States like Washington, Utah, Massachusetts, Texas, and California may not seem like they have much in common, but each has a strong economy that's helping to fuel national growth.
Those five states have the best economies, according to a new ranking of all 50 states and DC by financial services company WalletHub. Meanwhile, Mississippi, Hawai'i, West Virginia, Arkansas, and Louisana have the worst.
"A strong state economy doesn't guarantee success for the state's residents, but it certainly makes financial success more attainable," Cassandra Happe, a WalletHub analyst, wrote in the report. "Factors like a low unemployment rate and high average income help residents purchase property, pay down debt, and save for the future."
To determine the best state economies, WalletHub compared the 50 states and DC across three categories: economic activity, economic health, and innovation potential. Each of the three categories was evaluated using 28 metrics of varying weights, including share of fast-growing firms, unemployment rate, and entrepreneurial activity.
"The best state economies also encourage growth by being friendly to new businesses and investing in new technology that will help the state deal with future challenges and become more efficient," Happe wrote.
Washington secured the top spot due to its performance in both economic activity and innovation potential. The state's economy benefits significantly from high industry research and development investment levels, positioning it at the forefront of technological advancement. After all, Amazon and Microsoft are headquartered in the state.
Source: WalletHubAdditionally, people who move to Washington are the fifth-most educated in the country, contributing to the state's sixth-highest median household income after adjusting for the cost of living. A November report from Bank of America based on internal customer data showed that people who move to Seattle for a new job receive the largest pay raises among all US cities.
Utah was the runner-up with the second-highest median annual household income after adjusting for the cost of living. The state also has a healthy labor market, featuring one of the lowest unemployment rates in the country and substantial growth in its civilian labor force.
Meanwhile, several states in the south are among those with the lowest rankings. Many of the states scored low across the board as they struggled with issues like high unemployment rates and low household incomes.
Here are the top five states, followed by the five states ranked the lowest.