America’s 10 Worst State Economies in 2024

As states grapple with varied economic outcomes in 2024, many are still balancing on the edge of recovery. The International Monetary Fund recently increased its U.S. GDP growth forecast from 2.1% to 2.7%.¹

This promising sign comes after a challenging few years, yet some states are still struggling economically. Here are the ten states experiencing the most significant economic hurdles.

10. Vermont

Sluggish Growth and Pension Woes: Vermont’s economy has been hindered by sluggish growth and significant pension obligations. The state’s cumulative GDP growth from 2012 to 2022 was a modest 38.90%. Vermont’s struggle to attract and retain a younger workforce has contributed to its lackluster economic performance.^(ref)

Aging Population and Limited Opportunities: Despite efforts to address these challenges, Vermont continues to face an uphill battle. The state’s aging population and limited job opportunities have led to a net domestic migration loss of 33,755 residents between 2013 and 2022. Policymakers are working to create incentives for businesses and young professionals, but progress has been slow.

9. Illinois

Fiscal Challenges and Pension Strain: Illinois has made strides in improving its credit rating, but fiscal challenges persist. The state has the lowest pension funding ratio in the country, putting a strain on its budget. Illinois’ cumulative GDP growth from 2012 to 2022 was 42.25%.

Electric Vehicle Boom Amidst Uncertainty: The state’s economy has shown some bright spots, particularly in the electric vehicle industry. Companies like Rivian have brought manufacturing jobs to Illinois, strengthening demand in sectors such as construction and hospitality. However, the state’s high tax rates and uncertain regulatory environment have made it difficult to attract and retain businesses in other industries.

8. Maine

Flattening Revenues and Credit Concerns: Maine’s economy has been impacted by concerns about flattening revenues, which have affected the state’s credit rating. The state’s labor force participation rate of 60.9% in 2024 indicates room for improvement in engaging its workforce.^(ref)

Healthcare and Tourism Growth: On a positive note, Maine has seen growth in industries such as healthcare and tourism. The state’s aging population has increased demand for healthcare services, while its natural beauty continues to draw visitors. However, limited housing inventory and rising costs have made it challenging for workers to find affordable homes, hindering economic growth.

7. Rhode Island

Pension Debates and Budget Pressures: Rhode Island’s ongoing pension issues have led to debates about restoring benefit cuts. The state’s pension funding ratio is among the lowest in the country, creating budget pressures. Rhode Island’s cumulative GDP growth from 2012 to 2022 was 38.42%.

Attracting Tech and Life Sciences: The state has taken steps to improve its business climate, such as offering tax incentives for companies that create jobs. These efforts have attracted some businesses, particularly in the technology and life sciences sectors. However, Rhode Island’s small size and limited resources make it difficult to compete with larger states for major economic development projects.

6. Kentucky

Housing Market Slowdown and Economic Impact: Kentucky’s housing market slowdown has influenced its economic performance. The state’s cumulative GDP growth from 2012 to 2022 was 38.42%. Kentucky’s labor force participation rate of 59.3% in 2024 is also below the national average.

Diversifying Beyond Coal: The state has made efforts to diversify its economy, particularly in the automotive and aerospace industries. Companies like Ford and Toyota have expanded their operations in Kentucky, creating jobs and spurring growth. However, the state’s reliance on coal has led to economic challenges as the industry declines.

5. Kansas

Limited Housing and Tight Labor Market: Kansas faces challenges due to limited housing inventory and a tight labor market. The state’s unemployment rate of 2.8% in 2024 is lower than the national average, indicating a strong job market. However, this has led to difficulties for businesses trying to fill open positions.

Agriculture and Manufacturing Strengths: The state’s economy has benefited from growth in the agriculture and manufacturing sectors. Kansas is a major producer of wheat, corn, and soybeans, and the state’s manufacturing industry has seen expansion in recent years. However, the state’s tax policies and budget challenges have created uncertainty for businesses and residents.

4. Louisiana

Underwater Homes and Job Growth Struggles: Louisiana’s high rate of underwater home loans and low job growth have contributed to its economic struggles. The state’s labor force participation rate of 58.3% in 2024 is among the lowest in the nation. Louisiana’s economy has been heavily dependent on the energy industry, which has experienced volatility in recent years.

Diversifying into Tech and Healthcare: The state has taken steps to diversify its economy, particularly in the technology and healthcare sectors. New Orleans has emerged as a hub for startups and entrepreneurship, attracting young professionals to the city. However, Louisiana’s infrastructure challenges and vulnerability to natural disasters have made it difficult to sustain long-term economic growth.

3. New Hampshire

Labor Shortages and Economic Growth: New Hampshire’s labor shortage has affected its economic growth. The state’s unemployment rate of 2.4% in 2024 is one of the lowest in the country, but this has created challenges for businesses trying to find workers. New Hampshire’s economy has traditionally relied on industries such as manufacturing and tourism.

Attracting Tech and Biotech: The state has made efforts to attract new businesses, particularly in the technology and biotech sectors. New Hampshire’s proximity to Boston and its high quality of life have made it an attractive location for companies and workers. However, the state’s aging population and limited housing options have made it difficult to retain young professionals.

2. Hawaii

Recovering from Setbacks: Hawaii’s economy is recovering from recent setbacks, including wildfires and tourism declines. The state’s heavy reliance on tourism has made it vulnerable to external shocks. Hawaii’s cumulative GDP growth from 2012 to 2022 was 36.59%.

Renewable Energy and Local Agriculture: The state has taken steps to diversify its economy, particularly in the renewable energy and agriculture sectors. Hawaii has set ambitious goals for renewable energy adoption and has invested in local food production to reduce its reliance on imports. However, the high cost of living and limited land availability have made it challenging to attract new businesses and residents.

1. Mississippi

Low Job Growth and Labor Force Participation: Mississippi’s low job growth and labor force participation have contributed to its economic challenges. The state’s labor force participation rate of 55.9% in 2024 is the lowest in the nation. Mississippi’s economy has historically relied on agriculture and manufacturing, but these sectors have faced declines in recent years.

Attracting Automotive and Aerospace Industries: The state has made efforts to attract new industries, such as automotive manufacturing and aerospace. Nissan and Toyota have established operations in Mississippi, creating jobs and spurring economic growth. However, the state’s infrastructure challenges and educational disparities have made it difficult to sustain long-term economic development.

The economic landscape of the United States in 2024 is mixed, with some states thriving while others facing significant challenges. As policymakers and business leaders work to address these challenges, it will be crucial to develop tailored strategies that capitalize on each state’s unique strengths while addressing its weaknesses.

Source:

1. International Monetary Fund