According to a new report from the Department of Commerce, Red states lead the US in terms of economic growth. Specifically, South Dakota, Texas, and Utah are the frontrunners as the country attempts to recover from the pandemic. The findings come from 2020 fourth-quarter gross domestic product (GDP) data and February 2021 unemployment rates data.
All 50 states and the District of Columbia reported increases in real GDP in the fourth quarter of 2020. Meanwhile, real GDP for the US as a whole climbed to 4.3%. State increases range from a high of more than double growth in South Dakota (9.9%) to a low of 1.2% in the District of Columbia.
Red States Lead Economic Growth
South Dakota led all 50 states with a quarter-over-quarter growth rate of 9.9%. Next is Texas (7.5%), and rounding out third is Utah (7.1%). Real GDP for the entire US increased at an annual rate of 4.3%. The percent change in real GDP in the fourth quarter ranged from 9.9% in South Dakota to 1.2% in the District of Columbia. Notably, the top three states belong to Republication stewardship. Apart from a Republican Governor, their state legislatures feature Republican majorities. Specifically, the GOP dominates both the state senate and the state assembly.
Out of the top ten states, only Connecticut (fourth at 7%) and Delaware (tied at eighth with 5.8%) were Democrats. The remaining states are all Republican territory. This includes Tennessee (fifth at 6.7%), Iowa and Nebraska (tied at sixth at 6.3%), Alaska (tied with Delaware at 5.8%). Missouri rounds out the top ten with 5.6%.
The GDP growth also coincided with lower unemployment rates. According to the US Bureau of Labor Statistics, jobless rates registered lower numbers in 23 states and the District of Columbia during February. Meanwhile, unemployment went up in four states and stayed roughly the same in 23 states/ with the national unemployment rate remaining at 6.2%.
The national jobless rate fell to 6.2%, which is lower compared to 8.4% in August from 10.2% in July. The top ten growth states also featured lower unemployment. South Dakota and Utah boast the lowest jobless rates at 2.9% and 3%. In contrast, Democrat states Hawaii and California hold the highest unemployment rates at 9.2% and 9% respectively.
GOP States Celebrate
Texas Gov. Greg Abbott celebrated his state’s accomplishment. “The Texas economy expanded at a rapid pace of 7.5% in the last quarter of 2020. That means more jobs & more prosperity for Texans. Only one state – and no large state – had better economic growth than Texas. The Texas economy is fire,” he tweeted.
Meanwhile, Iowa Republican Governor Kim Reynolds pointed to Iowa’s growth of 6.3%. She tweeted that Iowa is “the #1 state for an opportunity,” with its GDP growth rate higher than the national average. In addition, Reynolds happily proclaimed that their school children already went back to school since August.
Prepare for the Second Quarter
Last year’s fourth-quarter performance set the stage for a bounceback year in 2021. Economists see a stellar performance for the whole of 2021. The New York Fed’s GDP Nowcast model sees a 6.1% total growth rate for the first quarter of 2021. However, the model also predicts a serious drop by the second quarter to 0.7% growth. The forecast for the entire year is at 6% growth or higher.
Fed analysts attribute the rapid decline to many factors. They include “negative surprises from personal consumption expenditures, manufacturers’ shipments of durable goods, and housing data” as contributing factors for the forecasted decrease.
Watch the Bloomberg Quick Take video reporting that the US is set for strongest GDP growth since 1984:
Why do you think that red states lead the way in economic recovery compared to Blue states? Do you see any reasons why GOP states seem to fare better compared to Democrat-controlled ones? Share with us your opinion by leaving your thoughts in the comment section below.