Seven states have registered negative economic growth for two consecutive quarters, which is generally characterized as a recession, according to data released Thursday by the Bureau of Economic Analysis.
Real gross domestic product is the bureau’s most comprehensive measure of U.S. economic activity. It is an inflation-adjusted measure of each state’s prices for the goods and services produced for all industries within that state.
Iowa, Nebraska, New Mexico, Oklahoma, Montana, Wyoming, and Alaska had consecutive quarters of negative economic growth in the fourth quarter of 2015 and the first quarter of 2016.
According to Mark Perry, a scholar at the American Enterprise Institute, two consecutive quarters of negative GDP growth is a rough rule of thumb for a recession that usually applies to national economies, not economies of smaller jurisdictions. "It’s troubling when a state does have two quarters of negative growth," he said.
According to the report, the economies of 37 states and the District of Columbia grew in the first quarter of 2016. The economies of 13 states shrank.
Perry said that seven states suffered declines in their mining sectors, which includes oil and gas production. These states were Alaska (-2.29 percent), Wyoming (-1.82), Oklahoma (-0.73), New Mexico (-1.37 percent), North Dakota (-2.22), West Virginia (-2.03), and Louisiana (-0.37). Other states recorded declines in agricultural output including Iowa (-3.43 percent), South Dakota (-3.93), and Idaho (-1.45).
"For the first quarter of 2016, it looks like some of the same negative growth can be explained by the same factors that explained the fourth quarter of 2015 negative growth: relatively volatile energy and farm sectors," Perry said. "The low prices for oil and natural gas last year could have impacted both energy production, which has been declining for oil, and the market price of the energy production as it is calculated for state GDP."
"The farming sector is very cyclical and has been declining in states like Iowa," Perry said. "In fact, farm income nationally is expected to fall. The USDA released a new forecast this week predicting that U.S. farm income will fall to about $55 billion this year, which would be the lowest level since 2002."