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The United States is the world’s largest economy, and every state and locality plays a part in keeping that massive engine running. The most populous states also contribute the most to the gross domestic product, but a new study from WalletHub looks behind the scenes to gauge additional indicators of performance and strength.
The analysis, released Monday, compared all 50 states and the District of Columbia based on economic activity, economic health and innovation potential using 28 metrics, including GDP change, unemployment rate and fiscal health, to determine which states are contributing the most to moving the U.S. economy forward.
According to WalletHub, these states have the strongest economies in the country right now:
1. Washington
An aerial view of Seattle, Washington, the state named the strongest economy in the U.S. for 2024 by WalletHub. (/iStock)
According to the survey results, Washington state had the highest ranking for economic activity, topping the list with “extremely high” industrial research and development investment per capita.
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“Washington state took the top spot as the most powerful economy state due to its significant investments in research and development, concentration of high-tech jobs, and strong startup ecosystem,” WalletHub analyst Cassandra Happe told FOX Business. “These factors make Washington state a current leader and future powerhouse of economic growth and innovation.”
2. Utah
Utah’s economy was ranked No. 2 because of its excellent economic situation and labor market, Happe said.
Beehive State The cost-of-living adjusted annual median household income is about $84,000, the second highest in the country, and the state’s median income increased 6.8% between 2022 and 2023.
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Utah has the nation’s lowest unemployment rate at 2.8% and one of the second-fastest growing private sector labor forces.
3. Massachusetts
A view of the Boston skyline. A new study from WalletHub ranks Massachusetts as the third strongest state economy in the country. (Ron Dahlquist/Design Pix Editorial/Universal Images Group/via Getty Images)
Massachusetts is rated the third best state economy, and Happe said that’s driven by significant research and development investments and a strong presence of high-tech industries and STEM jobs.
“The Bay Coast state excels at innovation, has the highest percentage of high-tech jobs and has some of the highest patents per capita,” Happe said. “These attributes position Massachusetts to play a key role in driving the nation’s economy forward.”
4. Texas
Texas, ranked fourth, has low innovation potential, but benefits from a large and diverse economy with strong GDP growth and robust export activity, according to the analysis.
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Lone Star State Its Economic Activity Index score was the second highest on the ranking, and it placed seventh in economic health, but it ranked 24th in innovation potential.
5. California
A marine crane stands at the Port of Oakland in front of the San Francisco skyline on October 24, 2022. (Justin Sullivan/Getty Images)
California ranked among the top five state economies, reflecting its “role as a major economic powerhouse with a large number of high-tech companies and significant research and development investments,” Happe said.
But the state faces challenges in its economic health due to the high cost of living and income inequality, she said.
US states with the worst economies
Meanwhile, Louisiana, ranked 47th, suffers from high unemployment, low median household income and minimal investment in research and development, hindering its economic growth prospects, Happe said.
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Meanwhile, Arkansas, ranked 48th, has high poverty rates and limited high-tech job opportunities, impacting both the health of its economy and its potential for innovation.
West Virginia ranked 49th, which the study said was due to a shrinking workforce, slow GDP growth and the nation’s lowest innovation potential.
Charleston is the capital and largest city of West Virginia. (/iStock)
Hawaii ranked 50th and Mississippi was last at 51st. Happe said the two states are among those facing “significant economic challenges.”
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Hawaii, which relies heavily on tourism, is struggling with high state debt and lack of growth in key economic sectors, while Mississippi’s struggles stem from low median household income, high poverty rates and little entrepreneurial activity.
