It is the proverbial election year mantra: “It’s the economy, stupid.” But when it comes to attracting business to a state, the economy doesn’t only matter every four years.
Companies want to locate in states with strong growth, stable finances, and a healthy housing market. They also like a diverse economy with lots of big corporations to partner with, and a healthy flow of international investment.
States know this, which is why they often point to their economies when they market themselves to business. And it is why the Economy category is important in CNBC’s annual America’s Top States for Business rankings. Our study includes ten categories of competitiveness, weighted based on how frequently they appear in state economic development marketing. Under this year’s methodology, Economy accounts for 14% of a state’s total score.
We consider economic growth and job growth. We look at state finances, fiscal reserves, pension obligations and credit ratings. We also look at the overall health of the housing market. We measure the breadth of each state’s economy by looking at how many major corporations are headquartered there. We evaluate the entrepreneurial economy based on new business formations. And, new in 2024, we measure foreign direct investment in each state, both in absolute terms and as a percentage of gross domestic product (GDP).
In 2024, some states are still struggling. But these ten states are thriving.
10. Delaware
Business is an essential part of life in The First State, known for its corporate-friendly legal system. Two-thirds of the Fortune 500 companies are incorporated in Delaware. (Most are headquartered elsewhere, which is the metric that counts in the Top States rankings.) The flood of new business formations during and after the pandemic has favored Delaware, which added another 55,000 new businesses last year, according to the Census Bureau. That’s one of the highest rates of entrepreneurship in the country. The state’s finances are rock solid. Delaware’s economy turned in a lackluster performance in 2023 — the only state economy to shrink last year. But it surged back at the start of 2024, according to the Commerce Department.
2024 Economy Score: 231 out of 350 points (Top States Grade: B-)
GDP (2023) $74.3 billion (-1.2%)
Job Growth (2023): 1.2%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $276 million (0.4% of GDP)
Major Corporate Headquarters: Dupont De Nemours, Incyte
9. Idaho
Idaho’s housing market has cooled considerably from its white hot recent past. Prices leveled off and even declined in some markets last year, but they are moving up again, suggesting plenty of stability in this popular destination as inventory remains tight. Overall economic growth is solid in The Gem State, and so is the state’s credit rating. New business applications rose 4.5% last year, building on a trend going back to 2009.
2024 Economy Score: 232 out of 350 points (Top States Grade: B)
GDP (2023): $94.9 billion (+3.5%)
Job Growth (2023): 2.5%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $0
Major Corporate Headquarters: Micron Technology, Lamb Weston Holdings
8. Nevada
The Silver State enjoyed solid job growth through much of last year, though unemployment remains the second highest in the country. A steady influx of new residents has fed a strong housing market. Inventory is tight, but new construction is strong. State finances are in reasonably good shape, with tax revenues running ahead of their 15-year average, according to the Pew Charitable Trusts.
2024 Economy Score: 233 out of 350 points (Top States Grade: B)
GDP (2023): $192.2 billion (+2.7%)
Job Growth (2023): 3.8%
Debt Rating & Outlook (Moody’s): Aa1, stable
Foreign Direct Investment (2022): $6 million (0.003% of GDP)
Major Corporations: Las Vegas Sands, MGM Resorts International
7. Georgia
A key to Georgia’s broad and deep economy is foreign direct investment. Major companies including Mercedes-Benz, Nestlé-Purina, and Adidas are putting down roots in The Peach State, according to the Georgia Department of Economic Development. With $9.7 billion in total planned investments as of 2022, according to the U.S. Commerce Department, Georgia is among the nation’s biggest attractors of international capital. While growth was sluggish in 2023, the state still has plenty of economic juice.
2024 Economy Score: 244 out of 350 points (Top States Grade: B)
GDP (2023): $661.1 billion (+0.8%)
Job Growth (2023): 1.2%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $9.7 billion (1.5% of GDP)
Major Corporate Headquarters: Assurant, Intercontinental Exchange
6. Utah
Eight of the ten major private sector industry groups in The Beehive State posted job growth last year, according to Utah’s Department of Workforce Services, helping the economy to keep on buzzing. But there is a flipside to Utah’s historically low unemployment, according to Mark Knold, the department’s chief economist.
“When labor is in short supply, an economy may not be able to expand at a pace equal to its full potential,” Knold said in January. He blames that shortage — instead of any underlying economic weakness — for the state’s subpar growth last year.
2024 Economy Score: 245 out of 350 points (Top States Grade: B+)
GDP (2023): $219.2 billion (+2.5%)
Job Growth (2023): 2%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $271 million (0.1% of GDP)
Major Corporate Headquarters: Zions Bancorporation, Extra Space Storage
5. Arizona
The Grand Canyon State’s surging chip sector is delivering many dividends, including strong job growth and a healthy housing market. Inventory, while tight, is more manageable than in many states because of strong construction activity. State finances, however, are not as strong as they should be. The Pew Charitable Trusts estimate that if all revenue stopped, Arizona could run for 98 days on its total balances (its rainy day fund and its general fund’s 2023 ending balance). That is below the national median of 119 days.
