Why Texas and Florida are America’s NEW economic powerhouses

Since COVID, there's been a lot of migration happening within the United States

And some areas are booming and some areas are losing out. The California exodus continues

Cities are losing population. As Americans are moving en masse to the south

You may have moved within your city or to a different city. You probably noticed some of your neighbors moving out or maybe moving in

And those shifts have really reverberated throughout the entire U.S. economy. in ways that are radically reshaping the geography of U.S. jobs and the geography of U.S. growth

So first we're going to talk about where, then we're going to talk about when

Why, yeah. So first we're going to talk about where, then we're going to talk about why

some of the biggest beneficiaries of the post-pandemic economy have been states in the

american south and the two biggest examples of that are texas and florida florida actually has

the fastest gdp growth of any state in the union since the start of covid more than a 20 increase

Texas is not far behind. They've had a GDP increase of more than 14% since the start of COVID

Both those states have seen jobs increase by 9% overall. On their own, those states are the size of mid-sized European economies

and they're growing as fast as rapidly industrializing nations. For example, Texas' economy grew 5.6% through 2023

That faster than even China which only grew at 5 by comparison That a lot for states as big as Florida and Texas States in the Rocky Mountains have also seen really rapid growth

That includes places like Idaho, Utah, Arizona, Colorado, which have seen extremely fast GDP growth and rapid job gains

as remote work enables people to move to those states. On the Pacific Coast, California has had very fast GDP growth, faster than the nation as a whole

Even though the tech boom throughout the pandemic has really helped the state, it's lagged behind in terms of job growth

Washington state has also seen really rapid GDP growth, thanks in large part to the tech boom, but with a bit of stronger job growth than California

and Oregon lags a little bit behind both. The Northeast and Midwest, by contrast, have been falling behind a bit

Illinois and New York in particular have only barely recovered the jobs that they lost during

COVID and have had pretty weak GDP growth. There are some bright spots. Indiana's GDP has grown by

more than 8% since the start of the pandemic, while Maine's has grown by more than 11%

But the region as a whole is struggling a bit. I'm trying to think, is there a big state that I like didn't mention

Not really. Ohio people will be mad at me, but that's fine

So what's driving these shifts in economic geography? The big obvious one is remote work

Some of the biggest losers have been dense, urbanized, unaffordable areas. And some of the biggest winners have been less dense, suburban, more affordable areas

People when given the flexibility to telework pick places that are more spacious suburban states than they did before the pandemic That includes places like Utah and Arizona but also places like Maine

But keep in mind, affordability isn't set in a vacuum. Another big shift caused by the pandemic

was migration to states that allow more housing construction than others. housing construction is a big part of the reason why states like florida and texas are booming

and states like new york and california are struggling florida and texas build tens of thousands more units a year than either new york or california

they're some of the fastest builders even on a per capita basis in the nation another important

part of this is the dissolution or at least the weakening of a lot of economic clusters that

dominated pre-pandemic America. For example, before the pandemic, about 19% of all tech jobs

were located in California. And as soon as the pandemic hit, the share started dropping

and it started dropping really rapidly. And for some specific industries like software publishing, it's near some of the lowest levels

on record. Other industries are also spreading out from their historical hubs. Think finance

from New York or movies from Los Angeles. But let's zoom in on tech in California and

in the Bay Area in particular. In early COVID, when the tech industry was booming, it didn't

matter so much that California was losing ground to other states. The Bay Area had some

of the fastest GDP growth in the nation, and hiring was still really rapid. But when the tech

industry slowed down as interest rates rose and the tech session began, it meant California went

from a smaller slice of a growing pie to losing outright And the loss of tech jobs has cost California and the Bay Area a lot The state depends on IPOs and tech pay for a lot of income tax revenue

And localities are really dependent on office space and other commercial districts for local sales tax and property tax revenue. That's drying up as more tech workers

are leaving the Bay Area. And the big destination has been Texas, followed by New York, Florida

and Washington State. All states that have tech hubs of their own, like Austin, like Seattle

like New York, but have had more affordable housing and build more than San Francisco itself

San Francisco has one of the lowest construction rates in the country and is thus one of the most

unaffordable cities on the planet. But despite losing ground to other states, California still

has a really big advantage at the very top end of the tech industry. The best jobs, the best

companies are still in Silicon Valley. California's problem isn't that it's economically unsuccessful

it's that it fails to include everyone in its economic success. The states become so unaffordable

that people have to leave for more accessible, less expensive locations. States like California and New York are going to have to reform a lot of their policies around

housing construction and transportation if they want to compete in this new economy

And if they don't, the out-migration to states like Texas and Florida is only going to continue

Do you want to talk about any other states? you can't say anything about states without somebody getting mad at you and you're like

what about my home state so you gotta accept that that's gonna happen want to dive deeper become a big think member and join our members only community

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