State Economic Watch

The US Bureau of Labor Statistics released its report on 2025 state productivity this week. The BLS calculated output and hours worked to determine the labor productivity of each state. By this methodology, the states that saw increases in output together with decreases in hours worked had the highest levels of productivity. According to the BLS calculations, the District of Columbia experienced the highest y/y growth in productivity in 2025 at 5.2%, followed by Arizona (4.4%), and California (4.2%). Alaska had the highest level of output growth at 3.8%, but its 6.2% increase in hours worked caused its productivity to decline 2.3% y/y, making it second only to Idaho (-2.5%) in the level of productivity decline in 2025. In all, eight states posted decreases in productivity in the year. Oregon saw the largest y/y reduction in hours worked and, together with its output increase of 1.2%, put its productivity growth just behind the leaders and even with Massachusetts at 3.7% The report als...

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes improved notably in April, as the three-month diffusion index rose to its highest level since January 2025. The index increased 14 points m/m to 90 in April from a revised 76 in March, with only two states, Connecticut and Hawaii, posting index declines. Washington State’s index remained flat over the three-month period, but the indexes of all other states improved. West Virginia, North Dakota, and Idaho posted the strongest three-month index gains in the month. The exhibit below is reproduced from the press release.

In the current edition of Chicago Fed Insights , economists at the Chicago Fed take a deep dive into the demographics of population aging in the US and the economic and fiscal implications of elder care. In the first part of this three-part series, the authors look at the three types of living arrangements for older adults, community based, assisted living, and nursing home, and point out that the utilization of each varies with age and demographic group. In addition to the direct effects of aging on the labor force and on public services, the article points out the second order effect of caregiving, noting that as more of the elderly age in community settings, caregiving often falls on family members which “can reduce labor force attachment, lower work hours, limit job mobility, and depress lifetime earnings”. One of the more interesting statistics discussed in the piece is the elderly dependency ratio, or the number of people over 65 divided by the number 15-64. The authors note that...

The results of the First Quarter 2026 Ag Credit Survey from the Federal Reserve Bank of Minneapolis are sobering. According to the Survey, farm income fell in 1Q2026 with 76% of respondents in the Ninth Federal Reserve District reporting y/y decreases in the quarter. However in Minnesota, that percentage jumps to 90%, the highest of the states in the District. Additionally, 70% of Minnesota respondents reported decreases in farm capital spending and 65% reported a decline the rate of loan repayments in 1Q2026 compared to 1Q2025. Minnesota also reportedly led the country in the amount of farm bankruptcy filings in the first quarter as federal trade policies and the Iran conflict have kept grain prices low and farm operating costs high. The below exhibit is reproduced from a report by the American Farm Bureau Federation, and illustrates the state-by-state Chapter 12 farm bankruptcy filings in calendar 2025.    

The May Texas Manufacturing Outlook Survey from the Federal Reserve Bank of Dallas indicates positive but slower growth in the state’s manufacturing sector. The top line production index fell almost ten points but remained in positive territory at +9.4, close to its historical average. Similarly, the new orders, capacity utilization and shipments indexes all fell m/m but remained positive. The growth rate of orders index however, fell into negative territory. Employment measures remained flat. Despite the erosion in current measures in May, Texas manufacturers remain optimistic, with the production, capacity utilization, new orders, and shipments six-month forward expectations indexes all remaining in solidly positive territory.

The regional disparities in the US housing market were on display again in two reports released today. The March 2026 S&P Cotality Case-Shiller Indices reflect not only a slowing national housing market, but also vast differences among major metro areas. The National Composite Index (NSA) increased only 0.7% y/y compared to 0.8% in the prior month, with half of the metros in the 20-City Composite Index posting y/y losses. Seattle saw the largest decline at -2.5%, followed by Denver (-1.95%), Tampa (-1.93%), Dallas (-1.71%), and Phoenix (-1.63%), while Chicago posted the biggest y/y gain at 6.1%, followed by New York at 4% and Cleveland at 3%.  The release of the 1Q2026 House Price Indices (HPI) from the Federal Housing Finance Agency (FHFA) illustrate a similar pattern. According to the FHFA’s figures, the national Purchase-Only HPI increased 1.7% from March 2025 to March 2026, compared to a 4% increase in the year-earlier period. All regions of the country saw lower y/y HPI ...

