Kiplinger

Kiplinger's Economic Outlook for All 50 States, 2018

America's economic engine will continue to hum across all major regions throughout 2018.

The strongest growth is in the West, with plenty of high-wage jobs being created in tech-related hardware and software, plus aircraft, finance and business services. The South is seeing higher demand for exports such as industrial machinery and other equipment. The Midwest is enjoying a surge in demand for manufactured goods, and it leads in productivity gains, though slower auto sales could ding growth in Michigan. The Northeast is benefiting from its high-tech clusters, such as Boston. Mid-Atlantic states have limited exposure to growing trade fights, compared with other areas that rely on exports. Mountain West states stand to benefit from the recovery in oil and minerals prices.

But it's not all good news. For instance, the commodities-heavy economies of the Plains states face some dark clouds. A slowdown in the farming industry and new international tariffs will hit hard.

Read on for Kiplinger's exclusive 2018 economic outlook - including projected job-growth and unemployment rates - for each state, listed alphabetically.

Alabama

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Population: 4,874,747
2018 job growth: 1.3%
2017 job growth: 1.0%
New jobs in 2018: 26,800
New jobs in 2017: 19,100
Unemployment rate by year-end 2018: 3.8%
Unemployment rate at year-end 2017: 3.8%

Alabama's job growth lags that of the other Southeast states, and labor-force growth is poor, though there are bright spots in the economy. Huntsville, with its tech, auto and aerospace sector, is seeing the fastest job growth. Two new rocket engine plants are being built there. Aircraft production is ramping up in Mobile.

The state's automotive sector had previously been a bright spot, as Alabama had landed auto plants from Mercedes, Honda, and Hyundai, and a new plant from Toyota/Mazda. 57,000 workers in the automotive sector build a million vehicles a year. It's the third-largest state for U.S. auto exports. However, the expected auto sales slowdown this year and the prospects of rising tariffs are casting clouds. Alabama has been successful at attracting manufacturing because it has the fifth-lowest costs in the country, and this will help it once again after the clouds pass.

Alaska

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Population: 739,795
2018 job growth: -0.7%
2017 job growth: -1.3%
New jobs in 2018: -2,200
New jobs in 2017: -4,400
Unemployment rate by year-end 2018: 7.1%
Unemployment rate at year-end 2017: 7.2%

A rebound in prices for crude oil is benefiting Alaska, but follows years of battering that drove it into recession and left its economy with the highest unemployment rate of any state. More job cuts are likely this year, but the rate of losses is declining, and there are glimmers of hope that the economic downturn may be near bottoming out. The cost has been severe: some 11,700 high-paying oil industry jobs were lost between 2015, when oil prices were slumping, and the end of this year. State officials are hopeful a huge infrastructure project to develop a liquefied natural gas (LNG) capability can be completed by 2024 or 2025. Alaska has huge reserves of the clean-burning fuel, and global demand for it is strong. Helping to cushion the blow from the loss of oil-industry momentum in recent years has been growth in Alaska's manufacturing, health care, and tourism sectors. Alaska also has a strong and growing military presence due to its strategic location. That is boosting construction, including $169 million budgeted in 2018 at Eielson Air Force Base for two squadrons of F-35s arriving in 2020.

Arizona

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Population: 7,016,270
2018 job growth: 2.4%
2017 job growth: 2.4%
New jobs in 2018: 67,000
New jobs in 2017:65,200
Unemployment rate by year-end 2018: 4.5%
Unemployment rate at year-end 2017: 4.7%

Steady population growth for rapidly growing cities like Phoenix as well as expanding high-tech businesses, including Amazon's plans to create a new distribution center in Tucson employing 1,500 people, keep Arizona's economy on a solid growth trajectory. Its sunny climate is a magnet for retirees, who fuel growth in health care and other professional services, while its relatively lower living costs are attractive for younger, educated workers from coastal cities like Los Angeles. Construction is under way on a $1.5 billion Intel semiconductor plant in Chandler that is to be completed in 2021, further contributing to the southwest region's reputation as a growing tech center. Arizona's more flexible regulatory environment is attractive to a wide variety of businesses from health care to banking. Payrolls went up significantly over the past year at defense contractors Raytheon and Orbital ATK, as well as at UnitedHealthcare, Walgreens, Charles Schwab and Wells Fargo.

Arkansas

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Population: 3,004,279
2018 job growth: 0.7%
2017 job growth: 1.0%
New jobs in 2018: 8,200
New jobs in 2017: 12,000
Unemployment rate by year-end 2018: 3.8%
Unemployment rate at year-end 2017: 3.7%

These are difficult times for Arkansas' efforts to breathe more vitality into labor markets, partly because of the state's lack of success to date in luring high-tech businesses -- but also a result of less interest in Fayetteville Shale, the state's gas reservoir. Houston-based Southwestern Energy is halting its drilling in the state after laying off hundreds of employees and will auction off its shale assets. A bid by state capital Little Rock to develop a technology park has not attracted any high-tech companies and now is being rescaled to accommodate smaller businesses. Meanwhile, a rapidly changing merchandising landscape is compelling the state's signature company, Bentonville-based Wal-Mart Stores Inc., to keep cutting its headquarters staff with as many as 1,000 jobs to disappear this year and next. There is modest hiring growth in smaller-scale manufacturing, including a new plant in Fort Smith under construction by Silgan Plastic Food Containers that will employ 150, but otherwise the state's labor markets are struggling with job growth slowing.

California

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Population: 39,536,653
2018 job growth: 1.8%
2017 job growth: 2.1%
New jobs in 2018: 294,300
New jobs in 2017: 340,200
Unemployment rate by year-end 2018: 4.1%
Unemployment rate at year-end 2017: 4.5%

There's solid job and wage growth, but spiraling housing costs and high taxes paint a mixed picture for California's giant economy - in dollar terms now rated the fifth-largest in the world. Retail giant Amazon is hiring hundreds of people for its massive new warehouse in Fresno, a $77-billion high-speed rail system between Los Angeles and San Francisco is under construction, and carmaker Tesla is supporting tens of thousands

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