Economics

Why Wyoming Is in Economic Trouble

Dec 19, 2016 3:43 PM EST

By Justin Fox

@foxjust

We've heard a lot over this past election year about the economic struggles of Rust Belt states. But the most economically troubled state in the country may be Wyoming. ... That at least is the verdict of the Bloomberg Economic Evaluation of States index, which currently ranks Wyoming dead last in absolute terms as well as in percentage change since both the beginning (December 2007) and end (June 2009) of the last recession. The BEES index tracks employment, mortgage delinquency, personal income, home prices, and the stock prices of local corporations.

The state employment and unemployment numbers released by the Bureau of Labor Statistics on Friday* offer a more mixed picture. The establishment survey of employers showed the state continuing to shed jobs in November, but the household survey showed an employment gain and a decline in the unemployment rate to 4.9 percent, not much above the national rate of 4.6 percent. The household survey is subject to a lot more sampling error, so one shouldn't put too much stock in its more hopeful numbers, but an establishment/household divergence like that is sometimes an early indicator of an economic turnaround, as households report jobs with new employers that the BLS doesn't track yet.
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... With only 586,107 residents as of July 2015, according to the Census Bureau's most recent estimate, Wyoming is not only the least-populous state but also smaller than 31 U.S. cities and 92 metropolitan areas. It accounts for just 0.2 percent of U.S. gross domestic product. .... Still, Wyoming's economic troubles matter to Wyomans. They may also shed light on a bigger economic trend. ... There are two main reasons the state's economy has been lagging that of the nation and its Rocky Mountain neighbors. The obvious one is that Wyoming's economy is built around energy extraction, and the past couple of years have been tough on the energy business. But it also seems significant that as economic growth has become more and more concentrated in large metropolitan areas, Wyoming doesn't happen to have any of those.

In energy, Wyoming is the country's leading producer of coal and uranium, is No. 4 in natural gas and No. 8 in crude oil, and its economy is more dependent on mining and drilling than that of any other state. Energy riches have made Wyoming pretty affluent -- its median household income and per-capita personal income are both above the national average. But they've also left it subject to the cyclical nature of the energy business -- and the past couple of years have been a downer.
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To contact the author of this story:
Justin Fox at justinfox@bloomberg.net

To contact the editor responsible for this story:
James Greiff at jgreiff@bloomberg.net