Yesterday 24/7 Wall St. announced its best and worst run states in America.
The results didn't surprise me. But they probably surprised a lot of other readers — especially when it came to the ranking of the coastal states.
The top five could be categorized as follows:
It's probably not hard to figure out which states are in the top five based on the categories I just gave you.
Here they are, nevertheless: North Dakota, Wyoming, Nebraska, Utah, and Iowa.
Ironically enough, four of the top five best run states are so-called "red states" — you know, the states where citizens are accused of being too dumb to run an efficient and effective government.
By the way, #6 and #7 are Alaska and South Dakota, respectively.
According to metrics used by 247wallstreet.com to determine the best and worst run states:
A state with abundant natural resources should have an easier time balancing its budget than one starved for resources. Regional problems or the national decline of certain industries can destroy local economies. The subprime mortgage crisis, for example, disproportionately affected states with strong construction and real estate markets. Such factors can be easily identified and noted as possible causes for a state's poverty levels, unemployment or strained coffers.
Despite this, it is the responsibility of each state to deal with the resources at its disposal. Each government must anticipate economic shifts and diversify its industries and attract new business. A state should be able to raise enough revenue to ensure the safety of its citizens and minimize hardship without spending more than it can prudently afford. Some states have historically done this much better than others.
To determine how well the states are run, 24/7 Wall St. reviewed hundreds of data sets from dozens of sources. We looked at each state's debt, revenue, expenditure and deficit to determine how well it is managed fiscally. We reviewed taxes, exports, and GDP growth, including a breakdown by sector, to identify how each state is managing its resources. We looked at poverty, income, unemployment, high school graduation, violent crime and foreclosure rates to measure if residents are prospering.
This is the first year North Dakota has been selected as the best run state in the U.S.
Of course, it's easy to see why... Oil!
We've been all over this story for years, but now it's getting really mainstream.
It's worth noting North Dakota has the lowest unemployment rate in the country. In fact, some counties in North Dakota like Williams County have posted the lowest unemployment rate in America's history.
North Dakota is experiencing a housing boom, rising retail sales, and a surging state surplus. As the saying goes in North Dakota right now, "If you don't have a job, it's because you don't want to work."
And here's another big benefit to the oil boom in North Dakota: banking.
According North Dakota's Dickinson Press, banks in the state are having a tough go at it. They have no idea what to do with the ballooning deposits customers are putting into their savings accounts. In other words, deposits are surging past lending.
As I've said before, this is just the tip of the iceberg...
It seems every year the EIA bumps up North Dakota's proven oil reserves. And with breakthroughs in technology — specifically, multi-well pad drilling — oil companies in the Bakken can now access even more oil in less time and at a lower cost.
My gut tells me North Dakota is going to remain in the No. 1 spot for years to come.
Wondering what the worst run state in the Union is?
It's California — a state that just raised its income tax to over 13% and has the second-highest unemployment rate in America.
Recently, it was discovered that California is sitting on a shale oil deposit so big, it rivals the Bakken... but I can bet you they will never, ever tap into it.
The Golden State is the worst run state for the second year in a row. I guess Housewives of Orange County doesn't exactly create enough jobs to stimulate the economy...
Way to go, Cali!
Brian is a founding member and President of Angel Publishing and investment director for the income and dividend newsletter The Wealth Advisory. He writes about general investment strategies for Wealth Daily and Energy and Capital. Known as the "original bull on America," Brian is also the author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century, published in 2008. In addition to writing about the economy, investments and politics, Brian is also a frequent guest on CNBC, Bloomberg, Fox, and countless radio shows. For more on Brian, take a look at his editor's page.