Once again, the State Employment Report from the US Bureau of Labor Statistics had little in the way of meaningful content. Both Connecticut and Florida continue to struggle with unemployment, as both saw their u-rates tick up m/m in April. These two states also saw the largest y/y u-rate changes, with the unemployment counts increasing for both. However, Connecticut saw a drop in its labor force over the year, while Florida’s labor force grew y/y. On the payroll front, six states saw modest m/m gains in NFP in April. New Mexico had the largest percentage increase thanks to some increases in construction and health and ed employment. Over the year, Nevada posted the largest percentage increase in NFP, while Oregon saw the largest percentage decrease. Nevada’s gains primarily came from professional services and health and ed, while Oregon posted y/y employment declines in every category except health and ed. The below exhibit is reproduced from the BLS release. Source: USBLS

Manufacturing activity in the Third Federal Reserve District has fallen sharply according to the May Manufacturing Business Outlook Survey from the Federal Reserve Bank of Philadelphia. The top line general business activity index fell into negative territory, declining to -0.4 in May compared to +26.7 in April. New orders and shipments also plunged m/m, with the new orders index falling from +33 in April to -1.7 in May, and shipments index declining to +4.9 from +34 in the prior month. The employee count index moved slightly higher m/m, but remained in negative territory at -2.8, while average workweek fell to +1.2 from +7.7. Despite the current gloom, the six-month forward expectations indexes generally improved, with the general business conditions forward index increasing to +53.2 from +40.8 in April. The new orders and shipments forward indexes also improved m/m. On the downside, the employment forward indexes fell, with both the employee count and average workweek expectations i...

Economists at the Federal Reserve Bank of Kansas City don’t think that current high oil prices will encourage more drilling in Oklahoma. In the latest edition of the Oklahoma Economist , the authors note that despite current high spot prices, oil futures prices are below the level that Oklahoma producers need to support any meaningful increase in drilling activity. Additionally, they note that Oklahoma’s energy production is more highly concentrated in natural gas than in oil, and that natural gas prices in the US, unlike those in Europe or Asia, have not risen in response to the Iran conflict.

Last month this blog posted a story about the possible rebirth of the abandoned, partially constructed VC Summer nuclear power plant in South Carolina. After state-owned Santee Cooper and what was then South Carolina Electric and Gas pulled the plug on the project, SCANA, SCE&G’s parent, filed for bankruptcy. Dominion Energy bought SCANA, while NextEra Energy made a failed bid for Santee Cooper. This morning, NextEra announced that it will acquire Dominion in an all-stock deal. The timing is interesting because just last week, the South Carolina Public Service Commission approved a $5 billion 2,200 MW natural gas project to be jointly constructed by Dominion and Santee Cooper. This was subsequent to the December MOU between Santee Cooper and Brookfield Asset Management to potentially restart construction on the Summer facility. Additionally, earlier this month Brookfield established a partnership with The Nuclear Company for the project. While the NextEra-Dominion merger is subje...

While conditions improved modestly in the last month, the New York-Northern New Jersey service sector remained in contraction territory in May, according to the results of the Federal Reserve Bank of New York’s Business Leaders Survey . The top line business activity index remained in negative territory, but improved to -5.8 in May from -14 in April, while the business climate index sat at a very unfavorable -46.9, only 2.4 points better than in April. The one bright spot in the report was  employment, with the employee count edging into positive territory at 1.9 from -2.4 in April. The six-month forward expectations indices indicated a slight uptick in optimism, with the forward-looking business activity index increasing 7.3 points to 10.2, while the business climate expectations also increased 7.3 but remained in negative territory at -14. The forward-looking employment and capex indexes were flat m/m. Both remained in minimally positive territory. 

