Why sunny states are eating Massachusetts' lunch
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Six fast-growing states in the South — Florida, Texas, Georgia, the Carolinas and Tennessee — now add more to the national GDP than the Northeast, the perennial powerhouse, writes Axios' Mike Allen.
Why it matters: The pattern is evidence of the growing influence of parts of the country far from New England and New York.
- It's not just about the coasts and the bubbles anymore: Americans are spreading out, physically and economically.
Those six southern states' new muscle is part of a "$100 billion wealth migration" as the U.S. economic center of gravity tilts south, Bloomberg reports.
- The switch happened during peak pandemic. There's no sign it'll reverse.
Zoom in: Massachusetts landed in the bottom five U.S. states for net inbound migration last year, meaning more people leave than move in.
- Even with an annual influx of students and a burgeoning medical and tech economy, Massachusetts' high cost of living keeps people from putting down roots.
- Only Louisiana, Illinois, California and New York saw more people leave.
- Maine ranked fourth for net inbound migration and New Hampshire 17th.
Between the lines: The people who are moving out are among the highest earners, according to a Pioneer Institute study. More than 60% of the wealth Massachusetts lost in 2021 came from those earning $200,000 or more annually.
- The report's authors attribute much of the out migration among the wealthy to the state's tax policy and surtax on incomes over $1 million.
- Lawmakers and Gov. Maura Healey are deliberating over a tax relief package meant in part to keep wealthy families from leaving.
Zoom out: In total, Massachusetts lost around $900 million in adjusted gross income to out-migration in 2012.
- That number nearly quintupled to $4.3 billion in 2021, thanks in part to the pandemic.
By the numbers: Nationally, a flood of transplants helped steer about $100 billion in new income to the Southeast in 2020 and 2021 alone, while the Northeast bled out about $60 billion, Bloomberg writes from IRS data.
The Census Bureau said in May that nine of the nation's 15 fastest-growing cities were in the South.
- Of the nine fastest-growing cities in the South, six were in Texas.
The bottom line: For years, the U.S. population has been trending south and southwest. Now money and economic activity are following, and that's a warning sign for the Bay State's future.