic stress. Consumer spending patterns are a key issue in Arizona because the state’s 5.60% sales tax typically accounts for nearly half of its general fund revenues.  You can find a link to a related article here .

Thoughtful analysis from The Pew Charitable Trusts on the potential impact of tariffs on state economies. Pew identifies heavy manufacturing states such as Indiana, Kentucky, Michigan and Tennessee, and states with significant port systems such as Georgia, New Jersey, South Carolina and Texas as those “most vulnerable to potential fiscal disruptions linked to increased import costs”. However, Pew does note that it will likely take time for the impact of the tariffs to be fully reflected in state budgets. You can find a link to the full article here .

A new release by the Federal Reserve Bank of Minneapolis discusses the current economic pressures in the farm sector. Chapter 12 bankruptcy filings by operating farms increased in the first half of the year both nationally and in the Minneapolis Fed’s district. At the same time, farmers have increased their debt loads. The article points to weak crop prices as the reason for this financial stress. The piece also includes an informative discussion of the unique characteristics of the Chapter 12 mechanism and is well worth a quick read. You can find a link to the article here .

For only the second time in the last 50 years, Colorado’s unemployment rate exceeds that of the US. An analysis by the Federal Reserve Bank of Kansas City cites downturns in the technology and construction sectors as the principal causes of the elevated u-rate, as employment in these industries is more concentrated in Colorado than in the US. However, the analysis does point to some positive factors such as a growing state labor force, driven by positive net migration, a highly skilled work force, and a higher labor participation rate than that of the US, and concludes that these factors place the state at a “longer-term advantage”.

The most recent forecast by the University of Hawaii Economic Research Organization (UHERO) calls for continued weakness in the state’s economy in 2026 as US tariff and trade policies impact Hawaii's tourism industry. UHERO projects a 0.4% decline in state nonfarm payrolls in 2026, and a corresponding increase in the state’s unemployment rate to 3.6% from an estimated 3.0% in 2025. Both Hawaii’s real GDP and real personal income are expected to be flat in 2026, increasing only 0.1% y/y. UHERO also forecasts a 0.1% decline in the state’s population next year. The forecast points to the state’s tourism sector as a significant contributor to this projected economic weakness, with tariff and trade issues impacting the economies of key visitor markets like Canada and Japan. UHERO expects a decline in total air passengers of 1.1% in 2026 after an estimated 1.3% drop in 2025, and a decrease in real visitor expenditures of 5.8% in 2026 compared to an estimated 1.4% decline in 2025. You can...

The latest quarterly business sentiment index from the Florida Council of 100 reflects increased optimism on the part of the state’s business leaders. Its CEO Economic Outlook Index increased 8 points in the third quarter to 91. As a point of comparison, the comparable national figure from the Business Roundtable was 76. Of the survey respondents, 46% expected their firm’s payrolls to increase over the next six months, 49% anticipated higher capital investment, and 64% projected higher sales.  You can find a link to the press release here .

The Business Confidence Index put out by the Associated Industries of Massachusetts (AIM) fell 1.5 points to 47.5 in September. The index has been below 50 since March of this year. As is typical of these kinds of surveys, below 50 indicates pessimism and above 50 signifies optimism. An overriding sense of uncertainty over tariffs, inflation and technological changes is contributing to weakened index readings according to AIM.  You can find a link to this story here .

Economist Dr. Loren Scott, former chair of the LSU economics department, is forecasting a 75,000 increase in employment in Louisiana over the next two years. His forecast is principally based on an expected increase in industrial construction associated with the development of data centers in the state, such as the already-announced Richland Parish Data Center project Meta is developing in Monroe.   You can find a link to the story here .

Manufacturers in Wisconsin are growing increasingly confident about the state’s economy according to an annual study put out by the Wisconsin Center For Manufacturing and Productivity. In its latest Wisconsin Manufacturing Report , 32% of the manufacturers surveyed believed that the Wisconsin economy was growing compared to 23% in 2024, and only 20% saw the economy as either slowing or in a recession compared to 39% last year. Finally, 46% believed the economy was stable, up from 34% in the prior year. The survey respondents expressed some concerns over the ability to recruit and retain skilled workers and were mixed on the impacts of tariffs, but were much less concerned about inflation, with that statistic dropping to 25% in this year’s survey compared to 46% in 2024. You can find a link to the report here .

The Leeds Business Confidence Index, produced quarterly by the Leeds Business Research Division at the University of Colorado Boulder, fell to 36 for 4Q2025 from 37.9 in the prior quarter. As with similar measures, a reading of 50 is neutral. The component of the index related to expectations for the state economy fell from to 31 from 34, with 71% of survey respondents viewing the state outlook as negative.  You can find a link to the report here .

Today’s release of the latest edition of the UCLA Anderson Forecast contains a somewhat sobering assessment of the California economy. The Forecast projects that the state’s economy won’t start recovering until late 2026. It does, however, project that growth will accelerate in 2027. The report forecasts flat employment growth in California through 2026, with nonfarm payrolls falling -0.1% in 2025, rising only 0.1% in 2026, and then increasing 2.2% in 2027. As a result, the state’s unemployment rate is projected to peak at 6.2% in early 2026 and decline to an average of 4.6% in 2027. The Forecast cites immigration issues as one of the sources of stress in the California economy. You can find a link to the press release here .