The Best and Worst States to Start a Small Business

A strong local housing market is very closely tied to the strength of the local economy and small businesses are one of the of the biggest driving forces in many local economies.

In a recent study, WalletHub compared the 50 states across 26 metrics for startup success, assigning each state a number in each category, then computing which states are the most business-friendly overall.

The results are hardly surprising: High-tax states in the northeast offer some of the worst conditions for businesses, while low-tax states in the Sun Belt have some of the best conditions.

States that offer the right conditions for success, such as access to cash, skilled workers, affordable office space and other factors, can be critical in helping a business thrive.

See the complete ranking below:

  1. Texas 
  2. Utah   
  3. Georgia   
  4. North Dakota 
  5. Oklahoma   
  6. Florida   
  7. Arizona   
  8. California   
  9. Montana   
  10. Colorado   
  11. Idaho   
  12. Washington   
  13. Mississippi
  14. North Carolina
  15. Louisiana
  16. Kansas
  17. Minnesota
  18. Michigan
  19. Nebraska
  20. Tennessee
  21. Kentucky
  22. South Dakota
  23. Maine
  24. Indiana
  25. Nevada
  26. Oregon
  27. New Mexico
  28. Alaska
  29. Alabama
  30. Wisconsin
  31. Arkansas
  32. Missouri
  33. Wyoming
  34. Ohio
  35. Illinois
  36. Massachusetts
  37. Iowa
  38. South Carolina
  39. Virginia
  40. Maryland
  41. West Virginia
  42. New York
  43. Vermont
  44. Delaware
  45. Pennsylvania
  46. Connecticut
  47. Hawaii
  48. New Hampshire
  49. New Jersey
  50. Rhode Island

What Happened to Rates Last Week?

Mortgage backed securities (FNMA 3.500 MBS) lost -20 basis points (BPS) from last Friday’s close which caused fixed mortgage rates to move slightly higher but remained near their lowest levels of the year.

Overview:  We saw an uptick in inflation (CPI and PPI), and that coupled with the prior week’s strong jobs data has bond traders pulling back their hedges for a 50 BPS rate cut from the Fed this month down to a 25BPS.  This pulled a little premium out of bond yields.


Inflation Nation: The headline June Core CPI (ex food and energy) YOY broke back above 2.0% and was a little higher than expectations (2.1% vs est of 2.0%).  CPI YOY hit 1.6% vs est of 1.6%. (ex food and energy) YOY broke back above 2.0% and was a little higher than expectations (2.1% vs est of 2.0%).  CPI YOY hit 1.6% vs est of 1.6%. The headline June Core PPI (ex food and energy) YOY was higher than expected (2.3% vs est of 2.2%) and the PPI YOY was also higher than expected (1.7% vs est of 1.6%).  These readings do not get the same weight as the CPI data does but these do show upward pricing pressure.

The Talking Fed:  Fed Chair Jerome Powell gave his semi-annual monetary policy report to the House Financial Services Committee and the Senate Banking Committee.  Here is the statement that he read to them: You can read them here.

Here are a few bullet points from his statement:

  • Hawkish “The economy performed reasonably well over the first half of 2019, and the current expansion is now in its 11th year.”
  • Hawkish “Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective.”
  • Dovish “Inflation has been running below the Federal Open Market Committee’s (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook.”
  • Dovish “Growth in business investment seems to have slowed notably, and overall growth in the second quarter appears to have moderated. The slowdown in business fixed investment may reflect concerns about trade tensions and slower growth in the global economy.”

The Minutes from the last FOMC meeting certainly pointed to a rate cut at the July meeting. You can read the official Minutes here.  While once again the markets are focusing on the most dovish of notes, but there was actually a mixed bag.

  • Many Fed Officials saw a stronger case for a rate-cut amid rising risks
  • Several officials didn’t yet see a strong rate-cut case
  • A few Fed officials saw a rate cut risking financial imbalances
  • Many Fed officials in June saw risks weighted to the downside


What to Watch Out For This Week:

The above are the major economic reports that will hit the market this week. They each have the ability to affect the pricing of Mortgage Backed Securities and therefore, interest rates for Government and Conventional mortgages. I will be watching these reports closely for you and let you know if there are any big surprises.

It is virtually impossible for you to keep track of what is going on with the economy and other events that can impact the housing and mortgage markets.  Just leave it to me, I monitor the live trading of Mortgage Backed Securities which are the only thing government and conventional mortgage rates are based upon.