The “Rich States, Poor States” report from the highly influential American Legislative Exchange Council (or ALEC, to its friends) was released this week—and while Texas can celebrate a big ol’ “we’re number one!” on the rankings of economic performance right now, the news is a bit less rosy when one looks at the “economic outlook rank” charts.
Over there, Texas—the miracle state that only ever seems to grow—drops to a mediocre number thirteen, just outside the top 25 percent and behind states like Michigan, Virginia, and Wyoming. The states at the top of the list? Utah, North Dakota, Indiana, and South Dakota. A full half of the top four states are Dakotas.
That’s not really a surprise, though, given the fact that the Dakotas are key to energy production right now. The booming oil industry in the area—largely due to fracking—has transformed the region in unexpected ways; the town of Williston, for example, saw its population double from 2010 to 2013. (The current average monthly rent in Williston is $2,400, as a result.)
Accordingly, ALEC seems to consider energy development to be a good indicator of future growth, which isn’t exactly a controversial viewpoint. It also makes sense that suddenly discovering a massive oil industry in a state like North Dakota means that its economy is likely to boom in ways that Texas’ is not: the relatively small size of the economy there means that an emerging energy sector is going to disproportionately affect growth.
Of course, all of these predictions aren’t necessarily indicative of what the future will hold. Texas’ slide has been anticipated by ALEC for several years, and we’re still holding on to that top spot. In 2011, our rank on the Economic Outlook chart was down to number eighteen, which means that moving up to number thirteen almost qualifies as optimism. (Utah, the perennial favorite of the council, has occupied the top spot every year since 2011.) Like most prognosticators, ALEC likes to play up its previous predictions (“The 2014 economic outlook ranking is a forward-looking measure of how each state can expect to perform economically based on 15 policy areas that have proven, over time, to be the best determinants of economic success,” the report says), but the track record doesn’t quite match the claim.
With all that in mind, though, it’s also not unlikely that Texas’ economic growth will slow—it’s just that it might be for different reasons than ALEC thinks. Failure to keep pace with the surprising turn of events in the Dakotas’ oil industry might not matter as much as the problems that arise from income segregation, or the inability to meet the transportation, water, and education needs of the ever-increasing number of new Texans.