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Animation: The 20 Largest State Economies by GDP in the Last 50 Years

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Animation: The 20 Largest State Economies by GDP

When it comes to understanding the size and scope of the $18 trillion U.S. economy, it’s sometimes easier to consider that it’s the sum of many parts.

Many states already have economies that are comparable to some of the world’s largest countries, giving you a sense of what they might be combined.

And while every state plays a role in the bigger picture, some states such as New York and California have an outsized impact on fueling the country’s overall economic engine.

The State of State Economies

Today’s animation comes to us from SavingSpot, and it covers the size of state economies by GDP going back all the way to 1963.

The video uses inflation-adjusted data from the U.S. Bureau of Economic Analysis, showing how the ranking of top state economies has changed over time as different states have taken advantage of economic booms.

Let’s dive into the data to see how things have changed.

Going Back in Time

The earliest data in the animation comes from 1963, when New York led the pack with a $70.6 billion economy in inflation-adjusted terms.

State Economies by GDP, Inflation-Adjusted Chained $USD (1963)

RankState EconomyGDP, Billions of USD (1963)Share of U.S. Economy
#1New York$70.611.6%
#2California$67.811.2%
#3Illinois$39.56.5%
#4Pennsylvania$34.55.7%
#5Ohio$33.35.5%
#6Michigan$30.55.0%
#7Texas$29.34.8%
#8New Jersey$23.43.9%
#9Massachusetts$17.42.9%
#10Indiana$15.62.6%
#11Florida$14.72.4%
#12Missouri$13.62.2%
#13Wisconsin$12.72.1%
#14North Carolina$12.62.1%
#15Virginia$11.71.9%
#16Washington$11.21.8%
#17Minnesota$10.71.8%
#18Georgia$10.31.7%
#19Maryland$10.31.7%
#20Connecticut$9.91.6%
#21Louisiana$9.71.6%
#22Tennessee$9.11.5%
#23Kentucky$8.41.4%
#24Iowa$7.91.3%
#25Alabama$7.31.2%
#26Oklahoma$6.21.0%
#27Kansas$6.11.0%
#28Colorado$5.91.0%
#29Oregon$5.70.9%
#30District of Columbia$5.10.8%
#31South Carolina$5.10.8%
#32West Virginia$4.60.8%
#33Arizona$4.50.7%
#34Mississippi$4.40.7%
#35Nebraska$4.30.7%
#36Arkansas$3.80.6%
#37New Mexico$3.00.5%
#38Utah$3.00.5%
#39Rhode Island$2.70.4%
#40Maine$2.40.4%
#41Hawaii$2.40.4%
#42Montana$2.00.3%
#43Delaware$1.90.3%
#44Idaho$1.80.3%
#45Nevada$1.80.3%
#46New Hampshire$1.70.3%
#47North Dakota$1.60.3%
#48South Dakota$1.60.3%
#49Wyoming$1.40.2%
#50Alaska$1.10.2%
#51Vermont$1.00.2%
🇺🇸 United States (Total)$607.0100.0%

California ($67.8 billion), Illinois ($39.5 billion), Pennsylvania ($34.5 billion) and Ohio ($33.3 billion) round out the top five, and together they added up to 40.5% of the national GDP.

The Largest State Economies by GDP Today

Looking at the most recent data from 2017, you can see the ranking changes significantly:

State Economies by GDP, Inflation-Adjusted Chained $USD (2017)

