States with highest GDP per Capita
By Andriy Blokhin | November 24, 2015 AAA |
In 2014, according to the U.S. Bureau of Economic Analysis (BEA), the top five states by real gross domestic product (GDP) per capita in the United States were Alaska, North Dakota, New York, Connecticut and Wyoming. Certain states such as North Dakota significantly improved their rankings due to the oil and gas shale boom.
Alaska had the highest real GDP per capita of $66,160 in 2014 due to its small population, which was estimated to be below 1 million people, and its high production output of oil and gas. Of Alaska’s current-dollar GDP (also known as nominal GDP) of $57.1 billion, over 80% comes from petroleum, natural gas, coal, gold, zinc and other precious metals. Other prominent export goods from Alaska include seafood products, such as salmon and cod. Employment in Alaska is concentrated in the government sector and energy industry.
Because of the oil and natural gas discovery and subsequent energy boom in 1980s, Alaska built the Trans-Alaska Pipeline System. The Alaskan state legislature created the Permanent Fund, which must set aside a certain portion of oil revenues and invest it for the future of Alaskan residents. Every year, the Permanent Fund pays an annual dividend to all eligible residents who lived in Alaska for the full calendar year and intend to stay in Alaska indefinitely.
North Dakota has the second highest real GDP per capita of $65,225. Similarly to Alaska, North Dakota has greatly benefited from a natural resource boom, particularly from oil extraction at the Bakken Formation. As a result, North Dakota significantly improved its economic ranking compared to other states. Natural resources and mining account for over 20% of North Dakota’s GDP. Agriculture, construction and government services play an important role in the state’s economy. North Dakota is also one of the fastest growing states in terms of personal income growth.
New York occupies third place with its real GDP per capita of $64,818 in 2014. New York generated a current-dollar GDP of $1.4 trillion in 2014. The financial services sector is the most important area of the state; it generated $459 billion for New York. Professional and business services such as legal advice, administrative services and management consulting have produced an output worth $178 billion in current dollars. In addition to Wall Street, New York is steadily growing its technology and entrepreneurship presence. New York’s GDP greatly suffered as a result of financial crisis of 2008-2009, as its financial services sector declined, but it has subsequently rebounded.
Connecticut boasts the fourth place in terms of real GDP per capita of $64,676. Connecticut has generated a GDP in current dollars of $253 billion. Finance, insurance, real estate, rental and leasing are the most important areas of Connecticut’s economy since they accounted for about 29% of its GDP in 2014. The state’s economic growth is also tied to manufacturing activity; United Technologies Corporation is based in Hartford. Connecticut has a somewhat high income inequality due to a concentration of wealthy individuals who live in certain metropolitan areas, such as New Haven and Bridgeport.
Wyoming has a real GDP per capita of $64,309, not too far behind Connecticut. Wyoming has one of the lowest populations among all states, with fewer than 700,000 people. Wyoming generated a current-dollar GDP of $44.2 billion in 2014. The mining and tourism sectors are the main sources of the state’s total output. In 2014, extraction of natural resources produced output worth $15.1 billion, accounting for 34% of the state’s GDP. Tourism and travel are other important driving economic forces behind Wyoming’s growth, as millions of people visit national parks and recreation areas in the state.