As economists ponder what’s behind the slowest U.S. economic recovery since World War II, Bloomberg reports a new explanation is taking shape: Several states have suffered severe downturns of late that hampered growth nationwide.
Fresh research by Federal Reserve Bank of Kansas Senior Economist Jason Brown shows Kansas, New Mexico, Oklahoma and Wyoming experienced recessions last year, while others saw milder contractions, including Louisiana, Maine, Montana, North Dakota, and West Virginia.
Brown says a ripple effect from the decline in commodity prices hit the oil- and coal-dependent states particularly hard, leading to economic contractions as local governments such as Oklahoma cut back on spending.
The findings also underscore the growing sense of economic inequality in the nation, as data compiled by Bloomberg show states like Washington and Massachusetts grew well above the national average last year. They saw employment climb as joblessness expanded in Louisiana, Oklahoma, Wyoming, North Dakota and Alaska.
In January, S&P Global Ratings said that six of eight major oil-producing states fell into recession in 2015 and 2016, including New Mexico, Oklahoma and Wyoming. The report also shows Alaska, Louisiana and North Dakota entered recession, and that North Dakota went from the fastest growing state in 2014 to the worst performer in 2015.
The states that were in recession represent 4.4% of U.S. GDP, meaning their downturns “certainly” affected national growth, Brown says.
