Good news for Wisconsin leaves Minnesota lagging the rest
Photo: Joe Bielawa via Flickr (licensed under CC BY 2.0)
In American Experiment’s 2021 report, “The State of Minnesota’s Economy: 2020 — A focus on economic growth,” we wrote:
What matters for economic welfare is per capita income. This is a general measure of welfare, telling us how much per person is available to be consumed, invested, or put to some other use. If we want to increase economic welfare, we should pursue policies that increase per capita incomes.
Given its importance, Minnesota’s recent record on per capita GDP growth is concerning. In Our recent report, “Accounting for Growth: Measuring the sources of per capita economic growth at the state level,” I wrote:
Minnesota has long been able to boast a per capita GDP above that of the United States generally, a “premium” for living in the state. In 2004, this premium was $4,973 per Minnesotan, and as recently as 2014, it was $4,669, or $18,676 for a family of four. Since 2014, however, this premium has fallen every year and was down to just $435 in 2023. In quarterly data, the premium disappeared completely in the first half of 2024.
This was confirmed in April:
The annual data for 2024 is now out and it is official: For the first year for which there is data, GDP per capita in Minnesota was below that of the United States generally, as Figure 1 shows. In 2024, Minnesota’s level of GDP per capita was $285 lower than for the United States generally, or $1,140 for a family of four.
Figure 1: Minnesota’s ‘Premium’ in Per Capita GDP Over the United States, $2017
This has occurred because:
…in every year since 2014, our state’s per capita GDP growth has been slower than that of the United States generally, as Figure 2 shows. While Minnesota’s real per capita GDP growth rate was higher than that of the United States (highlighted in green) in ten of seventeen years up to and including 2014, it has been below it (highlighted in red) in each of the ten years since.
Figure 2: Growth of Real Per Capita GDP in Minnesota Minus Growth of Real Per Capita GDP for the United States, Percentage Points
In my recent report, I noted that: “Only Wisconsin can match Minnesota’s record of lagging the national growth rate of GDP per capita in every single year since 2014.” As of April, that is no longer true.
Table 1 shows the same as Figure 2 but for all of the states since 2014. We see that, last year, Wisconsin recorded a rate of per capita GDP growth faster than that of the United States. This now leaves Minnesota as the only one of fifty states to have lagged the national rate of per capita GDP growth in each of the last ten years.
Table 1: Growth of Real Per Capita GDP Minus Growth of Real Per Capita GDP for the United States, Percentage Points
If you want to know what is behind this, take a look at my report, “Accounting for Growth: Measuring the sources of per capita economic growth at the state level.”