Which States Have the Best Economies?

states with best economies
The states with the best economies depend on farming for growth.. Photo: Thomas Barwick/Getty Images

Which states have the best economies and job markets? There's not a one-size-fits-all answer to that question. For example, many of the states with the fastest-growing economies did so for reasons that might not get you a job. South Dakota, Kansas, Iowa, Nebraska, and Idaho owed most of their growth to farming and related industries. These are primarily large businesses, not small family farms. They have become highly automated, and so are no longer jobs intensive industries.

Hawaii is growing thanks to its real estate and tourism industries. That primarily benefits owners of vacation rentals. 

You might have better luck in Indiana and Utah. Manufacturing and retail are generating growth in those states. These industries create more jobs than farming or real estate. In fact, manufacturing provides some of the highest-paid jobs in the United States. For more, see Manufacturing Jobs: Examples, Types, and Changes.

StateGrowth Rate (Q3 2015)Largest Contributor to Growth
South Dakota9.5%Agriculture/Forestry/Fishing/Hunting
Iowa6.4%Agriculture/Forestry/Fishing/Hunting, Construction
Idaho3.9%Agriculture/Forestry/Fishing/Hunting, Retail,Healthcare
Hawaii3.8%Real Estate
Indiana3.7%Manufacturing, Retail, Agriculture/Forestry/Fishing/Hunting,Healthcare
Wisconsin3.1%Agriculture/Forestry/Fishing/Hunting,Healthcare, Retail
Utah2.9%Technical Services, Manufacturing, Retail

(Source: "GDP Growth by State for Q3 2015," U.S. Bureau of Economic Analysis, March 2, 2016.)

Best States to Start a Business

Here are the top ten states for starting a business. The Kaufman Foundation ranks them by three attributes: Rate of new entrepreneurs, opportunity share of new entrepreneurs, and start-up density.

  Montana, Wyoming, North Dakota and Colorado were the top four in 2015. That's despite the downturn in the shale oil industry. They probably won't be that high on the list in 2016. To find out what happened, see U.S. Shale Oil Boom and Bust.

Vermont (#5) does well with new-business start-ups thanks to its resources of private equity and venture capital funds. South Dakota (#6) and Idaho (#8) are growing fast, as noted above. Alaska is #7 because of the oil industry. It will also be lower on the list in 2016.  Florida is #9, and Nevada is #10. The growth in those states helps those with entrepreneurial skills. (Source: "Best States for New Businesses," Kauffman Foundation, 2015)

Don't go to California, Rhode Island, Illinois, Connecticut or New Jersey, which are rated "D" or "F" by their entrepreneurs. The biggest reason for the ratings, whether high or low, was how easy it is to get professional licenses and file taxes. (Small Business Owners Grade Their States for Business FriendlinessKaufmann Foundation, June 10, 2014)

10 Best States to Find a Job

Here are the ten states with the cities that rank highest in ease in finding a job. Many of these cities are in the fastest-growing states in the list above.

  1. Texas: Plano (#1), Austin (#3), Irving (#4)
  2. Kansas: Overland Park (#2)
  3. Utah: Salt Lake City (#5)
  4. Iowa: Des Moines (#6)
  5. California: Irvine (#7)
  6. Wisconsin: Madison (#8)
  7. South Dakota: Sioux Falls (#9)
  8. Nebraska: Omaha (#10)
  9. Idaho: Boise (#11)
  10. Colorado: Denver (#12)

(Source: 2016's Best and Worst Cities for Finding a Job, WalletHub)

How It Affects You

You might want to think about moving to one of the states on the list, even if you aren't an entrepreneur or have farming skills. The companies that are doing well need all skill levels. It may also be a favorable environment to improve your skills and become more entrepreneurial yourself.

On the other hand, this list changes rapidly. Just three years ago, Texas grew a hearty 3.7%. However, it did so thanks to oil drilling and immigration from Mexico. That applied to many of the other fastest-growing states, which were boosted by mining. Four of the top five benefited from shale oil extraction. They were North Dakota (9.7%), Wyoming (7.6%), Oklahoma (4.2%), and Colorado (3.8%). The fifth, West Virginia, grew 5.1% thanks to national demand for coal. These states were also good for those who wanted to start a business. Their rapid growth created a desperate need for small service businesses. But many of those entrepreneurs are now looking elsewhere. (Source: USA Today, "Top States With Fastest Growing Economies," June 15, 2013)

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