In recent months, the economic challenges faced by various states in the United States have come to the forefront. Michigan experienced a significant decline in its economy, with Illinois now joining the list of states in recession. The economies of sixteen states contracted between July and October, according to the latest index. However, there is some hope as the growth of most states remains positive, which may help the United States avoid a recession.
According to a WalletHub report published earlier in 2024, states with Democratic governors dominated the top 10 best U.S. economies. The top 10 states included Washington, Utah, Massachusetts, Texas, California, Colorado, Florida, North Carolina, Arizona, and Maryland. Washington ranked first, noted for high R&D investment and a strong tech job market. Massachusetts ranked third, with a low unemployment rate of 3% and high shares of tech jobs. The report highlighted that seven of the top 10 states were led by Democratic governors, while three states with Republican governors (Utah, Florida, Texas) also made the list. The economy remains a top concern for Americans, with 47% citing it as a major issue ahead of elections [441359a0].
The closure of thirty-three Rite Aid pharmacies due to bankruptcy has heavily impacted Michigan's economy. Additionally, Georgia's job market is struggling as a mail processing facility closes, resulting in 46 layoffs. Eighteen Rite Aid stores in New Jersey have also closed, adding to the economic challenges faced by the state.
On the political front, a live debate between California Governor Gavin Newsom and Florida Governor Ron DeSantis highlighted the differences between the two states. Meanwhile, Universal Studios announced plans for a new theme park in Frisco, Texas, which could bring economic growth to the area.
In terms of job losses, VF Corp, a Colorado-based apparel firm, has laid off 500 employees as part of its corporate restructuring. However, there is some positive news as Sam's Club plans to open new distribution centers in Minnesota and Illinois, promising job growth in those areas.
Bank closures continue to be a concern in various states, including Georgia, Virginia, Florida, and New Jersey. The closure of bank branches in California is an ongoing issue. The high cost of living in two cities in California further highlights the economic disparities within the state.
Sikorsky Aircraft, a historic helicopter manufacturer in Connecticut, has experienced two rounds of layoffs in the last six months, raising concerns about an economic decline in the state. However, the layoffs are not seen as a turning point or indicative of a decline by experts. Sikorsky has about 7,500 employees in the state, and the recent layoffs of 400 jobs are not expected to have a significant impact on the overall economy. Connecticut has been experiencing overall economic growth and job creation, outpacing other states in the region. The layoffs are attributed to the defense industry and are not seen as symptomatic of a larger issue in the state's economy. Efforts are being made to match laid-off workers with available jobs, and the hope is that people will choose to stay in Connecticut. Experts believe that the state is on a positive economic trajectory and that the recent layoffs should not be cause for alarm.
Layoffs in New York state have raised concerns about the economy. The Tesla plant in Western New York has laid off more than 300 workers, and nine WARN notices were filed this month alone, indicating more than 600 jobs lost. The New York State Department of Labor has a Rapid Response Team in place to help impacted workers. Despite the layoffs, economists believe that the overall economy is in good shape. From April 1 to May 9, more than 2,600 New Yorkers were laid off, but the job market is growing. The U.S. economy added 175,000 jobs in April, which is less than March's 315,000 jobs. Layoffs are considered normal and are balanced by new job additions over time.
Rising unemployment in nearly half of US states points to a recession this year, according to Piper Sandler's Nancy Lazar. 21 states have seen a jump in joblessness over the last year, accounting for over 40% of US GDP. When unemployment has jumped by that much, in that many states, a recession has almost always followed. The 21 states signaling a recession may be on the way are Rhode Island, Connecticut, Massachusetts, Maine, New Hampshire, California, West Virginia, Oregon, Vermont, New Jersey, Montana, Alaska, Arkansas, Colorado, Maryland, Illinois, Oklahoma, Kentucky, Ohio, and Missouri.
According to CNBC's America's Top States for Business study, the 10 U.S. states with the worst economies in 2024 are Vermont, Illinois, Maine, Rhode Island, Kentucky, Kansas, Louisiana, New Hampshire, Hawaii, and Mississippi. These states have been struggling with factors such as lack of major corporations, low job growth, high debt ratings, low foreign direct investment, and weak housing markets. Despite the overall easing of recession fears in the U.S., these states continue to face significant economic challenges.
Overall, the economic struggles faced by different states in the United States are becoming more apparent. The impact of recession and job losses on various sectors, such as manufacturing, hospitality, retail, and banking, is evident. The closure of businesses, bankruptcy filings, layoffs, and bank closures contribute to the economic crisis experienced by these states. While there are some positive developments in certain areas, the overall picture is one of economic challenges and uncertainty.