After measuring a steady growth rate of 2 percent over the past three years, the Congressional Budget Office (CBO) expects continued national growth in 2013 and 2014 at rates of 1.4 percent and 3.4 percent, respectively. But while the country shows overall gains, growth at the state level varies across several key factors. 

Reasons for the anticipated growth are myriad, and detailed in a recent report from the Urban-Brookings Tax Policy Center’s State Economic Monitor. The report measures changes in employment rates, earnings averages, public sector employment, state tax revenues and housing permits and projects nationally and by state.

The feds are fairing well, according to the report, with the deficit falling from 10.1 percent of the GDP in 2009 to 7 percent in 2012. The CBO projects the rate to drop to 5.3 percent for 2013. Likewise, states “have begun to rebound from the recession as well, with many states exceeding nominal pre-recession expenditure levels in 2013,” according to the report.

While posting positive numbers nationally, the report showed “wide differences in state economic activity.” Below are basic breakdowns of the report’s findings in key areas:

Unemployment rates: 

Lowest (3.2 percent to 5 percent)

 - 4.6 percent

 - 4.6 percent

North Dakota
 - 3.2 percent

South Dakota
 - 4 percent

 - 3.8 percent

 - 5 percent

Iowa - 4.6 percent


Highest (at 8.1 percent to 9.5 percent)

 - 8.6 percent

Nevada - 9.5 percent

Illinois - 9.1 percent

 - 8.3 percent

 - 8.4 percent

 - 8.1 percent

 - 8.3 percent

North Carolina
 - 8.8 percent

Georgia - 8.3 percent

Mississippi - 9.1 percent


Changes in Public Sector Employment:

According to the report “steep declines in state and local government revenue lead to sharp cuts in public employment” during the recession. From Aug. 2008 to Dec. 2012, nonfederal public employment fell 3.4 percent (a loss of 681,000 public-sector jobs). But the public sector is rebounding, with 18 states reporting growth in this area in 2012. The six states with the highest gains in public sector employment (gains of more than 1 percent) are:

Colorado - 1.1 percent

 - 1.6 percent

New Jersey - 1.1 percent

 - 1.2 percent

South Carolina - 1.2 percent

Texas - 1 percent

States’ fiscal outlooks continue to improve, according to the report, with general fund revenues projected to increase in 2014, for the fourth consecutive year. Nominal tax revenues in the first quarter of 2013 were 9.3 percent higher than the previous year, in part due to shifts in capital gains to “lock in lower federal tax rates.” Those states boasting the largest change in state tax revenues were California and North Dakota, both with changes between 20 and 30 percent.

But much of the country continues to struggle. The report notes that 19 states are expected to have general expenditures in fiscal year 2014 below their nominal pre-recession levels.

While the federal government holds a steady growth rate of 2 percent annually since 2010, the report shows “state-level growth has been uneven.” Preliminary data from the Bureau of Economic Analysis shows strong growth – exceeding 4 percent – in North Dakota and Texas in 2012. West Coast states reported growth rates of between 3 and 4 percent, but eight states have reported a growth rate of less than 1 percent. Regionally, New England posted weak numbers.

To read the report, click here.