RankState EconomyGDP, Billions of USD (2017)Share of U.S. Economy
#1California$2,57614.3%
#2Texas$1,6169.0%
#3New York$1,4147.8%
#4Florida$8834.9%
#5Illinois$7454.1%
#6Pennsylvania$7013.9%
#7Ohio$5913.3%
#8New Jersey$5473.0%
#9Georgia$5112.8%
#10Michigan$4592.5%
#11North Carolina$4842.7%
#12Virginia$4642.6%
#13Massachusetts$4902.7%
#14Washington$4812.7%
#15Maryland$3632.0%
#16Indiana$3211.8%
#17Arizona$2971.6%
#18Minnesota$3221.8%
#19Tennessee$3151.7%
#20Wisconsin$2921.6%
#21Colorado$3231.8%
#22Missouri$2761.5%
#23Connecticut$2391.3%
#24Louisiana$2271.3%
#25Alabama$1931.1%
#26South Carolina$1991.1%
#27Kentucky$1851.0%
#28Oregon$2081.2%
#29Oklahoma$1911.1%
#30Iowa$1690.9%
#31Nevada$1430.8%
#32Kansas$1480.8%
#33Utah$1500.8%
#34Arkansas$1140.6%
#35District of Columbia$1220.7%
#36Mississippi$1000.6%
#37Nebraska$1110.6%
#38New Mexico$910.5%
#39Hawaii$790.4%
#40West Virginia$710.4%
#41New Hampshire$740.4%
#42Delaware$640.4%
#43Idaho$670.4%
#44Maine$560.3%
#45Rhode Island$530.3%
#46Alaska$520.3%
#47Montana$440.2%
#48Wyoming$390.2%
#49South Dakota$450.3%
#50North Dakota$510.3%
#51Vermont$300.2%
🇺🇸 United States (Total)$18,051100%

California is the largest economy today – it has a state GDP of $2.6 trillion, which is comparable to the United Kingdom.

Meanwhile, Florida and Georgia are two states that did not crack the top 10 back in the 1960s, while Texas jumped up to become the second largest state economy. It’s actually not a coincidence that all of these states are in the southern half of the country, as air conditioning has played a surprisingly pivotal role in shaping modern America.

In fact, the share of the nation’s population living in the Sunbelt rose from 28% in 1950 to 40% in 2000, and this increase in population has coincided with economic growth in many of the states that used to be a sweaty mess.

A Final Look

Here is a final animated version of the top 10 largest states by GDP, also provided by SavingSpot:

Animation: The 20 Largest State Economies by GDP in the Last 50 Years

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Markets

A Visual Guide to Bond Market Dynamics

What factors impact the bond market? Here’s how current interest rates, bond returns, and market volatility compare in a historical context.

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Bond Market
The following content is sponsored by New York Life Investments

A Visual Guide to Bond Market Dynamics

Bond markets have been rattled given recent events in the banking industry.

The good news is that the Federal Reserve, U.S. Treasury, and Federal Deposit Insurance Corporation are taking action to restore confidence and take the appropriate measures to help provide stability in the market.

With this in mind, the above infographic from New York Life Investments looks at the factors that impact bonds, how different types of bonds have historically performed across market environments, and the current bond market volatility in a broader context.

Bond Market Returns

Bonds had a historic year in 2022, posting one of the worst returns ever recorded.

As interest rates rose at the fastest pace in 40 years, it pushed bond prices lower due to their inverse relationship. In a rare year, bonds dropped 13%.

YearBloomberg U.S. Aggregate Bond
Index Total Return
2022-13.0%
2021-1.5%
20208.7%
20197.5%
20180.0%
20173.5%
20162.7%
20150.6%
20146.0%
2013-2.0%
20124.2%
20117.8%
20106.5%
20095.9%
20085.2%
20077.0%
20064.3%
20052.4%
20044.3%
20034.1%
200210.3%
20018.4%
20018.4%
200011.6%
1999-0.8%
19988.7%
19979.7%
19963.6%
199518.5%
1994-2.9%
19939.8%
19927.4%
199116.0%
19909.0%
198914.5%
19887.9%
19872.8%
198615.3%
198522.1%
198415.2%
19838.4%
198232.6%
19816.3%
19802.7%
19791.9%
19781.4%
19773.0%
197615.6%
20018.4%
200011.6%
1999-0.8%
19988.7%
19979.7%
19963.6%
199518.5%
1994-2.9%
19939.8%
19927.4%
199116.0%
19909.0%
198914.5%
19887.9%
19872.8%
198615.3%
198522.1%
198415.2%
19838.4%
198232.6%
19816.3%
19802.7%
19791.9%
19781.4%
19773.0%
197615.6%
19939.8%
19927.4%
199116.0%
19909.0%
198914.5%
19887.9%
19872.8%
198615.3%
198522.1%
198415.2%
19838.4%
198232.6%
19816.3%
19802.7%
19791.9%
19781.4%
19773.0%
197615.6%

Source: FactSet, 01/02/2023.

