• A recent WalletHub study ranked Massachusetts' economy the best in the US.
• Potential for innovation was the biggest factor.
• An emphasis on education and a large share of high-tech jobs also play a role.

Whether it's cornfields, tornadoes, or Broadway, every state is known for something. But in terms of overall economic strength, one state stands above the rest.

Massachusetts has the best economy in the United States, according to a WalletHub study released earlier this month. It ranked above every other state and Washington, DC, with Washington state in second and Utah in third.

Massachusetts' top ranking was driven by its No. 1 placement for innovation potential, based on factors such as the share of jobs in high-tech industries and STEM, and its No. 5 placement for strong economic activity, based on GDP growth, the share of fast-growing companies, and exports per capita.

Michael Goodman, a professor of public policy at the University of Massachusetts Dartmouth and co-editor of MassBenchmarks, a journal that provides assessments and analyses of the state's economy, told Business Insider that a "multidimensional set of strengths" sets Massachusetts apart from other states economically.

Massachusetts is one of the leading states for innovation

In an earlier study, WalletHub ranked Massachusetts the most innovative state, second only to Washington, DC. The state's research and development spending per capita is among the highest in the country, as well as its venture-capital funding per capita.

"While California, New York, and other states are simply just much larger, if you go by population, Massachusetts punches way above its weight in terms of innovation," Goodman said.

He added that the state is "magnetically attractive" to innovative people. For example, the pharmaceutical and biotech company Moderna, a major developer of the COVID-19 vaccine, is headquartered in Cambridge.

The state is also a hub for high-tech jobs

WalletHub reported that Massachusetts' tech sector accounts for more than a quarter of its GDP, and the state has the highest share of jobs in high-tech industries.

Compared to other states, Massachusetts also has the highest percentage of companies on Deloitte's Technology Fast 500 list, which names the fastest-growing, innovative companies in North America, WalletHub reported.

Companies with offices and/or labs in Cambridge include Microsoft, Google, and Amazon.

Its top universities play a large role in the state's research and development

In addition to MIT, the state is home to some of the US' most renowned higher-education institutions, including Harvard, Northeastern University, Boston University, and Tufts University.

Goodman said Massachusetts' focus on education starts at the K-12 level, and the state's large-scale investments in education have paid off. The state spent $22 billion on public-school expenditures in 2024, per the Massachusetts Department of Elementary and Secondary Education.

Compared with other states that year, Massachusetts ranked seventh-highest in per-student expenditures for elementary and secondary education, according to Census data.

"I don't think it's an accident that Massachusetts remains the most well-educated state by educational attainment," Goodman said.

Despite its economic strength, the state still faces challenges

For all the gains from Massachusetts' research and innovation, Goodman said people in parts of the state who haven't had the chance to take part in the innovation economy still face an uphill battle.

Though WalletHub ranked Massachusetts the best state to live in overall last year, it ranked it 44th in affordability.

Efforts by the Trump administration to freeze federal grants to universities like Harvard and to bar international students have also created uncertainty. (The administration said the funding freeze was tied to Harvard's response to antisemitism and its refusal to submit to a list of demands, including suspending DEI programs and changing its hiring practices. A judge later ruled the suspension unlawful.)

"We do have a serious cost-of-living and inequality challenge here," Goodman said. "That's not new, but it's certainly extra painful in this period due to the overall inflation and federal activities."