Table of contents
Over 40% of the U.S. population lives in one of the 10 states that have been hardest hit by inflation, collectively accounting for 199 of the 270 electoral votes needed to win the 2024 election. That’s almost 74% of the electoral vote needed to secure the presidency. Could inflation alone determine who wins the Presidency? NationalBusinessCapital.com’s inaugural report on inflation found five of the most populous states in the country also rank among the most impacted by increasing costs for goods and services. While it’s very unlikely that strongly partisan inflation-ravaged states like California, New York, Texas, or Florida will be changing colors anytime soon, if their populations vote with their wallets we might see some surprising results. The report looked not just at where prices have been rising the most but also at indicators of how much difficulty state residents are having when paying their bills. Our results found inflation-distressed states to be primarily located in the South, where households appear to be particularly sensitive to price increases. The most impacted states, however, were California and New York, which suffered from a potent combination of decreasing wages (when adjusted for inflation) and large price increases from 2021 to 2022. Household budgetary distress, while not quite as high as in the South, was relatively high in both states as well. Over 1 in 4 adults in all 50 states reported difficulty meeting expenses within the last seven days during the first quarter of 2024.
Key Findings
- Almost 74% of Electoral Votes Needed to Win the Presidency Can Be Found in the Top 10 Most Impacted States: If residents in these states voted solely based on inflation, their candidate would be virtually certain to win the presidency. Over 40% of the U.S. Population Lives in One of the 10 Most Affected States: California, New York, Florida, Georgia, and Texas were the most impacted by inflation, respectively. Each of the five rank among the 10 most populous states and collectively account for over a third of the U.S. population, with the remaining five states (Louisiana, South Carolina, Hawaii, Alaska, and Oklahoma) raising that number to above 41%.
- Loss of Real Personal Income in California and New York Compounded the Pain of Big Price Increases: California and New York saw the first and sixth largest price increases on goods and services between 2021 and 2022 along with the sixth and 11th biggest decreases in real personal income.
- Southern States Have Struggled to Absorb Price Increases: While they saw comparatively moderate price increases, residents of the Southern States among the top 10 reported more difficulty meeting expenses and greater rates of credit card delinquency than most other regions.
- Non-continental States Saw Big Increases in Personal Expenditures: Alaska and Hawaii saw the first and third biggest increases in personal consumption year-over-year from 2021 to 2022, with substantial increases in the price of goods and services.
- Swing States Mostly Landed in the Middle of the Pack: With the exception of Georgia, none of the most (or least) affected states are typically cited as swing states for the 2024 election.
THE 10 STATES WHERE INFLATION IS HITTING HARDEST (2024)
1. California
2. New York
3. Florida
4. Georgia
5. Texas
6. Louisiana
7. South Carolina
8. Hawaii
9. Alaska
10. Oklahoma
THE 10 STATES LEAST AFFECTED BY INFLATION (2024)
41. Maine
Score: 40.2 (out of 100) Despite a big hit to real personal income (-6%, 10th), Mainers actually saw a decrease in PCE (-1.7%, 48th). Credit card delinquencies (8.4%, 30th) and reported difficulty meeting expenses (31.2%, 43rd) were also relatively low.42. North Dakota
Score: 38.8, tied North Dakota enjoyed the biggest increase in real income of all states (3%, 50th), softening relatively low price increases (102.9 IPD, 45th). Credit card delinquencies are high (10.5%, 9th), however, despite a relatively low number of adults reporting difficulty paying expenses (29.8%, 45th).42. New Hampshire
Score: 38.8, tied Despite serious losses in real personal income (-8%, 4th) and growth in prices (124.9, 6th), New Hampshirites actually saw the biggest decrease in PCE (-3.2%, 50th) among all states, with relatively few adults reporting difficulty meeting expenses (27.2%, 49th).44. Idaho
Score: 38.3 Idaho scored low on all of our metrics except PCE growth (4.7%, 3rd). However, the Gem State's low regional CPI (2.5%) over the last year should help keep it from creeping up the list anytime soon.45. Iowa
Score: 37.7 Iowa saw some of the smallest price hikes in our report (102.6 IPD, 46th) and had only a small decrease in real personal income (-1.1%, 41st). Credit card delinquencies were on the high side (9.1%, 21st), with about 1-in-3 adults reporting difficulty meeting expenses (38th), which is relatively low for Q4 of 2024.46. Minnesota
Score: 37.0 Whatever is going on in the North Star State with regard to inflation, Minnesotans are handling it well, with the third lowest rate of credit card delinquency (6.7%) and percentage of adults saying they’re struggling to pay for expenses (28.8%).47. South Dakota
Score: 36.6 Like its namesake to the north, South Dakota was one of just five states to see an increase in real personal income (1.6% 48th) from 2021 to 2022. Price increases have also been comparatively low (102.1 IPD, 47th).48. Vermont
Score: 35.8 Like its neighbor to the east, Vermont has managed to decrease its PCE (-0.2%, 44th) despite relatively high price increases (117.3, 17th). Vermonters also reported the lowest rate of difficulty paying bills in Q1 of 2024 (26.7%, 50th).49. Wyoming
Score: 29.7 Wyoming ranked low in all of our inflation pain metrics, notably seeing only a 0.6% rise in PCE (40th).50. Montana
Score: 28.4 Montana was one of the few states to see an increase in real personal income (0.8%, 47th) along with modest growth in prices (104.7, 39th). The lack of sales tax doesn’t hurt either.COMPLETE RANKING OF ALL 50 STATES (2024)
Methodology
To create our rankings, we collected metrics related to inflation rates and consumer stress in each of the 50 states. We then ranked each of the states within each metric and applied a weight to the metric to determine the state’s score in that ranking. Scores within each metric were then aggregated and normalized to give each state an overall score between 0 and 100. States most impacted by inflation received a higher score than those that were less affected. The seven metrics we chose, along with their weights, were:- % Change in Personal Consumption Expenditures (PCE) (15%): PCE measures consumer spending on goods and services in constant dollars, and is used by the Federal Reserve to measure inflation. This metric represents the YoY change in PCE from 2021 to 2022. Data was sourced from the Bureau of Labor Statistics.
- % Change in Real Personal Income (15%): This metric measures the change in the amount of money individuals in each state earned from 2021 to 2022 in constant (2017) dollars. Declining purchasing power in a state can stress household budgets. Data was sourced from the Bureau of Labor Statistics.
- Implicit Price Deflator (IPD) (16%): The implicit price deflator is a ratio that measures the change in the price of goods and services YoY. IPD measures a broader range of goods and services than CPI. A higher IPD implies larger price increases. This metric represents the change in prices from 2021 to 2022 and was sourced from the Bureau of Labor Statistics.
- Change in Regional Consumer Price Index (CPI) (15%): CPI measures the average change in prices over time of a selected basket of consumer goods and services and is commonly used to measure inflation. The metric represents changes in CPI in each state’s region between March 2023 and March 2024. Data was sourced from the Bureau of Labor Statistics.
- % Reporting Difficulty Paying for Household Expenses (16%): This metric represents the average number of respondents in each state who reported having difficulty paying for typical household expenses within the last seven days to the US Census Household Pulse Surveys conducted between January and March 2024.
- Credit Card Delinquency Rate (15%): This metric represents the percentage of credit card balances that are 90 days or more past due in each state. Data is for Q4 of 2023 and was sourced from the Federal Reserve Bank of New York.
- Average Combined Sales Tax (8%): Higher sales tax can magnify the costs of rapidly increasing prices. This metric represents the average combined state and local sales taxes in each state. Data was sourced from the Tax Foundation.