States That Believe in the Recovery (and Those That Do Not)

Americans remained pessimistic about the economy last year. Confidence has improved recently, reaching its highest levels since last spring, but has fallen from -28 in 2010 to -37 in 2011, according to the Gallup Economic Confidence Index. And while all of the individual states remain negative on the economy, some are less pessimistic than others. 24/7 Wall St. reviewed the economies of the states with the most and the least confidence in the economy. North Dakota is the most confident state; West Virginia the least.

Read the States That Believe in the Recovery

Read the States That Do Not Believe in the Recovery

The Gallup Economic Confidence Index measures Americans’ assessments of current conditions and their views of whether the economy is improving. 24/7 Wall St.’s analysis of the index revealed several interesting relationships between a state’s confidence level and its own economic conditions. The states with healthier local economies are more optimistic than those that still struggle with the effects of the recession.

Many of the states that have a relatively high degree of confidence in the economy have felt this way for several years now, ranking high on the list previously. North Dakota, for example, which is the most optimistic state, was also the most optimistic in 2008.

All of the states that are more optimistic relative to other states have healthy job markets. In December, all of the states with the most confidence had unemployment rates lower than 7%, significantly below the national average of 8.5% at the time. While some of the states with the least confidence had good unemployment figures, five of them had unemployment rates above the national average, and four had among the 10-worst unemployment levels.

The housing market condition of a state also appears to play a meaningful role in its economic confidence. Home values in states that are most worried about the economy dropped from the third quarter of 2010 to the third quarter of 2011, according to Fiserv Case-Shiller. The states with the five worst-performing housing markets were among the most pessimistic ones. The reverse is also true. Home values only improved in seven states during the period. And four of those seven states are among the most optimistic about the economy.

The most economically confident states also have among the lowest poverty rates in the country, measurably below the 15.3% national average. In fact, most states that believe the economy is doing well have poverty rates of less than 12%.

Wealth and affordable living are also related to economic confidence. The states that are most pessimistic about the economy are generally poorer and have among the highest costs of living relative to median income. Maine — one of the most pessimistic states — has the 19th-lowest median income and the 12th-highest cost of living. The states that are least pessimistic are wealthy and have relatively low costs of living. Utah, one of the least pessimistic, has the 13th-highest median income in the country and the sixth-lowest cost of living.

24/7 Wall St. reviewed the states that were most and least optimistic about the economy based on Gallup’s Economic Confidence Index, which can go as low as -100 and as high as +100. Negative scores indicate there are more negative responses about the economy than positive ones. As many as 48% of Americans think the economy’s current condition is poor, and only 11% think it is excellent or good. Only 29% think the economy is improving, while over 66% think it is getting worse. Because there were more negative responses about current conditions and about the economy’s prospects, all of the states have negative scores.

These are the states that believe in the recovery and those that do not.

States That Believe in the Recovery

11. Vermont
> Economic confidence index: -32 (tied for 10th-highest)
> Current unemployment: 5.1% (4th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -12.1%
> Median income: $49,406 (20th highest)
> Poverty rate: 11.7%

In 2008, Vermont had the sixth-worst economic confidence in the country. In 2011, it was tied with Virginia as the 10th-most confident state. Since last year, home prices in the state declined just 1.2%, the fifth-smallest drop in the country. Vermont also has a poverty rate of just 11.7%, well below the national average, and an unemployment rate of 5.1%, the fourth lowest among all 50 states. According to Gallup’s 2011 poll, 35.3% of state residents believe the economy is improving, compared to the national average of 28.8%.

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10. Virginia
> Economic confidence index: -32 (tied for 10th-highest)
> Current unemployment: 6.2% (11th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -6.1%
> Median income: $60,674 (8th highest)
> Poverty rate: 10.7%

Virginia’s outlook on the economy has improved in the past few years. The state unemployment, which is already among the lowest, decreased an additional 6.1% in the past year. Home prices increased 3.3% since 2008 — the second-largest increase in the country. Virginia also has among the highest median household incomes and among the lowest poverty rate in the U.S. Additionally, the state has the 20th-lowest cost of living, implying that a dollar goes further in Virginia than many other states.

