Analyzing the Gaps: Why ALEC-Laffer’s Rich States, Poor States Rankings Don’t Always Tell the Whole Story

Each year, ALEC-Laffer’s 2024 Economic Outlook report compiles data regarding economic trends and policies across the U.S. and uses all of that information to create its Rich States, Poor States ranking. Each state receives a rank from first to 50th for both its economic performance — a backward-looking measure of recent success based on things like GDP growth, job creation and net migration, and economic outlook — a forward-looking measure based on 15 key policy variables.

While the economic performance ranking considers the past 10 years of data and performance, and the economic outlook is more hypothetical, there are still some glaring discrepancies. 

The difference in these rankings suggests that a state could have a strong past economic record but policies that may hinder future growth, or vice versa. For example:

• High Performance, Low Outlook: A state with strong historical growth might have enacted recent policies that could weaken future performance, such as raising taxes or increasing regulatory burdens.
• Low Performance, High Outlook: A state with historically weaker performance may be adopting pro-growth policies, improving its potential for future growth despite past struggles.

So, what does it mean? States with notable discrepancies between their performance and outlook rankings are likely making big moves. Whether those moves are positive or negative varies in the eyes of the ALEC-Laffer group. Either way, big gaps in the ranks tend to point to two key possibilities: 

1. A state with economic policies that are considered favorable for the sake of the report is underperforming. Either the state’s leadership is working to implement positive change or people looking to start businesses in that state should consider potential risk factors beyond the key 15 data points analyzed by the report.
2. A state with economic policies that are considered unfavorable for the sake of the report is performing well. Either the state’s leadership has already begun making moves to better its economic future or policies and practices deemed harmful by the report are actually neutral — or even beneficial — in practice.

Regardless of the practical forces behind the discrepancies, there are some states that seem to have more complex stories than what’s reflected in a quick economic report. For entrepreneurs looking to grow, this may be a signal to dig a bit deeper into what it will really mean to operate your business in your state.

Here are a few to keep an eye on:

Wyoming

2024 Outlook: 8th

2024 Performance: 44th

2023 Outlook: 6th

The gap between Wyoming’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is a staggering 38 spots. Despite relatively poor economic performance, as shown by the 2024 ranking, Wyoming yet again received a strong outlook ranking in 2024, only falling two spots on the list.

Oregon

2024 Outlook: 42nd

2024 Performance: 13th

2023 Outlook: 43rd

The gap between Oregon’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 30 spots. Though the report showed strong economic performance, Oregon only climbed one rank in the economic outlook portion between 2023 and 2024.

North Dakota

2024 Outlook: 10th

2024 Performance: 37th

2023 Outlook: 8th

The gap between North Dakota’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 29 spots. While the state’s performance fell in the bottom third of the ranking in 2024, it still received an optimistic outlook ranking, only falling two spots on the list.

Maine

2024 Outlook: 45th

2024 Performance: 18th

2023 Outlook: 44th

The gap between Maine’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 26 spots. Still, Maine’s 2024 outlook ranking slid backwards by one spot, indicating low confidence in its economic future from the ALEC-Laffer team despite proven performance in prior years.

Alaska

2024 Outlook: 25th

2024 Performance: 49th

2023 Outlook: 23rd

The gap between Alaska’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 26 spots. After a strong outlook in 2023, Alaska came in near-last performance-wise in the 2024 report. Regardless, it was again ranked in the middle ground for its 2024 economic outlook.

New York

2024 Outlook: 50th

2024 Performance: 29th

2023 Outlook: 50th

The gap between New York’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 21 spots. While New York has consistently been ranked last for its economic outlook, the state generally hovers in the high 20s to mid 30s range for its economic performance ranking.

West Virginia

2024 Outlook: 23rd

2024 Performance: 47th

2023 Outlook: 28th

The gap between West Virginia’s economic outlook, according to the 2023 report, and performance, according to the 2024 report, is 19 spots. The state was at the end of the pack in terms of recent economic performance, just three spots from last, but still climbed five ranks for its economic outlook at the time of the 2024 report.

For more on the ALEC-Laffer report, visit https://www.richstatespoorstates.org/. Find more information on top franchise opportunities at https://1851franchise.com/growth-club.