The Federal Reserve Bank of New York released a very solid May Empire State Manufacturing Survey this morning. The survey’s results indicate strong growth in the New York manufacturing sector. The headline general business conditions index increased 8.6 points to 19.6, while the new orders index rose 3.4 points to 22.7. The May increases pushed both indexes to four year highs. The employment indexes however, dipped slightly lower in the month. Finally, the six-month forward looking indexes reflected growing optimism, with general business conditions expectations index increasing to 33.5 from 19.6 in the prior month. Likewise, the new orders, shipments, and capex expectations indexes also improved m/m. The employment expectations indexes were mixed, with the employee count index increasing 2.5 points while the average workweek index fell five points.

The US Census Bureau released its Vintage 2025 population estimates for towns and cities today. The report reflects data from the July 1, 2024 and July 1, 2025 period.  Not surprisingly, Census found that the cities with the largest percentage increases in population during this period were all in Texas. We note that for the purposes of this exercise, Census defines US cities as those with populations of 20,000 or more. The picture is similar for pure numeric rankings. Of the cities to see the largest numeric increase in population during the reference period, Texas cities ranked second, third and fourth, while Charlotte, NC took the number one spot and Seattle, WA number five. 

Economists at the University of Michigan believe that the state’s labor economy is currently in a “soft patch”, but that brighter days are ahead. They expect the state's employers to shed 5,900 jobs in calendar 2026, but then add 13,400 in 2027 and 9,300 in 2028. The forecast assumes no further escalation of the conflict in Iran and gradual reductions in the price of oil. According to the press release, the forecast will be presented to Michigan’s Consensus Revenue Estimating Conference on May 15.

The Maine State Chamber of Commerce released its Maine Economic Vision 2035 report this week. The report sets out policy prescriptions to grow the state’s economy over the next ten years. These policy goals and proposals are primarily focused on productivity, investment, education, competitiveness and affordability. You can access the glossy 32-page presentation here .

The Northern Economics Alaska Confidence Index , produced quarterly since 2010 by Alaska Survey Research continues to scrape the lows of the COVID era. The index is compiled from responses to six questions about the health of the state’s economy and of respondent’s personal financial situation, and is standardized to a 0-100 scale. The most recent survey in March 2026 produced an index value of 42.6, which is only 0.2 points higher than the index’s historical low set in October 2023. The index has been stuck in the mid-to-low 40s range since late 2021. For context, the index hit a historical high of 61.9 in September 2014.

The latest edition of the Federal Reserve Bank of Kansas City’s Nebraska Economist examines Nebraska's healthcare profile. After discussing some of the macro economic and demographic trends facing the overall US healthcare industry, the Kansas City Fed’s economists go into a data-rich analysis of the Nebraska healthcare environment and find that the state has seen dramatic reduction in the number of beds since 2000, particularly in its rural areas. In addition, they note that Nebraska experienced a larger percentage decline in key service offerings from 2000 to 2023 than any other state. The below exhibit is reproduced from the Kansas City Fed’s report.

The Federal Reserve Bank of Philadelphia’s State Coincident Indexes were mixed in March. According to this morning’s release, the three-month diffusion index fell to 60 in March from 70 in February. However, we note that the February figure was revised up from the originally reported 54. The three-month index has been in this tepid 50-70 range since July 2025. North Dakota and Indiana posted the strongest three-month index gains in March, while Hawaii and Connecticut saw the biggest declines. One notable element in the March report is the movement in the volatile one-month diffusion index. This index increased sharply in March to 74 from a revised 30 in February. To put this into some context, the one-month diffusion index has bounced dramatically from a low of 26 to a high of 90 over the last five months.  The exhibit below is reproduced from the press release.

An interesting article this week in KFF Health News discusses some of the avenues that states are exploring to try to shore up the finances of community and other rural and urban hospitals, many of which are in a state of financial distress because of Medicaid funding cutbacks at the federal level. A basket of aid options including loans, grants and debt forgiveness are being contemplated or implemented by a number of states. You can find a link to the article here . 