9. Utah
> Economic confidence index: -31 (tied for 8th-highest)
> Current unemployment: 6% (9th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -20.0%
> Median income: $54,744 (13th highest)
> Poverty rate: 11.5%

In 2008, Utah residents were the second-most optimistic in the country regarding the economy. Over the past three years, that confidence has dropped, but it remains high relative to the rest of the country. Home prices dropped 16.1% in Utah, which was worse than the average for states. But the unemployment rate is just 6%, the ninth-lowest rate in the country. According to Gallup’s poll, 47.7% of all Americans surveyed believe the national economy is in poor shape. In Utah, only 41.7% felt that way.

8. Massachusetts
> Economic confidence index: -31 (tied for 8th-highest)
> Current unemployment: 6.8% (16th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -18.1%
> Median income: $62,072 (6th highest)
> Poverty rate: 10.8%

In 2008, Massachusetts residents had the third-lowest economic confidence in the country. The state has made large strides to turn this around, however, and by 2011 became one of the most confident states. Residents of the state have much to be optimistic about. Its unemployment rate fell by 18.1% between 2010 and 2011, one of the largest declines in the country. And with a median income of $62,072, it is also one of the wealthiest states. Nearly one-third of Massachusetts residents now think the economy is “getting better.”

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7. Iowa
> Economic confidence index: -30 (tied for 5th-highest)
> Current unemployment: 5.6% (6th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -8.2%
> Median income: $47,961 (24th lowest)
> Poverty rate: 11.9%

Iowa’s housing market was left mostly unscathed, relative to the rest of the country, during the housing market crash. Between the third quarter of 2006 and the third quarter of 2011, home prices actually increased slightly. In December of 2011, Iowa’s unemployment rate was just 5.6%, the sixth-lowest rate in the country. The state’s median income and cost of living are both near the national average, which suggests affordable living. Some 13.4% of Iowa residents believe the U.S. economy is in good shape compared to the national average of 11%.

6. South Dakota
> Economic confidence index: -30 (tied for 5th-highest)
> Current unemployment: 4.2% (3rd lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -10.6%
> Median income: $45,904 (20th lowest)
> Poverty rate: 13.8%

South Dakota managed to avoid much of the worst effects of the recession. For example, in October 2009, when the national unemployment rate peaked at 10%, South Dakota had an unemployment rate of 5%. The most recent data places South Dakota’s unemployment rate at 4.3%. Between 2006 and 2011, when home prices tumbled throughout most of the U.S., they rose 0.9% in South Dakota — the second-largest increase in the country.

5. Hawaii
> Economic confidence index: -30 (tied for 5th-highest)
> Current unemployment: 6.6% (13th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: +4.8%
> Median income: $63,030 (5th highest)
> Poverty rate: 10.0%

Hawaii is different in many aspect of its geography and economy from the continental U.S. Median income in the state was $63,030 in 2010, the fifth-highest in the country. In that year, just 10% of families lived below the poverty line, and the unemployment rate was just 6.6%. Only 11% of those surveyed nationwide believed the economy was in good or excellent shape. In Hawaii, 15.3% felt that way.

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4. Maryland
> Economic confidence index: -28 (4th-highest)
> Current unemployment: 6.7% (15th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -9.5%
> Median income: $68,854 (the highest)
> Poverty rate: 9.1%

Maryland is the wealthiest state in the U.S., as measured by median household income. It also has the third-lowest poverty rate. While the state experienced among the largest declines in home prices between 2006 and 2011, prices are expected to increase 4.4% by the third quarter of 2013. As many as 34.3% of the state’s population now believes the economy is “getting better,” although this number is overshadowed by the 59.0% who believe it is “getting worse.”

3. Nebraska
> Economic confidence index: -27 (tied for 2nd-highest)
> Current unemployment: 4.1% (2nd lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -4.7%
> Median income: $48,408 (25th highest)
> Poverty rate: 11.9%

Like so many other states in the Midwest, Nebraska’s economy remained relatively stable when other parts of the country experienced double-digit unemployment rates and massive losses to home values. In Nebraska, home prices fell just 2.2% between the third quarter of 2006 and the third quarter of last year. As of December, 2011, the unemployment rate was only 4.1% in the state, better than any other state but North Dakota. According to Gallup’s 2011 Economic Confidence Poll, 47.7% of Americans believe the U.S. economy is in poor shape. In Nebraska, that number is almost 10 percentage points lower, at 37.9%.

