Kiplinger

Kiplinger’s Economic Outlook for All 50 States, 2020

Low jobless rates and rising incomes are helping to fatten state coffers across the U.S. Revenue from sales, personal and corporate taxes is on the rise --the best growth since before the Great Recession.

States can expect healthy tax revenues for at least the next several quarters as low unemployment continues, incomes slowly rise, inflation increases modestly and higher energy prices generate more income for states with severance taxes.

But the outlook for individual states is varied, with several regions facing big challenges. The trade war with China is battering the agriculture industry in the Midwest and the prairie states and crimping activity at Southern ports. Manufacturing is slowing down because slowing global growth is hurting exports. New England's economy is slowing as employers struggle to find the workers they need.

Although construction spending is up markedly this year, most states won't boost spending much. As they prepare for 2020, governors and legislatures are eyeing modest spending increases --perhaps reversing cuts made after the Great Recession. They also intend to sock away some of the newfound revenues in rainy-day funds. (See our list of States Most Unprepared for the Next Recession.)

Read on for Kiplinger's exclusive economic outlook --including projected job-growth rates-- for every state, listed alphabetically.

Alabama

Getty Images

Population: 4,888,000

Unemployment rate: 3.1%

2019 job growth: 1.8% (37,000 new jobs)

2020 job growth: 1.2% (25,000 new jobs)

Alabama's job growth has begun to pick up this year. 2019 job growth of 1.8% would be its fastest growth since 2005. Tuscaloosa, Decatur, and the east side of Mobile Bay are showing the strongest job growth at the moment, all around 3%. Its August unemployment rate of 3.1% is a record for the state.

Construction is an especially strong growth area. Alabama has a growing automotive industry, with three vehicle manufacturing plants, an engine plant, and Toyota/Mazda building a new vehicle plant in Huntsville by 2021 that should amount to 4,000 jobs. Alabama's reliance on the auto industry could hurt it a bit if the industry slows down later this year.

Amazon will create 1,500 jobs at a fulfillment center in Birmingham next year. Blue Origin will create 300 jobs in Huntsville at a rocket engine plant, also next year. Airbus is adding 430 employees to a new assembly line in Mobile.

Alaska

Getty Images

Population: 737,000

Unemployment rate: 6.2%

2019 job growth: 1.1% (3,600)

2020 job growth: 0.3% (1,000)

Growth in Alaska has picked up along with oil prices. Expect job growth of 1.1% in 2019 after three straight years of declines. However, this growth is narrow, being limited for the moment to the energy industry, construction, and food services. The metro areas have yet to see much benefit, and the state's population is still declining as 11,000 residents moved south last year. Alaska's initial unemployment claims are low, and its August unemployment rate of 6.2% is the lowest it's been since 2007, but the rate remains the highest by far of any of the states.

Oil development continues on Alaska's North Slope. ConocoPhillips has three significant projects that are ongoing. Greater Mooses Tooth 1 (GMT1) started operating in October 2018, but is only at 25% capacity so far. Greater Mooses Tooth 2 (GMT2) is larger, and under construction with 700 workers, and is predicted to start producing in 2021. Willow is the largest of them all and will employ thousands in its construction. It will start producing in 2024. All three projects together have the capacity for 165,000 barrels of oil per day.

Arizona

Getty Images

Population: 7,172,000

Unemployment rate: 5.0%

2019 job growth: 2.5% (72,300)

2020 job growth: 1.7% (50,400)

Arizona is noted for its growing labor force as well as its relative affordability and business-friendly regulatory environment. Hiring will increase by 2.5% this year, just a tad below 2018's 2.7% rise, and well distributed across sectors from good-paying blue-collar work in construction, manufacturing and trucking businesses to sophisticated R&D expansions. The strongest growth will be in the Phoenix area.

The Mayo Clinic is investing $650 million for a major expansion of its operations in Phoenix, while Caterpillar's Surface Mining & Technology Division is building a new headquarters that will bring about 1,000 engineers, product developers and support staff to Tucson. Rosemont Mine wants to establish a $2 billion copper mine in the Tucson area that will generate about 2,500 construction and support jobs, though the project has been blocked for now by a federal judge.

The service sector is expanding too, partly because of the growing number of retirees choosing the state for its combination of a warm and stable climate, affordability and well-developed healthcare system. It's a longstanding magnet for tourism with attractions from the Grand Canyon to the scenic red rock country around Sedona, Monument Valley and the Hoover Dam. Large financial firms including Voya, Allstate and Freedom Financial are following the growth in population by relocating or expanding in Arizona. That route has been made easier by the state government's initiative in enacting a "fintech sandbox" that encourages companies to try new business methods without being unduly burdened by regulation.

Arkansas

Getty Images

Population: 3,014,000

Unemployment rate:3.4%

2019 job growth: 1.1% (14,300)

2020 job growth: 0.6% (7,700)

The economy is still growing and adding population in the northern part of Arkansas and in the central region of the state where the urban population is concentrated. The strongest growth will be in the northwest, as usual. But other more rural parts of the state are losing population, which shows up in declining labor force participation rates and complicates difficulties in attracting industry. Arkansas will add about 1.1% to its workforce overall this year, matching last year's increase, but longer-term prospects are weakening as regional disparities grow.

The state's signature firm, Bentonville-based Walmart, is investing $31 million to upgrade five of its supercenters, and Coca-Cola Bottling Co. is spending $33 million on a 200,000-square-foot expansion in West Memphis that will bring about 60 jobs to it. There is substantial growth in Arkansas' leisure and hospitality industries as well, aided by a planned $250 million expansion by Southland Gaming and Racing in the eastern part of the state. It will include a casino and hotel that will create 400 new jobs, and upwards of 1,500 during the construction phase.

California

Getty Images

Population: 39,557,000

Unemployment rate: 4.11%

2019 job growth: 1.8% (311,400)

2020 job growth: 0.9% (158,100)

California growth downshifted late last year as the trade war with China heated up. So far this year, trade with Asia through the Port of Long Beach has fallen 5%. Continuing tensions will likely keep job growth subdued at 1.7% in 2019, down from 2.0% in 2018. The slowdown in job growth has been most pronounced in Southern California, especially in the Inland Empire, which is home to a lot of warehousing and logistics. Growth in the east Bay Area appears to be untouched, as the tech economy juggernaut continues on its merry way.

It's not just the trade war that is slowing California growth. The population growth rate has been cut in half over the past three years as the number of Californians moving to other states has picked up. In large part, this is a result of California's high housing prices and the lack of enough affordable construction. Governor Newsom has threatened to withhold funding from localities that fail to meet zoning and construction goals on housing.

You’re reading a preview, subscribe to read more.

More from Kiplinger

Kiplinger4 min readAmerican Government
Where the Midterm Election Races Stand Today
With the congressional midterm elections only weeks away, here’s how we think things will shake out. In early spring, Republicans appeared well on their way to steamroll through the midterms and win back control of the House and Senate. Democrats wer
Kiplinger3 min read
Cryptocurrency: Stay In? Get Out? How to Decide?
Warren Buffett is famous for saying “Only when the tide goes out do you discover who's been swimming naked.” If you invested in cybercoins, the news has not been good lately. Are you wearing your bathing suit?  What to do?  Is time to take your profi
Kiplinger5 min read
What You Need to Know About Life Insurance Settlements
Your life insurance monthly premium can start looking less and less appealing once you’ve retired. It’s a scenario Dan Simon, a retirement planning adviser with Daniel A. White & Associates in Middletown, Del., has seen quite often, even with his own

Related Books & Audiobooks