New Data Confirm Economic Exodus From Blue States

Written by Jack Elbaum

What’s happening: A new Bloomberg analysis confirmed that there is a substantial economic exodus from California and New York. Both states “lost firms that managed close to $1 trillion of assets” since the start of 2020, and many more firms left than moved in.

Where are they going? Most of the firms that left New York during the relevant period headed to Florida. Tennessee, North Carolina, and Florida all gained upward of $1 trillion of total assets under management.

Why it’s happening: The biggest reasons are low corporate and personal tax rates and nice weather. It can also be seen as a rejection of Democratic governance: The strict pandemic lockdowns of blue states and high crime rates in blue cities drove both residents and businesses out.

Why it matters: States are often thought of as “laboratories of democracy.” As state governments pursue differing political priorities, people ultimately vote with their feet.

• In hindsight: With hardly any change in governance since the beginning of this exodus, New York is undergoing one of its largest crises in the past decade — illegal immigration. Now, Wall Street CEOs are demanding President Joe Biden and Congress do something about it.

People are leaving, not just businesses: The most recent data on domestic net migration show New York and California lost 299,557 and 343,230 people, respectively. Six southern states now contribute more to national GDP than the entire Northeast.