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2. Minnesota
> Economic confidence index: -27 (tied for 2nd-highest)
> Current unemployment: 5.7% (7th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -17.4%
> Median income: $55,459 (12th highest)
> Poverty rate: 11.0%

Minnesota is a relatively wealthy state. It has the 12th-highest median household income in the country and the 10th-lowest poverty rate. The state’s economy has also improved significantly recently. From the end of 2010 to the end of 2011, the unemployment rate dropped by 17.4%. This was one of the largest decreases. The state unemployment rate is now an exceptionally low 5.7%. Although Minnesota, like all U.S. states, is still overall pessimistic on the economy, its confidence has improved greatly since 2008.

1. North Dakota
> Economic confidence index: -26 (the highest)
> Current unemployment: 3.3% (the lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -13.2%
> Median income: $48,670 (23rd highest)
> Poverty rate: 12.3%

According to the Gallup poll, residents of North Dakota are the least pessimistic about the U.S. economy than any other state in the country. This is not surprising considering the healthy state of its economy. North Dakota’s housing market was one of just a few that was healthy during the worst years of the recession. Between the third quarter of 2006 and the third quarter of last year, home prices in the average state fell 14.7%. In North Dakota, they rose 16.8%. The unemployment rate in North Dakota was just 3.3% in December, 2011, the lowest rate in the U.S. Compared to 11% nationally who believed the U.S. economy was in good or excellent shape, 18.8% of North Dakota residents believed that is the case.

States That Do Not Believe in the Recovery

11. Idaho
> Economic confidence index: -42 (tied for 11th-lowest)
> Current unemployment: 8.4% (18th highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -13.4%
> Median income: $43,490 (13th lowest)
> Poverty rate: 14.3%

From the third quarter of 2006 to the third quarter of 2011, home prices tumbled by more than 25% in Idaho — one of the biggest drops in the country. In the past year alone, home prices have fallen by 8.3%, the second-largest decline among all states. This trend, according to Fiserv Case-Shiller’s projections, is expected to turn around by the third quarter of 2012. However, Idaho residents’ perception of the economy is changing very little. Of all the states’ economic confidence scores, Idaho’s has improved the least since 2008.

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10. Ohio
> Economic confidence index: -42 (tied for 11th-lowest)
> Current unemployment: 8.1% (21st highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -14.7%
> Median income: $45,090 (17th lowest)
> Poverty rate: 14.8%

Between December 2010 and December of last year, the unemployment rate in Ohio fell from 9.5% to 8.1%. This 15% decline was the 11th-biggest in the country. Despite this improvement, state residents are among the most pessimistic when it comes to the national economy. According to Gallup’s poll, just 26.1% of state residents believe the economy is improving compared to the 28.8% that believe it nationally.

9. Florida
> Economic confidence index: -42 (tied for 11th-lowest)
> Current unemployment: 9.9% (6th highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -17.5%
> Median income: $44,409 (15th lowest)
> Poverty rate: 15.0%

The recession hit Florida more than most states of the country. Since February 2008, the state’s unemployment rate has exceeded the national average. While the national rate was 8.5% in December 2011, Florida’s was 9.9%. From the third quarter of 2006 to the third quarter of 2011, home prices were just about halved in the state, falling by 49%, which is the third-largest decrease in the country. While in many regions of the U.S. the housing market is expected to improve over the next year, Florida’s is expected to experience further price decline of 8.6% by the third quarter of 2012.

8. Nevada
> Economic confidence index: -42 (tied for 11th-lowest)
> Current unemployment: 12.6% (the highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -15.4%
> Median income: $51,001 (19th highest)
> Poverty rate: 13.0%

Arguably, no state was more severely affected by the housing crisis than Nevada. Between the third quarter of 2006 and the third quarter of 2011, home prices tumbled nearly 60%. Despite the huge losses already sustained in the housing market, prices are projected to fall by more than 14% over the next two years. The unemployment rate in December 2011 was 12.6%, the highest rate in the U.S. More than 57% of Nevada residents believe the U.S. economy is in poor shape, more than any other state. Coupled with the worst housing market and highest unemployment, it is perhaps surprising that Nevada’s confidence level is not even lower.

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7. Delaware
> Economic confidence index: -43 (tied for 3rd-lowest)
> Current unemployment: 7.4% (22nd lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -12.9%
> Median income: $55,847 (10th highest)
> Poverty rate: 11.3%

Delaware is a relatively wealthy state, with the 10th-highest median household income in the country and the 11th-lowest poverty rate. Despite these impressive numbers, residents currently have one of the most pessimistic views of the economy. As recently as 2010, the state had a better view of the economy. Between 2010 and 2011, Delaware saw the largest decrease in economic confidence among all states. Between the third quarter of 2010 and the third quarter of 2011, home prices decreased 5.5%, one of the largest decreases in the country during the period.

