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Eight State Economies Shrank in 4th Quarter

More than half of states saw GDP growth decline at end of 2015

Pebble Mine
A helicopter lands near a test drilling site for the Pebble Mine in Southwest, Alaska / AP
June 14, 2016

Eight states had negative GDP growth in the fourth quarter of 2015, and Alaska had negative growth for two consecutive quarters putting it in a recession, according to data released Tuesday by the Bureau of Economic Analysis.

Real gross domestic product is the bureau’s most comprehensive measure of U.S. economic activity and is an inflation-adjusted measure of each state’s prices for the goods and services produced for all industries within that state.

There were only three states—including Alaska, North Dakota, and West Virginia—that had negative GDP growth in the third quarter of 2015, which includes data from July, August, and September.

By the fourth quarter of 2015, which includes data from October, November and December, that number grew to eight states: Alaska, Iowa, Kansas, Nebraska, New Mexico, Oklahoma, Montana, and Wyoming.

Four of these states, Alaska, Wyoming, Oklahoma, and New Mexico, had significant declines in their mining sector, which includes oil and gas production. The other four, Kansas, Iowa, Montana, and Nebraska, had significant declines in agricultural output.

"It looks like some of the negative Q4 growth can be explained by the relatively volatile energy and farm sectors," explained Mark Perry, a scholar at the American Enterprise Institute. "The low prices for oil and natural gas last year could have impacted both energy production (which has been declining for oil) and the market price of the energy production as it is calculated for state GDP."

"The farming sector is very cyclical and has been declining in states like Iowa," he added. "In fact, farm income nationally is expected to fall. The USDA released a new forecast this week predicting that U.S. farm income will fall to about $55 billion this year, which would be the lowest level since 2002."

In both quarters, Alaska had negative GDP growth, putting its economy into a recession.

More than half of states in the United States saw their GDP growth decline from the third quarter of 2015 to the fourth quarter.

The states that saw the largest declines from the previous quarter were Oklahoma, Wyoming, New Mexico, and Montana.

"Today’s weak GDP numbers out of the states are yet another sign of a persistently sluggish economy that is leaving many Americans behind," said Alfredo Ortiz, president and CEO of the Job Creators Network.

Published under: Economy