30 March 2016

State Business Climate Indexes Are Worthless Or Worse

State business climate indexes are a political tool, not a meaningful economic indicator.
This study submits 11 business climate indexes to tests of their ability to predict relative economic performance on either side of state borders. Our results show that most business climate indexes have no ability to predict relative economic growth regardless of how growth is measured. Some are negatively correlated with relative growth. Many are better at reporting past growth than at predicting the future. In the end, the most predictive business climate index is the Grant Thornton Index which was discontinued in 1989.
From here.

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