How each state handles its budgetary affairs and chooses to address its budget plays a critical role in that state’s competitiveness relative to other states. With people, products and capital free to move from state to state, state governments are ultimately competitors. Pro-growth and anti-growth state economic policies influence decisions on whether, where and how much to work, save and invest. These policies influence the ability of a state to retain and attract residents and businesses. The evidence suggests that pro-growth policies result in higher after-tax returns, increased economic activity and an eventual improvement in overall state fiscal health; anti-growth policies result in the opposite effects.

For investors and corporate planners, knowledge of a company’s exposure to a particular state and that state’s economic outlook should be important inputs in investment and location decisions due to the relationship between economic policy and asset values.

For more than two decades, we have specialized in the analysis of state and local economic policies. In fact, over the years our State Competitive Environment model has repeatedly demonstrated its ability to forecast changes in state competitiveness and thereby economic health and asset values. Our current rankings, building upon the traditional State Competitive Environment model with additional analysis, represents the culmination of this knowledge and experience and represents the most comprehensive ranking of the states we’ve undertaken. The result is a supply-side ranking of the states’ economic outlooks from best to worst.

An Example from the latest Laffer State Competitive Rankings