States of Economic Comparison: Texas is booming, but Illinois still lags and California bears watching

WSJ editorial. Excerpts:

"The Bureau of Economic Analysis (BEA) this week published state personal income data for the second quarter and revisions for the past three years"

"The BEA revised personal income growth upward in most states, especially in the West and Midwest. Incomes were revised up 4.2% in Colorado and Washington, 3.9% in Utah and 3.1% in Idaho.

One not so surprising exception is Illinois where growth was revised down 1.2%. Its neighbors Indiana (1.5%), Michigan (2.5%) and Wisconsin (2.6%) experienced modest upward revisions. Illinois incomes have grown faster over the last year (3.7%) than during the late Obama years amid an uptick in manufacturing, but the state still lags in the Great Lakes region.

Manufacturing earnings in Illinois have increased 4% over the last four quarters, but workers and businesses have been fleeing. Last year 80% of Illinois cities lost population, according to the Illinois Policy Institute. Swelling worker pension obligations are driving up property taxes, and some towns are imposing special fees to pay for public-safety pensions."

"Farm states have lagged the rest of the country in income growth, and one culprit is tariffs by China, Europe, Mexico and Canada in retaliation for President Trump’s steel and aluminum tariffs. Dairy states were squeezed the most. Farm earnings last year declined 18% in Florida, 32% in Wisconsin and 35% in Pennsylvania, though overall incomes in these states still grew faster than in New York and Illinois.

"Oil and natural gas drilling has invigorated several state economies. Drillers especially in shale-rich formations like the Bakken and Permian have taken advantage of OPEC production cuts by lifting their output as oil prices have remained flat. U.S. crude output climbed to 12 million barrels per day in June from 10.6 million a year before.

Total wages and salaries for mining workers (which includes oil and gas) have increased 12% in North Dakota and Pennsylvania, 18% in Texas and 20% in Alaska over the past four quarters. Producers have been raising pay to compete for workers in a tight labor market. The average oil and gas worker earns $109,000, according to the Bureau of Labor Statistics."

"Texas has especially benefited from the shale resurgence, but its economy has become more diversified since the oil boom-and-bust of the 1980s. During the second quarter, Lone Star State incomes grew 7.5%—the most in the country—and professional services (1.12%) and finance and insurance (0.91%) contributed more than mining (0.88%).

Low taxes and a lower cost of living along with a generally business-friendly climate have helped Texas attract companies and workers from other states. Apple is building a $1 billion campus and its new Mac Pro factory in Austin. McKesson is moving its headquarters from San Francisco to Dallas.

During the early Obama years California ranked among the fastest growing states as its housing market recovered and tech startups expanded in the Bay Area. But entrepreneurs are increasingly choosing low-tax climes with less expensive housing. Over the last year, information industry earnings rose a mere 2% in California compared to 19% in Washington, 12% in Oregon and 10% in Arizona.

Democrats portray California as a paragon of progressive governance but its job growth has flagged of late. The Bureau of Labor Statistics reported this week that employment over the last 12 months increased 1.8% in California, 2.4% in Texas, 2.5% in Arizona, 2.6% in Washington, 2.8% in Utah, and 3% in Nevada."