Find Out Which States Fare Better, Worse Economically
Is your state one of the five in a recession?
March 26, 2008 — -- Recession fears have rattled international markets and consumers, and it turns out some states are feeling the economic pinch more than others. But while five states have officially entered a recession, others have bucked the trend and have booming economies.
"Good Morning America" financial contributor Mellody Hobson tells you which states are struggling, which are booming and what it all has to do with the housing market.
Arizona, California, Florida, Michigan and Nevada were already in the midst of a recession at the start of the year, and these five states alone account for 25 percent of the nation's total economic output. Another 15 states — which collectively represent another 25 percent of economic output for the U.S. — are at risk of sliding into a recession, and many of these states are in the Midwest, including Wisconsin, Minnesota, Illinois and Ohio. So, all told, you essentially have nearly half of the U.S. facing tough times.
As you would expect, the housing market plays a big role. During the housing boom, home prices soared in many parts of the country, and homeowners tapped into their home equity to support their expanding lifestyles, pumping more money into their local economies.
The bust of the housing market has had a similar impact — albeit a negative one — on the same local economies. Take, for example, Nevada, California and Florida. These states saw skyrocketing home prices during the housing boom, and in the month of February, they had the highest rates of foreclosure in the country.
Not all the states have as tenuous economic times as Nevada, Florida, California and Michigan. There are areas that are growing. They include Iowa, Kansas, Nebraska, Indiana and North Dakota.
The common link here is agriculture, an industry which has benefited from the rising prices of corn, soybean and wheat. Additionally, those states hit hardest by hurricane Katrina, including Louisiana and Alabama, are also flourishing. Recovery efforts have created jobs, and tax incentives have brought businesses back to these regions.
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