Job growth, strong consumer spending, housing affordability and surging business investment are making the South the fastest-growing regional economy in the U.S., according to a new report from Visa.
Economic growth slowed in all four U.S. regions in the first quarter of 2025 as tariff implementation and uncertainty weighed on businesses and consumers.
Still, the South led the nation in economic expansion and job creation, according to data from the credit card giant.
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Service sector hiring across the region has outpaced expectations, and robust consumer spending in Texas and Florida — two of the country’s top domestic migration destinations — is fueling much of the momentum, the report said.
Michael Brown, Visa’s principal U.S. economist, said Texas in particular is an anchor for the regional growth story. He pointed to about 270,000 tech workers the state has added since the pandemic.
Visa’s economists now forecast the South’s gross domestic product to grow by 1.6% and 1.2% year over year in the third and fourth quarters of 2025, followed by 1.9% growth in both 2026 and 2027.
The forecast comes as President Donald Trump’s tariffs on about 90 countries — some as high as 50% — took effect earlier this month.
Meanwhile, negotiations between the U.S. and China are ongoing. In May, the two countries reached a temporary agreement in which the U.S. lowered its tariffs on China to 30% and China reduced its tariffs on U.S. goods to 10%. That deal is now set to expire in November.
Visa economists noted that the impact of the levies are hitting hardest in the West — which depends heavily on trade with Asia — and in the Midwest, where manufacturing and agriculture face significant disruptions.
By contrast, the South has so far escaped the brunt of the international surcharges reshaping global trade. That is leading to a more optimistic outlook.
“Export demand has held up better than we feared — that’s crucial for a state like Texas with significant international trade exposure,” Brown said.
“Now, we’re not blind to the risks. Texas has a substantial manufacturing base, and the prospect of broad-based import tariffs does concern us,” he said.
“Those tariffs are likely to squeeze manufacturing margins and could dampen hiring in that sector as we move through the year,” the economist added.
Since the COVID-19 pandemic, the South’s population has surged, with workers and companies relocating from higher-cost regions to more affordable states. Between 2020 and 2024, the region added more than 6 million residents, according to the U.S. Census Bureau.
That influx has lifted housing markets, which remain more affordable than elsewhere in the country, while drawing new investment into fast-growing industries.
Still, the report cautioned that risks remain. Beyond tariffs, cuts to the federal workforce are weighing on the South Atlantic states of Maryland and Virginia, as well as Washington, D.C.
Southern states, which have a strong contingent of government-funded employment, are at risk from potentially crippling ripple effects to private firms that depend on federal contracts.