Western, Southeastern states see economic bumps in first quarter • Stateline

Economic output in the first quarter, which increased 2.1% nationally, was highest in Western and Southeastern states and dropped in the agricultural Midwest, according to new figures on Gross Domestic Product released Thursday by the federal Bureau of Economic Analysis.  

The change, measured from the last quarter of 2025, resulted in a 4.5% increase in Washington state, mostly because of the AI boom in tech industries. South Dakota saw the biggest decrease, down 1.6%, as agriculture continues to struggle with low prices and high costs. 

The next biggest state GDP increases were in California (up 3.7%), and North Carolina and South Carolina (both up 3.2%). The only other losses were in Nebraska (down 0.9%) and Iowa (down 0.1%) 

Personal income showed a different pattern, with North Dakota and South Dakota showing the biggest increases as oil prices rose starting in February with the Iran war. Personal income rose 22.4% in North Dakota for the quarter and 11.8% in South Dakota. 

The disconnect between high income increase and slow economic output in the Dakotas, where economic output dropped in South Dakota and barely budged at 0.1% in North Dakota, is because of inflation adjustment. Higher oil prices show up in personal income, which is not adjusted for inflation, but economic output is adjusted for price inflation. Oil production is also crucial to North Dakota’s tax revenues. 

The only state where income dropped was Hawaii (down 23.9%). The state has suffered from a tourism downturn and federal job cuts, according to a February state report.

Stateline reporter Tim Henderson can be reached at [email protected].