GDP in the States: Performance Varies Wildly

By SBE Council at 1 October, 2025, 3:51 pm

by Raymond J. Keating -

The economic data for the first half of 2025 reflects a great deal of volatility due mainly to costs and uncertainties regarding tariff policies.

So, with decision-making by entrepreneurs, businesses and investors affected by real and potential challenges regarding international trade, real GDP swung wildly during the first two quarters of this year, from -0.6 percent in the first quarter to +3.8 percent in the second. At this point, looking to the average for these first two quarters makes sense, and that average was a poor 1.6 percent.

The U.S. Bureau of Economic Analysis just released its latest report on state GDP. Obviously, the same uncertainties affect state-by-state data. However, as always, growth varies wildly among the states.

Looking at the average real GDP growth rate over the first two quarters of 2025, consider the states that exhibited the strongest average growth rate, and those that fared the worst.

So, nine states managed average real growth of better than 2 percent during the first half of the year, while ten states experienced negative average growth.

State and local policymakers shouldn't be standing idly by and just watching what's happening in Washington, D.C. Instead, they should be moving aggressively to establish a pro-growth policy environment in each of their states. That is done, broadly, via tax and regulatory relief, while keeping the growth of government in check.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .