States Perform Differently as Inflation and Interest Rates Rise
While the economy in the United States continues to grow, the effects from rising inflation and elevated interest rates are showing up in various degrees across the nation’s 50 states and the District of Columbia.
States economies depend on some industries more than others and are consequentially performing differently. High-growth states, such as those across the Sunbelt, tend to be more sensitive to the rise in construction costs due to the amount of housing and infrastructure needed to support growth. In states with a large concentration of tech firms, such as California, Seattle and New York, higher interest rates have made tech firms more sensitive to profitability and affected payrolls. States dependent on energy, including Texas, Louisiana, Alaska and North Dakota are continuously affected by energy prices, which have been rising recently. Meanwhile, tourism remains below pre-pandemic levels in terms of international and group travelers, affecting Hawaii and Florida more than others.
This week, we examine how a series of economic indicators have fared at the state level across the nation.
Nonfarm Employment: A handful of states in the West, including Alaska, Nevada, and Montana, have led job growth during the past three months, for some marking a reversal of job gains over the 12-month period. The three states, as well as Florida, have benefited from increased tourism, as a large proportion of job gains were in the leisure and hospitality sector. Some of these states have also benefited from the long-term tailwind in population growth.