J Brauer | © Stone Garden Economics
Figure 1: Total real growth of gross state product, 2007-2010. Source: Federal Reserve Bank, St. Louis, FRED II database. Note: 2007=100.
Three years ago, I penned a column on the state of the states, a reflection on the G.W. Bush administration’s economic record. Data from 2000-2007 for real per capita income by U.S. state and average annual real per capital growth in gross state product (GSP) demonstrated that the Bush years had not been good economic years for the 50 states.
I thought I should repeat the exercise with data from 2007 to 2010 (the latest available) so as to gauge the effects of the 2008/9 economic crisis on the 50 states and on Washington, D.C. Figure 1 shows the result.
Setting 2007 equal to an index of 100, only five states have seen economic growth per person. North Dakota grew by 14.4 percent, which is a rather decent economic performance of about 4.8 percent per year (2007/8; 2008/9, and 2009/10). Wyoming and South Dakota follow, then West Virginia, then Alaska with about 1.5 percent per year.
But from Louisiana to New York—9 states and the District of Columbia (Washington, D.C.)—growth was zero. The remaining 36 states had negative growth. Nevada’s index of 86.5 implies a per capita gross state product loss on the order of 13.5 percent! My own home state of Georgia declined by eight percentage points. (Worse, its economy declined by minus 0.6 percentage points over the entire 1997 to 2010 period. In inflation-adjusted, per capita terms that’s 14 years of nothing.)
While my own view is that the blame for this dismal 2007-2010 record is still to be pinned on the Bush administration—market hubris, lack of proper regulatory monitoring and supervision of the financial sector, and eventual financial and economic collapse occurred on its watch—the Obama administration has dithered too much to pull things around. Once the 2011 numbers for the states are released later this year, the economic record will appear somewhat improved. In addition, 2012 thus far seems to suggest continuing improvement in economic terms: Businesses are investing and hiring once again, banks are getting back to loaning funds, and consumer are starting to loosen their purse strings as well. Thus, Obama may well squeeze out another election victory come November, but it is easy to see from the state by state record why folks on Main Street, Anytown, USA, are tired of stagnation and recession.
Whoever will be president in 2013, the general economic malaise is likely to continue throughout the remainder of that presidential term. There is simply too much that needs to be rebuilt. There will be growth, I believe, but not anything overly dramatic such as the 1960s or 1990s.
J Brauer is Professor of Economics, James M. Hull College of Business, Augusta State University, Augusta, Georgia, USA.