Bond prices are only one part of a bond’s total return—the other looks at the income a bond provides. As interest rates have increased in the last year, it has driven higher bond yields in 2023.

TypeYield (Mar 21, 2022)Yield (Mar 20, 2023)
Treasuries (2-Year)2.1%3.9%
Treasuries (5-Year)2.3%3.6%
TIPS (10-Year Breakeven)2.9%2.1%
Corporate Bonds3.5%4.5%

Source: YCharts, 3/20/2023.

With this recent performance in mind, let’s look at some other key factors that impact the bond market.

Factors Impacting Bond Markets

Interest rates play a central role in bond market dynamics. This is because they affect a bond’s price. When rates are rising, existing bonds with lower rates are less valuable and prices decline. When rates are dropping, existing bonds with higher rates are more valuable and their prices rise.

In March, the Federal Reserve raised rates 25 basis points to fall within the 4.75%-5.00% range, a level not seen since September 2007. Here are projections for where the federal funds rate is headed in 2023:

  • Federal Reserve Projection*: 5.1%
  • Economist Projections**: 5.3%

*Based on median estimates in the March summary of quarterly economic projections.**Projections based on March 10-15 Bloomberg economist survey.

Together, interest rates and the macroenvironment can have a positive or negative effect on bonds.

Positive

Here are three variables that may affect bond prices in a positive direction:

  • Lower Inflation: Reduces likelihood of interest rate hikes.
  • Lower Interest Rates: When rates are falling, bond prices are typically higher.
  • Recession: Can prompt a cut in interest rates, boosting bond prices.

Negative

On the other hand, here are variables that may negatively impact bond prices:

  • Higher Inflation: Can increase the likelihood of the Federal Reserve to raise interest rates.
  • Rising Interest Rates: Interest rate hikes lead bond prices to fall.
  • Weaker Fundamentals: When a bond’s credit risk gets worse, its price can drop. Credit risk indicates the chance of a default, the risk of a bond issuer not making interest payments within a given time period.

Bonds have been impacted by these negative factors since inflation started rising in March 2021.

Fixed Income Opportunities

Below, we show the types of bonds that have had the best performance during rising rates and recessions.

Type Rising Interest Rates (%)Recession (%)Overall Average Return (%)
U.S. Ultrashort4.26.34.2
Municipal Bond3.45.25.6
Fixed Income (Diversified)3.19.06.3
World Bond3.19.76.4
U.S. Short-Term2.88.65.1
U.S. Long-Term2.511.27.7
Mortgage Bond2.211.45.7

Source: Derek Horstmeyer, George Mason University 12/3/2022.

As we can see, U.S. ultrashort bonds performed the best during rising rates. Mortgage bonds outperformed during recessions, averaging 11.4% returns, but with higher volatility. U.S. long-term bonds had 7.7% average returns, the best across all market conditions. In fact, they were also a close second during recessions.

When rates are rising, ultrashort bonds allow investors to capture higher rates when they mature, often with lower historical volatility.

A Closer Look at Bond Market Volatility

While bond market volatility has jumped this year, current dislocations may provide investment opportunities.

Bond dislocations allow investors to buy at lower prices, factoring in that the fundamental quality of the bond remains strong. With this in mind, here are two areas of the bond market that may provide opportunities for investors:

  • Investment-Grade Corporate Bonds: Higher credit quality makes them potentially less vulnerable to increasing interest rates.
  • Intermediate Bonds (2-10 Years): Allow investors to lock in higher rates.

Both types of bonds focus on quality and capturing higher yields when faced with challenging market conditions.

Finding the Upside

Much of the volatility seen in the banking sector was due to banks buying bonds during the pandemic—or even earlier—at a time when interest rates were historically low. Since then, rates have climbed considerably.

Should rates moderate or stop increasing, this may present better market conditions for bonds.

In this way, today’s steep discount in bond markets may present an attractive opportunity for price appreciation. At the same time, investors can potentially lock in strong yields as inflation may subside in the coming years ahead.

Learn more about bond investing strategies with New York Life Investments.

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