In the latest edition of the Rocky Mountain Economist , the Federal Reserve Bank of Kansas City takes a deep dive into the economics behind the recent spike in oil prices caused by the war in Iran, and notes that there may be a silver lining in all of this for the Rocky Mountain energy producing states. In the article, the KC Fed’s economists illustrate the correlation between oil prices and severance tax collections, and note that New Mexico and Wyoming in particular stand to benefit, from a budgetary perspective, from the current conflict-driven increases in oil prices. The below exhibit is reproduced from the KC Fed’s article. Source: Federal Reserve Bank of Kansas City

Another incredibly boring State Employment Report from the US Bureau of Labor Statistics. The current US low hire/low fire economy is clearly reflected in these state numbers. According to today’s BLS report there was no meaningful m/m change in state unemployment rates in March. Over the year, only Connecticut, Delaware, and Florida posted u-rate increases of over 1%. Of the three, Florida is notable for seeing a significant y/y increase in the number of unemployed, from approximately 403,000 in March 2025, to an estimated 523,000 in March 2026. However, Florida did see a m/m increase in employment in March of 28,100, primarily from the construction and business services sectors. The other states seeing statistically meaningful NFP increases in March were Texas and Tennessee. On a y/y basis, payrolls in Maryland, DC continue to suffer from reductions in government employment, while Nevada posted the largest y/y percentage gain in total employment, thanks principally to growth in the ...

PJM Interconnection says it has received applications for 811 projects, totaling 220 GW, to connect to the grid. PJM redesigned its interconnection process in 2023 and the window for this first round of new applicants closed on April 27, 2026. PJM says its new process moves it from the “prior first-come, first-served model with a first-ready, first-served approach”. The applications include, among others, those for natural gas, solar, wind, storage, nuclear generation, and one for a fusion power facility. You can find a link to PJM’s press release here .   

The results of the most recent Washington Employers Survey from the Association of Washington Businesses reflect a continued erosion of sentiment among the state’s businesses. According to the survey, conducted April 8-22, 24% of Washington State businesses are considering relocating to another state. That’s an increase of seven percentage points since the last quarterly survey. Similarly, the number of business leaders considering moving their personal residences out of Washington State rose from 44% to 55%. Further, expansion of existing operations in Washington State is looking less likely, with only only 9% of businesses considering expanding in-state compared to 14% in the last survey, while 38% plan to expand their businesses in another state, up from 30% last quarter. Finally, only 7% consider the state’s economy to be strong, down three percentage points from the last survey. Taxes are cited as the number one business challenge by 72% of the respondents, an increase of eight p...

Work began on a major expansion of Baltimore’s port facilities last Friday. When construction is fully completed in 2029, the former Bethlehem Steel site will be home to the Sparrows Point Container Terminal. The Terminal, to be run by the privately held Tradepoint Atlantic, will increase Baltimore’s existing container capacity by 70%. Its two berths and seven cranes will be able to accept an estimated 1 million containers per year and will give Baltimore the third largest container capacity on the East Coast. 

Kentucky Governor Andy Beshear says that the first four months of 2026 saw the largest economic investment in the state’s history. He cites significant investment in battery production facilities, among other investments, from Ford, AESC, Shelbyville Battery Manufacturing, and Toyota. Here's a link to the press release from the Governor's office, which also touts rating upgrades by Moody's, S&P and Fitch. 

A new study by the Washington Roundtable looks at the twin issues of cost of living and affordability in Washington State. The report finds that the state is the fifth most expensive place to live in the US behind California, DC, New Jersey, and Hawaii. Using the US BEA’s Regional Price Parities, the report notes that the state had an RPP score of 108.6 (US index level is 100) in 2023 compared to 102.5 in 2013, and that during this ten year period, the state’s RPP score increased faster than that of any other state. 

A new report from the Rhode Island Public Expenditures Council finds that the state’s economic growth falls short of the US average on several measures. The report, Rhode Island 2026 Economic Prosperity Scorecard , uses publicly available data on state GDP, income and cost of living to show that Rhode Island’s GDP growth is lagging both that of its neighboring New England states and of the U.S as a whole. The study’s authors attribute some of this underperformance to the high percentage of the state’s GDP that is generated by health and education, which they consider to be low productivity sectors. The study also finds that while Rhode Island’s personal income measures put it in the top half of all states, the state’s relatively high cost of living drops its real personal income ranking to the bottom third of states.