State Economic Quality: Iowa Edges Illinois in Latest Report
Each year, global investment management firm Conning releases its State of the States credit quality report. Conning ranks each of the 50 states based on 13 factors such as employment growth, economic growth, income levels, housing activity and various credit-specific metrics. The goal is to assign a ranking that reflects each state’s ability to repay its debts and the general health of its economy.
Obviously, on a state-by-state basis, credit quality ranges from the good, the bad to the ugly. The top five ranked states are Nebraska at No. 1, followed by Wyoming, Florida, North Dakota and South Dakota. The lowest-rated states are No. 46 California, followed by Mississippi, Louisiana, Illinois and lastly, Hawaii.
Iowa is ranked No. 37, a precipitous drop from last year’s ranking at No. 20. Among its strengths, Iowa has the eleventh lowest state-wide unemployment rate. It also has the fifth lowest state debt per personal income. This ratio of total state debt compared to its citizens’ income helps assess a state’s ability to repay its debt obligations through various tax revenues. Finally, Iowa has the ninth lowest state debt per capita, or the amount of state debt attributable to each person in the state.
But Iowa’s weaknesses are notable when compared to other states. It ranks No. 49 in annual tax revenue growth and No. 48 in annual personal income growth.
Unfortunately, for Illinois citizens, their state’s economic condition is not as vibrant as its Iowa neighbor. As previously mentioned, Illinois is ranked No. 49 in this 50-state comparative analysis. Last year’s ranking was slightly better at No. 44. For its relative strengths, Illinois has the twelfth highest state economic output per capita. This is the total dollar-value of all goods and services produced divided by the state’s population, which helps measure economic production and productivity. It also has the fifteenth highest average income per resident.
But Illinois’ budgetary woes, high unemployment, blistering high taxes and miserable credit rating continue to plague its overall economic health. Of all 50 states, Illinois’ credit rating ranks dead last with an investment grade just above junk, or speculative classification, according to Standard & Poor’s. Illinois ranks No. 48 in total economic debt. Illinois also ranks No. 41 in state debt per personal income. This conveys the heavy tax burden placed on Illinois citizens to pay off the state’s massive debt load.
Illinois has long struggled with a troubling economic climate. This has led to a steady outflow of Illinois residents to other states. According to the U.S. Census Bureau, Illinois has had a net domestic migration loss in each of the last 20 years. This means there have been more people moving away from Illinois to another state than there are people from other states relocating to Illinois.
From July 2023 to July 2024, Illinois had a net migration loss of 56,235. This was third in the nation behind No. 2 New York (-120,917) and No. 1 California (-239,575). Illinois’ net migration loss of 56,235 translates to one resident leaving the state for another state every nine minutes and 21 seconds. If you ask me, that doesn’t exactly make for a good marketing slogan for the beleaguered State of Illinois.
Mark M. Grywacheski, Investment Advisor
Quad Cities Investment Group is a Registered Investment Adviser.
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