Wednesday, May 26, 2021

How Tennessee’s Economy Compares to Other States

by Samuel Stebbins, 24/7 Wall St. via The Center Square, May 20, 2021 - The COVID-19 pandemic sent economic shockwaves through the U.S. economy, tripling the monthly unemployment to nearly 15% and leading to a more than 30% quarterly decline in GDP -- by far the largest economic contraction in U.S. history. 

No corner of the country was untouched by the pandemic's economic consequences -- but some states have emerged better off than others. A range of factors, including industrial diversity, labor force education levels, household income, and long-term GDP growth, have an effect on a state's overall economic strength -- and its ability to withstand the impact of the pandemic. 

To determine the states with the best and worst economies, both in the years leading up to the pandemic and during it, 24/7 Wall St. created an index of five measures: 
  • five-year economic growth, 
  • five-year employment growth, 
  • the poverty rate, 
  • unemployment rate, and 
  • share of adults with a bachelor's degree or higher. 
Tennessee reported some of the strongest job growth of any state in recent years. Overall employment in the state climbed at an average annual rate of 1.2% over the last half decade, while nationwide, employment grew at just a 0.1% pace, due largely to the COVID-19 pandemic. Today, 5.0% of the state's labor force are out of work, below the 6.0% national unemployment rate. 

Economic growth in Tennessee over the last five years falls in the middle of all states and is not especially strong or weak. A more rapid economic growth that all state residents benefit from would likely help reduce the share of residents living below the poverty line, which, at 13.9%, is among the 10 highest state poverty rates. 

All index components used to create this ranking were included at equal weight. All data used to create the index came from the Bureau of Labor Statistics and the U.S. Census Bureau. Additional state level data on economic output by industry from the Bureau of Economic Analysis. 

This is how all 50 state economies rank:

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