6. Montana
> Economic confidence index: -43 (tied for 3rd-lowest)
> Current unemployment: 6.8% (16th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -8.1%
> Median income: $42,666 (11th lowest)
> Poverty rate: 14.6%

Montana’s unemployment rate of just 6.8% is the 16th lowest in the country. Home values in the state dropped just 4.5% between Q3 2006 and Q3 2011, the fourth-smallest decline over that time. However, the poverty rate is relatively high, at 14.6% of the population. Though median income is the 11th lowest in the U.S., it is offset by the low cost of living. Compared to most states, unemployment, housing and cost of living are fairly good. Despite being better off than most states, Montana has a relatively negative perception of the current economy. Compared to the 47.7% who believe the U.S. economy is in poor condition on a national level, 53.4% of the state’s population feels that way.

5. Mississippi
> Economic confidence index: -43 (tied for 3rd-lowest)
> Current unemployment: 10.4% (4th highest)
> Change in unemployment Dec. 2010 to Dec. 2011: +2.0%
> Median income: $36,851 (the lowest)
> Poverty rate: 21.8%

Mississippi may very well be considered the poorest state in the nation. Its median household income of $36,851 is the lowest among all states and its poverty rate of 21.8% is the highest. Mississippi is also one of the few states where the unemployment rate has increased over the last year. It now stands at 10.4% — the fourth-highest in the U.S. Despite being one of the worst off states, others are even more pessimistic about the U.S. economy.

4. Rhode Island
> Economic confidence index: -43 (tied for 3rd=lowest)
> Current unemployment: 10.8% (3rd highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -6.1%
> Median income: $52,254 (18th highest)
> Poverty rate: 12.8%

Rhode Island’s median income of $52,254 is the 18th highest in the country. However, cost of living in the state is seventh-highest in the U.S. The state’s unemployment rate is 10.8%, and it has overtaken states like Michigan for the third-worst unemployment in the country. Just 5.4% of those polled in Rhode Island believe the U.S. economy is in good or excellent shape compared to the 11% who believed so across all 50 states.

3. Oregon
> Economic confidence index: -43 (tied for 3rd-lowest)
> Current unemployment: 8.9% (14th highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -16%
> Median income: $46,560 (22nd lowest)
> Poverty rate: 14.6%

Only 7.2% of Oregon residents consider the national economy to be in excellent or good condition. This is the second-lowest rate in the country, next to Rhode Island. Home prices in the state have consistently fallen since 2006 and are not expected to begin to recover until the third quarter of 2012. Oregon also has the 22nd-lowest median income in the country, yet it has the 13th-highest cost of living, which means Oregon residents may have be able to afford less than other states.

2. Maine
> Economic confidence index: -47 (2nd lowest)
> Current unemployment: 7.0% (19th lowest)
> Change in unemployment Dec. 2010 to Dec. 2011: -6.7%
> Median income: $45,815 (19th lowest)
> Poverty rate: 12.6%

Maine’s unemployment rate in December 2011 was 7%, significantly less than the national average of 8.5%. The state also has a poverty rate of just 12.6%, the 20th lowest rate in the U.S. Meanwhile, median income in Maine is just $45,815, the 19th lowest in the country, while cost of living in Maine is the 12th-highest. An overwhelming majority of states residents, 70.6% of those polled in 2011, believed the economy is getting worse. Only 25.4% believed the economy was improving.

1. West Virginia
> Economic confidence index: -49 (the lowest)
> Current unemployment: 7.9% (25th highest)
> Change in unemployment Dec. 2010 to Dec. 2011: -18.6%
> Median income: $38,218 (2nd lowest)
> Poverty rate: 17.6%

West Virginia is another largely poor state. It has the second-lowest median income in the country and the sixth-highest poverty rate. Despite low levels of income in the state, it has the 25th-highest cost of living. To make matters worse, the state also just recently has begun to experience a downturn in its housing market. Between the third quarter of 2006 and the third quarter of 2011 home prices actually increased, albeit by a modest amount. Over the past year, however, they decreased 3.1%. Now, 73.9% of state residents believe the economy is getting worse.

-Charles B. Stockdale, Michael B. Sauter and Ashley C. Allen