How Does Each State’s Debt Compare to Its Output?

by howmuch

Government spending has been in the news a lot since the national debt reached a record $22 trillion earlier this year. While debt incurred by the federal government tends to draw headlines, government spending at the state level paints a less stark picture, especially when compared to each state’s level of production.

Our latest visualization uses data from the U.S. Census Bureau and the U.S. Government Debt website to break down each U.S. state’s spending from state & local governments when compared to each state’s output. In gross numbers, California, Texas, New York, and Florida all have the highest output (or gross domestic product), with each exceeding $1 trillion. The good news is that every state brings in more money than it spends or incurs in debt. The wider the gap between spending and output, the better.

In addition to looking at the gross numbers shown on this visualization, we can use this information to calculate each state’s debt-to-GDP ratio to better compare how states are doing against each other. The debt-to-GDP ratio is defined as the ratio of a country’s (or state’s) public debt compared to its gross domestic product (GDP), or output. This number, usually shown as a percentage, is calculated by dividing the total debt by the total output. Since the debt-to-GDP ratio compares what a state owes to what it produces, a lower percentage indicates that the state has a greater ability to repay debts and is economically better off.

Top 5 States With the Highest Debt-to-GDP Ratio.

1. New York: 23.53%

2. South Carolina: 19.19%

3. Rhode Island: 19.06%

4. Alaska: 18.69%

5. Nevada: 18.59%

Bottom 5 States With the Lowest Debt-to-GDP Ratio

1. Wyoming: 4.6%

2. Wisconsin: 7.12%

3. Idaho: 7.24%

4. North Carolina: 7.35%

5. Utah: 9.13%

There are a few other takeaways from the visualization. The states with the highest output also tend to have the highest state and local debt. States with larger populations tend to have higher aggregate levels of spending and output compared to less populous states. However, there is no clear correlation between state populations and debt-to-GDP ratios. In more than half of states, local government debt is greater than state government debt. As a whole, U.S. states have a combined state and local government debt of $3.1 trillion and gross output of $21 trillion.

Curious to see how U.S. output compares to the rest of the world? You can view that visualization here.

Data: Table 1.1

 

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