CDFI Fund

US Internal Revenue Service

Economic Innovation Group

Key Insights from Ten Years of Change.

A decade ago, the financial crisis impacted our economy, our politics, and our society in ways few could have expected. Looking back now, we wondered: How did the Great Recession and subsequent recovery affect the health and trajectories of American communities? And how have the rewards of a long national expansion been distributed in local terms across different places and populations?

To find out, EIG used its Distressed Communities Index (DCI) to compare two distinct time periods: 2007-2011 and 2012-2016. The DCI combines seven complementary metrics into a single measure of economic well-being, resulting in a clear snapshot of the economic and social state of the U.S. zip codes, counties, cities, and congressional districts. Places are sorted into quintiles based on their performance on the index: Prosperous, comfortable, mid-tier, at risk, and distressed.

What we found amounts to a “Great Reshuffling” – a sorting of human capital, job creation, and business formation that has had vast implications for Americans and their communities. In the years following the recession, top-tier places have thrived, seeing meteoric growth in jobs, businesses, and population. Meanwhile, the number of people living in America’s most distressed zip codes is shrinking as the nature of distress becomes more rural. But the gaps in well-being between prosperous areas and the rest have grown wider, and national rates of growth have become more distant from the experience of the median community.

It may come as a surprise that Americans are less likely to start a business, move to another region of the country, or switch jobs now than at any time in recent memory. But dynamism is in retreat nationwide and in nearly every measurable respect. Read the full report.

The term economic dynamism refers to the rate and direction of change in an economy. It traditionally encompasses activities like the rate of new business formation, the frequency of labor market turnover, and the geographic mobility of the workforce. The U.S. economy has historically been one of the most dynamic in the world, and its dynamism has been tied to high rates of economic growth and unparalleled innovation. Troublingly, there are now signs that the U.S. is rapidly growing less dynamic—a trend that, if continued, could fundamentally redefine the economic landscape for future generations.

Why does this matter? Because dynamic economies tend to be more resilient in the face of disruption. They’re better positioned to innovate and thrive. And they’re likely to be richer in opportunity.

The Index of State Dynamism (ISD) combines seven economic indicators into a single measure of a state’s dynamism each year going back to 1992. Explore the data state by state and over time below.

Download the ISD Report

The New Map of Economic Growth and Recovery Report surveys the economic landscape emerging from the Great Recession and compares it to previous recovery periods. This report identifies the geography and strength of job creation and new business formation, as well the overall collapse in the number of new firms in the economy.