Gov. Katie Hobbs, a Democrat, recently signed the state’s FY2025 budget into law. The $16.2 billion budget includes cuts of about 3% for most state agencies, and it cuts funds for school construction, while targeting new investments in health care, border security, fentanyl interdiction and affordable housing.
2024 Economy Score: 255 out of 350 points (Top States Grade: B+)
GDP (2023): $414.3 billion (+2.7%)
Job Growth (2023): 2.5%
Debt Rating & Outlook (Moody’s): Aa1, stable
Foreign Direct Investment (2022): $2.8 billion (0.7% of GDP)
Major Corporations: Align Technology, First Solar
4. North Carolina
The Tar Heel State’s fiscal picture is the envy of most states, with rock solid credit and healthy fiscal balances. But North Carolina has frequently been a victim of its own success when it comes to digesting its strong growth. That is particularly noticeable in the job market, and it has state economists concerned.
“Employers in our state are still hiring, but they’ve been adding jobs at a slower pace than during the economic boomtimes of 2021 and 2022,” wrote senior economist Andrew Berger-Gross of the North Carolina Department of Commerce in a blog post in March.
Berger said he and his colleagues were surprised at the level of slowdown in job growth last year, noting that it was concentrated in the professional and business services sector, “which was thought to be the growth engine of the pandemic-era economy.”
But he noted that construction employment grew at a healthy pace last year, evidence that the state economy still has steam left.
“Employment in North Carolina is slowing, but still growing,” he said.
2024 Economy Score: 256 out of 350 points (Top States Grade: B+)
GDP (2023): $625.7 billion (+2.7%)
Job Growth (2023): 1.4%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $8.3 billion (1.4% of GDP)
Major Corporate Headquarters: Bank of America, Duke Energy
3. Tennessee
The Volunteer State’s economy surged out of the pandemic, with a staggering 9.2% jump in GDP in 2021, and a still impressive 4.8% increase in 2022. By the end of last year, in their annual economic report to the governor, University of Tennessee economists wrote that the inevitable next chapter appeared to be underway.
“Signs that the economic recovery is winding down have emerged, as both consumer spending and job gains have slowed in recent months,” wrote economist Lawrence Kessler in the report.
He cited the resumption of student loan payments and rising interest rates as major reasons.
Tennessee’s economy still grew at a respectable 3.2% rate last year, helping to keep the state’s fiscal picture extremely healthy. But employment growth slowed to a trickle.
Even so, Kessler wrote, things are looking up in The Volunteer State.
“Tennessee’s economic outlook is more favorable than that of the nation’s,” he said.
2024 Economy Score: 259 out of 350 points (Top States Grade: B+)
GDP (2023): $425.4 billion (+3.2%)
Job Growth (2023): 0.3%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $6.7 billion (1.6% of GDP)
Major Corporate Headquarters: FedEx, Autozone
2. Texas
The Lone Star State is a growth engine. It was the nation’s second-fastest growing economy last year (just behind North Dakota), with among the strongest job growth. Only California has more S&P 500 companies. Texas’ fiscal health is outstanding, with more than ample reserves and an unblemished credit rating.
That is not to say the Texas economy is perfect. Home price appreciation has slowed faster than the national rate. And Texas homeowners are paying the 12th-highest effective property tax rate in the country, according to an analysis by real estate data firm ATTOM. Entrepreneurship is lagging as well. New business applications rose by just 7% last year.
The fact remains, however, that everything is big in Texas, including the economy. And it keeps getting bigger.
2024 Economy Score: 292 out of 350 points (Top States Grade: A)
GDP (2023): $2.03 trillion (+5.7%)
Job Growth (2023): 2.1%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $20.7 billion (1% of GDP)
Major Corporate Headquarters: Oracle, Tesla
1. Florida
With more than 240,000 new jobs added last year, Florida’s economy and labor market are hot. Housing market activity is reasonably well balanced, with good price appreciation and robust construction. However, rising foreclosures are a concern.
Economic growth in The Sunshine State, while not the strongest in the nation, is solidly in the top ten, powered by a steady influx of new Floridians. New business applications last year jumped 9%. Florida’s credit rating is pristine. The state is fiscally healthy, but all the growth in the state has put some pressure on budget reserves. Recently, Gov. Ron DeSantis signed into law a $116.5 billion budget for FY2025 that he said reduces state spending, cuts taxes by $1.5 billion, and provides raises for teachers.
The budget also includes new funding to help homeowners protect their property from hurricanes, as well as funding for stricter oversight of the insurance market. Both provisions are aimed at combating an insurance crisis that could otherwise upend America’s top state economy.
2024 Economy Score: 308 out of 350 points (Top States Grade: A+)
GDP (2023): $1.28 trillion (+5%)
Job Growth (2023): 2.5%
Debt Rating & Outlook (Moody’s): Aaa, stable
Foreign Direct Investment (2022): $9.1 billion (0.7% of GDP)
Major Corporate Headquarters: CSX, Carnival
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